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By William Van Winkle |
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Meet the Disties We could fill the remainder of this article by merely zooming on one distributor and discussing it in depth. That would be great for the distributor but not terribly helpful to you. Our objective here is to give you a 60-second snapshot, a first impression of a wide selection of those distributors who volunteered to participate in this story, and feed you a sufficiently tantalizing appetizer so you'll want to order up the whole entre on your own. Chances are that you deal with at least a couple of these companies already, and if we're covering familiar ground, hopefully you'll pick up a few new nuggets you can use. For the distributors you don't use currently, give them a close look and see what they offer that can help make you more marketable and profitable.
ASI Sporting 13 locations across the U.S. and Canada, ASI's internal studies reveal that about 80% of its customers lie within a two-day ground shipping radius of its warehouses. Some distributors manage resellers from a central location and use local offices with skeleton staffs, but ASI gives each of its locations almost complete autonomy. "It's not just that inventory is there," says ASI's Kent Tibbils, "it's that everything is there. Your sales rep is there, your credit manager, your customer service person. Everything gets handled out of the local office." Considering that the distributor boasts over $1 billion in annual sales, the company is surprisingly choosy about its vendor roster. ASI focuses on only about 100 manufacturers, trying to pick the best partners in each major product category that jives with its core components business. For instance, ASI is very strong in CPUs, motherboards, and video cards but only carries two printer lines, Samsung and the niche-oriented Wasp Barcode. ASI was one of the three launch distributors for the Verified By Intel (VBI) program, and Tibbils believes that Intel's Common Building Blocks initiative has done much to build reseller enthusiasm in a standards-based approach to notebook hardware and help improve whitebook sales. One of the few exceptions to its decentralized approach, ASI keeps its spare notebook parts stockpiled in its San Francisco headquarters location—a more cost-effective approach given today's whitebook volumes. On the other hand, ASI has taken steps to do a lot more of the motherboard-level repair work here in the States instead of slow boating the parts back to China. This is indicative of the distributor's overall philosophy on reseller support. "A lot of distributors seem to have gotten away from providing what we would call real technical support," says Tibbils. "Our support goes beyond a customer calling in and getting an RMA number. Our technicians work directly with customers on their integration issues. They help configure the product, deal with networking issues, and so on. The advantage we have over a manufacturer who can provide the same kind of services is that because we carry so many different kinds of parts, we can actually duplicate the hardware a customer is using when they call in." Mobility may be ASI's headliner category going into 2007, but the distributor also has several other areas of specialization in which it wants to build reseller participation. Tibbils says his company is deeply involved in the Core 2 Duo push, promoting Windows Vista, and developing solution clusters based around security, digital signage, and storage. In the case of storage in particular, ASI works to take what might otherwise be a simple point product and help resellers see how it could be something much more significant and profitable. "It's easy enough to buy and attach a NAS box," says Tibbils, "and I'm sure even most home users could do that. But I think a lot of people would rather pay to have someone come into their house, set up their NAS, and do some other things like their wireless network at the same time. NAS represents a great opportunity to go in and pitch something besides a desktop. And you can also take NAS beyond a simple plug-and-go solution. There are things you can do in terms of security, setting up multiple users, drive selection. Different users in the house may need access to different resources. You don't want to enable a situation where a kid might accidentally delete some of the customer's work files." For a distributor with the education, program, and support feel of a national distributor but the local touch of a much smaller provider, ASI is a must-try partner. Bass Computers Bass describes itself as a wholesale parts distributor and computer manufacturer, but you might call also call the Houston, TX company a sub-distributor given that the Bass buys some of its