The Price Is Right

To put it simply: More VARs are looking for the best price on the Internet and then sourcing products from a wide variety of alternative sources ranging from e-tailers such as Newegg.com to national retailers such as Best Buy to product resellers such as CDW and PC Connection.

There are some ominous signs for broadline distributors in the study. This year, 80.5 percent of survey respondents said they purchased products from distributors, compared with 86.3 percent in 2003. This illustrates the poor job many distributors are doing when it comes to establishing tight ties with small solution providers. For the most part, many distributors are not delivering Web sites and services that bring meaningful value to small VARs and their customers.

Distribution giant Ingram Micro, for example, has been singled out anecdotally by several VARs for not investing more to make it easier for them to do business online. In the absence of these services, many are turning to the superior Internet experience as well as price, pick, pack and ship services promised by companies such as Newegg.com, which offers next-day shipping. It is no secret that a number of broadline distributors merely give lip service to creating substantive programs that serve small VARs generating less than $1.5 million in annual sales. D&H is a notable exception—the distributor has stepped up with an outstanding Web site, solid pricing and programs, and strong field-rep support for small VARs.

One other factor driving the tendency to shop around is the fact that many vendors have abdicated their responsibility to provide rational pricing and product strategies that truly differentiate their consumer retail products from the business products sold through VARs. Some vendors compound the problem by selling products online on their own Web sites at lower prices than VARs can get from their longtime distribution partners. Call it the mad, mad, mad world of technology product pricing.

When all is said and done, most distributors and vendors are simply not doing enough to provide value to small VARs and consultants. As long as this continues, this silent majority will continue to shop where the price is right.

Who do you think has the right price? Let me know at (781) 839-1221 or via e-mail at [email protected].