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By William Van Winkle |
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SED International Founded 26 years ago by a husband/wife team, SED stakes much of its history on success in the PC components business. At one point, the company was recognized as the de facto name in hard drive distribution. Over the last several years, SED has also carved out a successful niche in cellular phones and accessories, a comparatively difficult space for PC companies to play in. Most recently, SED returned to the consumer electronics space in the middle of 2005, looking to seize on the growing number of convergence opportunities. SED sells to every type of reseller from e-tail to CompUSA to mom-and-pop shops, although the bulk of its business comes from small PC resellers. At the same time, SED is another of those distributors that sees the sense in maintaining a limited vendor roster. "Our model is to have the right amount of vendors to be able to provide complete solutions but also the right amount to provide the right amount of attention to those vendors and be important to them," says Rob Kalman, vice president, U.S. marketing. "For example, in motherboards, we don't want to have 20 suppliers; we want five. That way, our salespeople know the products and we can provide complete service and support. I was at a tier-one distributor for 19 years, so I know they're very good at a lot of things. But there isn't as much attention to understanding the customer's need, their business model, what they're looking for in a solution." We asked Kalman who the ideal SED customer would be, and his reply was frank: someone small to medium in size who values help in making decisions about products and wants to get into new categories. Those shopping for the best price and availability should definitely put SED on their comparison shopping list, but this type isn't likely to be a member of SED's core customer set. Regarding getting into new categories, SED is an enthusiastic proponent for resellers breaking down the walls that have separated the PC and consumer electronics categories. "Distribution has definitely helped with this," says Kalman. "The consumer electronics channel has been very separate from the computer channel, and the cross-over is happening, but it's been slow going. Think cellular. There's no Ingram or Tech Data there. And consumer electronics is very regionalized. There's no massive national distributors. So CE is still largely a regulated channel in terms of pricing and who's selling what. Those are still barriers to people, but they're breaking down pretty fast now." SED is better positioned than just about anyone to help PC resellers dig into the cellular space, but Kalman cautions that it may be a long process. Cellular carriers still have a lot of control over deployment and usage, adding considerable complexity to the sales process. The big names in cellular still do business like they did a decade ago and have little grasp on the PC channel's workings. Walk into any shop selling smartphones and they likely wouldn't be able to tell you a thing about how to integrate the device with a PC. Therein lies the opportunity for resellers who choose to embrace cellular and gain an early foothold in this inevitable convergence space. Just expect to need patience. "The lowest hanging fruit is notebook wireless cards," advises Kalman. "You hook up one of these PC Card adapters, and you can get on Verizon or Sprint or whatever network at broadband speed, connected wherever you are. Now you see tier-one manufacturers starting to incorporate those inside the notebooks. Clearly, there is more and more opportunity for a reseller to be a complete solution provider for communications and mobility."
Not all CE product categories relate to home theater. SED also sells GPS systems, for example, from TomTom, Lowrance, and Rand McNally. You might have transport company customers or customers with transport fleets, and GPS could be a great addition for these accounts. In the past, resellers had nothing for such people. You could argue that mass merchants from Best Buy to Target offer GPS, as well, and often at lower prices and/or with more prominent marketing. But this is taking a point product view of things. The object is to approach such convergence categories from a solution standpoint. You're providing a total package for boosting company-wide efficiency and workflow. You're a technology provider, not just a PC reseller. The distributors like SED that can help you succeed with this viewpoint shift are the ones that will help your business grow in the coming years. Seneca Data Now approaching 27 years in business, the North Syracuse, NY-based Seneca Data is now the #2 system builder in the country and keenly focused on the channel. Ninety-two percent of all company sales are to resellers, with a few government and education accounts comprising the rest. Seneca Data specializes in a handful of major verticals, specifically education, government, healthcare, and independent software vendors (ISVs). To serve these markets, the company has developed a remarkably efficient production process for its Nexlink systems line and bolstered this with a range of corporate-oriented add-ons, such as tablets, storage solutions, power products, and networking gear. "It's tough,"says Seneca Data director of marketing Scott Falso, "but we do not compete with off-the-shelf PCs. The services that differentiate us are many. Imaging, for example. Loading the end-user images right here during the production process. We have unique capabilities where the system recovery file includes that image. In typical recoveries, if your system is not working, you can go back to the original system state, meaning the original condition just after the OS installation. We add value by letting customers recover to the state that they originally purchased it in, not just the original OS." Knowing that business verticals often have more stringent requirements than the norm, Seneca Data has worked hard to lift its quality control and design well above the herd. The company recently created an engineering lab, including a thermal testing chamber for analysis of temperature and acoustic performance. Similarly, all Nexlink notebooks are stamped with approval from the Windows Hardware Quality Labs (WHQL) process. Falso notes that these, like nearly all Seneca Data services, were spawned from reseller requests. Another example is the company's package reduction program. If a reseller rolls out 100 PCs