products from tier-one distribution. This raises an obvious question: Why should resellers buy from Bass when they could buy the same parts from a larger disty and eliminate a middleman? "Our pat answer is customer service, customer support, RMA, things that we can do that the tier-ones normally don't," answers general manager Jason vonCordsen. "We've got a 50,000-square foot warehouse that's just full of new parts, so when our customers have an issue with something they bought from us, whether they're local or out of town or state, they send it to us, we go grab a new part from the warehouse, put it in a box, and overnight it back to them. Then we deal with the RMA on our end. If a local person brings us a motherboard, we'll put it on our benches and test it. If it's under warranty, we give them a new one, and we deal take over the RMA hassle with Gigabyte, Intel, or whoever." The eight to ten weeks you normally wait to get RMAs back can be a business killer, according to vonCordsen. In that amount of time, a part could become obsolete, never mind the drag on a reseller's cash flow. This is partly why Bass puts special emphasis on service issue turn-around. But quick turn-around extends to the sales process, as well. For resellers within driving range, Bass built a full-blown tech bench area next to its RMA area, complete with peripherals and high-speed Internet access, that can be used either for troubleshooting or building new machines. Bass Computers is 16 years old, and over 90% of its tech staff has been there for over five years. Either vonCordsen is an exceptionally good salesman or we picked up on a surprising Southern hospitality vibe that pervades Bass' operations. Everybody says their customers are like family. Bass is one of the few companies we spoke with that was actually convincing. "We do a barbeque in May and another in October," says vonCordsen. "It's a no-alcohol event in a big 200x80-foot tent with five security guards to keep out the crashers. We bring in all the vendors—Microsoft, AMD, Intel, Symantec. All the big names. Then we set up the food. It's just a big meet-and-greet for customers where they can sit down and talk with the manufacturers, talk about new products, get to see and touch some of them. We raffle and give away 12 or 13 built computer systems, plasma TVs, Xboxes, and things like that, plus we feed everybody. The barbeque is just about giving everything away. We drop everything we sell to cost that week. And it's a great time. That's how much we love our customers." Without the multi-million-dollar marketing budgets of some other distributors, Bass takes pride in helping small resellers boost their images with minimal investment. For example, every so often, Bass might organize a promotion in which a reseller earns a T-shirt for every copy of a given Microsoft title he purchases. No reseller needs 100 Microsoft T-shirts, but they sure make for nifty give-aways to the right end-users. Similarly, Bass is more than happy to save empty product boxes for resellers who want to build displays in their showroom—a silly "value-add" perhaps, but for small shops with no dollars to spend on collateral, such small tokens can be significant. Of course, Bass isn't all about back slaps and juicy ribs. The company is very serious about specializing in security products, including cameras, security DVRs, cabling, and more. The BCI computer line is a well-regarded alternative to tier-one OEM systems, and Bass is also more than able to do custom builds under a reseller's branding and blind drop ship to the customer. To help further, Bass will provide resellers with an e-commerce front-end for their Web site that ties back into Bass' sales and inventory system. It's entirely possible for you to fulfill thousands of dollars of system and component orders without investing a single minute of effort in the sale. Resellers within range of Houston obviously have an advantage here, but Bass has a lot to offer any reseller, especially smaller groups in need of a friendly ally. D&H In that hazy space between the tier-one distributors and the billion-dollar multi-regionals sits D&H, which operates from a central Pennsylvania facility but sports five distribution hubs across the U.S. and reaches out constantly through road shows, Web broadcasts, and other mediums. Unlike many major nationals, every D&H customer has a dedicated sales rep. The isn't put into a pool. The company's niche is that it operates like a national but seeks to touch resellers like a smaller regional. Tier-ones often try to focus on the top 1,000 reseller accounts, most of which deal extensively with enterprise markets. D&H does no enterprise business. According to vice president of purchasing Dan Scwab, D&H targets the mass mainstream of resellers below that top 1,000 level.