to an organization, most buyers would rather have a palette of PC towers, a box of keyboards and mice, a box of software, and so on in order to streamline deployment and cut down on waste. Only about 20% of Seneca Data's business comes from component sales. The remaining 80% is all build-to-order systems. But this doesn't happen by just sitting passively by and waiting for orders. The distributor encourages resellers to make use of its engineering services and, when the circumstances are right, bring Seneca Data experts in for an on-site analysis of ways to help the end-user. One of the distributor's top priorities is helping to elevate each reseller's capabilities, enabling them to do more with existing customers and cultivate new accounts. "We believe we can help our reseller customers grow their business," says Falso. "They're experts in what they do, and we're a larger organization than most of our customers. Like today, we delivering the fifth in a five-part Microsoft webinar series. Microsoft is confusing to a lot of people, and we have dedicated people whose job is to sort through that confusion and figure out what matters most to our customers. Hence things like these webinars for training. We have our e-newsletter for bringing new technologies in front of customers. We also have several seminars a year for vertical markets, like education and health care." Going forward, Seneca Data sees servers and storage being its two fastest growing segments. Being a knowledge-centric company, these two categories play particularly well in regards to building extra value and additional services, such as consulting and training. Resellers looking to cultivate vertical business in these areas should definitely give Seneca Data a spin. SYNNEX Founded in 1980, SYNNEX now flourishes in contract manufacturing and logistics services, much of which flies over the heads of SMB resellers. However, SYNNEX's Technology Solutions Division (TSD), started in mid-2004, should be of keen interest to system builders and VARs. The TSD is comprised of several core units: AIDC solutions for inventory tracking and control, enterprise systems (up through and including UNIX), point of sale, telephony, physical security, document management, and professional print and graphics John Paget, president of the TSD, describes a recent past when many of the vendors involved in the enterprise space couldn't find the expertise necessary in the channel, so a sort of walled-off distribution model evolved wherein specialized distributors were trained to be experts in enterprise technologies that in turned passed this expertise on to their resellers. "About two and a half, maybe three years ago," says Paget, "we crossed over that inflection point where the reseller is more competent than the enterprise distributor. We took a look at that model, which was primarily designed to move product to the Fortune 1000 or 1500, and saw that the SMB end-user is now demanding that same type of solution and complexity that the Fortune 500 get, but you can't come to that market with the same cost structure. So we created a different model. We looked at everything the enterprise people had and built a model that has more technical talent and solutions design in it. We don't perhaps do as much on-site sales as they do, but we believe we do it appropriately and in a competitive manner. Now manufacturers are approaching us with products previously only available in the closed distribution model." All well and good, but what does this mean for your business? As a case in point, when the TSD decided to tackle SAN and NAS solutions, SYNNEX brought in about 30 VARs who at the time were not storage specialists. SYNNEX trained this group, helped to get them certified, leveraged its own demand generation company to launch their sales, and in under one year that set of 30 VARs became the fastest growing reseller set for the manufacturer backing the effort. "In the VoIP world," adds Paget, "when we brought Avaya to the marketplace, we took Avaya to 83 data VARs rather than voice VARs. Again, we've become the second-largest, fastest growing Avaya voice-over-IP distributor. We did not go to people who were already buying that product from another distributor. We went to people who were starting a new business model and enabled them. We wrote the processes for them, the how-to books, and provided the pre- and post-sales support." Clearly, the best type of partnership to develop with SYNNEX isn't one based around one-off systems or buckets of bare componets. This is a partner you approach when you find that you have a dozen attorneys in your client base and you decide that law offices are a sub-vertical you want to pursue, both to find better ways to mine your existing clients as well as jump from them into new accounts. One way in which SYNNEX helps resellers accomplish this is by leveraging the TSD's ISV focus to find the right software developer to match with the reseller. Paget points to one example in which an ISV married VoIP services with an office's existing billing, forms management, and other applications. Of course, VoIP leads neaturally into IP security, network storage, and other areas in which the reseller can build on the initial service. "There are a lot of things coming up around managed services and how you support those," says Paget. "That's a very broad topic that runs all the way from print managed services to network support and remote server monitoring. It's probably the next breakthrough in the distribution world as resellers are needing to build expertise in the SMB market, and it's not very well understood. There's probably 2% of the world that's doing that right today. Even if only one-third did it right, it would make a huge difference in the marketplace. We're going to help help them do that." Tech Data Tech Data was the hardest distributor for us to approach on this story. With $20 billion in annual sales and specialties spanning from Apple hardware to imaging to professional A/V to telephony, it's easy to feel like you're staring into the Grand Canyon. But that's good. Every reseller should have a bottomless distributor at its back helping to guide it into the right training opportunities, incentive programs, and partnerships. For instance, the TechSelect program helps to pair member resellers with complementary capabilities, such as when a networking house needs help on a job from another reseller focused on point-of-sale systems. TechSelect is also a key vehicle resellers can use for digging into the managed services space.
"We could spend a few hours just talking about the array of services we offer," says Tech Data president Ken Lamneck, "everything from systems engineering, tech support, configuration services, extensive e-commerce tools—many different aspects of what we can provide on technical training, conferences, integration support, credit being at the top of the list, logistics, our in-house marketing services. If they need to hire a call-out campaign, we can do that, as well. But resellers today are very solutions-focused, whether it's people in the components space trying to buy a bill of materials or a reseller doing networking, they'll on average buy 3.8 different vendors' products for their solution. It used to be that you could go to one vendor for a solution. The world has changed. We help put those pieces together with one-stop shopping and the fact that we carry all those lines." Without question, Tech Data is one of the top logisitics distributors in the world. The company serves 60,000 resellers each quarter and has a 99.7% same-day ship rate, including on orders placed at 5:00 local time, and those can be blind ship orders seeming to originate from the reseller. The distributor does a huge business in components, whitebox integration, and software. Tech Data plans to capitalize on its status as the latest VBI distributor with several novel solutions built on Intel's platform, including fully pre-configured VBI systems. Naturally, Tech Data has long experience in the enterprise space, and with today's exploding interest in blade servers and storage solutions, the company's advanced infrastructure division is working on ways to bring these high-end technologies down to where the bulk of resellers can make money with them. According to Pete Peterson, Tech Data's senior vice president of systems business, Tech Data's business in branded servers and storage has mushroomed in the last two to three years, and his division is rolling out a host of services to help small- to medium-sized VARs drive those solutions into SMB environments. Of course, anyone doing servers will eventually need to climb and conquer the virtualization hill, and Tech Data has devoted a lot of time into becoming expert in this field, whether its with vendors like XenSource or through platforms such as Intel's vPro. "Now," says Lamneck, "for the first time, we have virtualization-based products with the right horsepower and price points but were designed and simplified for the reseller and their end-users. All that's coming together, so we're trying to make sure those beefier servers are procured through us and our partnerships by making a substantial investment to form a separate division to make sure we can provide the necessary support to address that. It's an exciting time, and I think you'll see a long runway ahead for the next three or four years. Yes, we're concerned about virtualization reducing the number of boxes sold, but we think there will be substantial growth overall because we think virtualization will allow quite a few companies to upgrade and move into these solutions." As indicated previously, Tech Data's credit offerings are expansive, the company offers marketing services galore, and probably no other distributor offers more education opportunities. Tier-one distributors may not pair up ideally with small whitebox builders, but for larger resellers, VARs of all stripes, and those looking to shift into forward-looking technologies, Tech Data is a partner not to miss. Pick Several There is no ideal distributor. Just as your business changes over time, distributors change, too, and the ways in which each distributor will mesh with your operation will shift in kind. While there may be advantages to centering most of your ordering with one disty, you should always keep a fresh viewpoint. Play the field, shop around. Because if you get too used to doing one thing a certain way with a given source, you'll be blind to the growth opportunities other distributors have for you—opportunities that could make the difference between success and stagnation. We've covered a wide range of distribution partners here, and all of them have much more to show you than what we've described. Check them out, forge some bonds, and let each take a stab at making you more profitable. E-tail is no long-term answer. The channel was built on the value that distribution brings to the table, and in this time of continuing channel consolidation and rising OEM prominence, strong distributors may be your best friends and sturdiest life lines. |
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