According to Schwab, 82% of D&H IT resellers bought some consumer electronics products during 2006, a stunning number considering the hard bashing Viiv took last year and the overwhelming confusion that still reigns in the convergence space. Schwab says that convergence interest continues to climb, albeit more slowly than many had hoped, but the media center functionality built into most versions of Vista will act like a Trojan horse and open end-users' eyes to the possibilities of digital entertainment. And the more sites like iTunes and CinemaNow promote digital media into the mainstream, the more he sees reseller queries escalating. Not that convergence is solely about homes. Digital signage, waiting room entertainment, or similar venues are equally lucrative targets. This is the type of space where D&H wants to be a key player. "It's hard to add value once a technology has become commoditized," says Schwab. "So the reseller needs us less on mature technologies than emerging ones—technologies they have yet to integrate. Voice is a good example. It's something many resellers are interested in and maybe have tested but still don't understand what's involved or the pros and cons of the investment they'll need to make. We gravitate to things like that because there's more margin for the reseller and new reasons for resellers to go back to customers with new functionality, productivity, or ways to pull costs out of their businesses." D&H launched Cisco's voice technology a year ago, and it seems like a natural fit for a company with a long history of systems and networking experience. The move from networking to voice networking is a natural progression. Sure, it's a brand new world with different technologies and knowledge barriers, but that's the gap that D&H is working to fill and in turn tie the reseller more closely to his end-user. Because with data networks, your services are important but somewhat common. In the relatively new sphere of voice networking, you become mission critical to the end-user. Offices have plenty of computers, but if the phone system goes down, it's an instant disaster. The pitch is on the benefits digital voice can bring to businesses and the huge recurring service opportunity around that product category. This is where D&H wants to take you. The Pennsylvania distributor is also a new addition to the VBI program—another natural fit given that D&H was the industry's whitebook champion when Centrino first debuted. Of course, D&H sells several branded notebooks and whitebooks, as well, but Schwab is convinced that resellers putting their support behind VBI is critical.
"Intel's economies of scale and their ability to offer service and do bundles to help price the units more effectively are key," says Schwab. "We do sell other whitebooks, but I think VBI is clearly the best option. That said, you do get people like Panasonic who brought us on because they want better penetration in the SMB space. Last year, notebooks passed desktops in the consumer and enterprise, and this year I think it's true for SMBs, so the hot opportunity now is to go back to your customers and look through your portfolio of mobile solutions, not just with notebooks but all of the technologies surrounding them." Schwab cautions against the current tendency to forsake hardware for services. Some resellers now figure that with notebooks outselling desktops there is no point in staying in systems hardware. True enough, if you just sell a clamshell in cardboard, you leave yourself open to replacement. The trick that D&H wants to teach resellers is how to deploy a halo of technology around the notebook to make your solution unique. MA Labs In our discussions, MA Labs' Scott Twomey told us a story about being at a trade show and standing in the Corsair Memory booth. Two men walked up, one younger and the other obviously older and more experienced. At one point, the younger man commented on how Corsair makes really good memory, not like that low-end SuperTalent garbage. In the midst of the younger man's rant, Twomey walked up, gave the man his card, and saw the older man hang his head. Twomey asked if the loud talker knew that MA Labs manufactured both SuperTalent and Corsair modules. Incredulous, the young man turned to his older companion, who only nodded and quickly found another conversation to join.
From this tale, you can discern a fair bit about the distributor's corporate personality. Roughly 30% of MA Labs' business is memory, yet SuperTalent remains a relatively unknown (or at least misunderstood) brand in the field. The fact that SuperTalent modules have a sub-0.5% defect rate and a lifetime warranty goes practically ignored because MA Labs isn't aggressive about promoting its own strengths. Sometimes, Twomey chafes against his figurative muzzle, but, as he readily admits, he doesn't personally own one of the top distributors in the U.S., and it's hard to argue with MA Labs' track record. With two locations in California and one on the East Coast, MA Labs is now the top distributor of both ATI- and NVIDIA-based graphics cards. The company became a Microsoft Authorized OEM Distributor in 2001, debuted at #5 on the Microsoft charts that year, and has been #1 in both 2005 and 2006, outselling even Ingram Micro. The tendency of this company is not to lead resellers into brave, new territories but to identify hot component products and then dominate them. Essentially, MA Labs specializes in anything that goes inside of a PC. One of the things Twomey sees as being a competitive advantage for MA Labs is the distributor's emphasis on maintaining a large inventory so as to avoid backorders. This is paired with MA Labs' ardent commitment to speed and accuracy in the back rooms. Twomey described to us one example in which a customer called in a 37-item order at 5:25 on a Friday, then called back at 5:35 needing to add one more item. Twomey immediately walked to the warehouse trying to track down where the order was in its pull process and couldn't find it. At 5:42, he discovered it in the shipping area being boxed up, having already cleared credit. "We don't have the customers like the Ingrams and Tech Datas where they're ordering 1,000 boxes a month that ship out on the 15th of every month like clockwork," says Twomey. "We have everybody else." ...more |
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