Delivering Value: Beyond Price & Availability

Sky IT Group's Hakami said some vendors' closed distribution models likely account for why specialty distributors are sought for more unique product lines. "We specialize in the IBM iSeries. Only a very few carry that. We have to choose one of them," Hakami said. "You can't buy that from CDW or Tech Data. But those companies have the breadth of networking products that we need when we get into the Intel space."

For custom-system builders and component distributors, alternative suppliers and mass merchants, price and availability tended to rise to the top. About 27.9 percent of solution providers cited price and availability as their main reason for buying from custom-system and component distributors, while a significant 48.2 percent did so for alternative sources such as online e-tailers like Tiger Direct, Newegg.com and Buy.com.

The study also showed solution providers were making a higher percentage of total purchases from alternative sources, which rose from 9.3 percent last year to 16.8 percent this year. Darren McBride, CEO of Sierra Computers, a Reno, Nev., solution provider, advises his employees to check out Newegg.com and others like it when they have time to shop around. McBride calls that part of his new "co-opetition" stance with retailers and direct marketer giants like CDW.

"If they have Microsoft Office for less money for whatever reason that no one ever seems to explain, then I am stupid to buy it from Ingram when my customer can get it for $30 cheaper from CDW. I'm not going to fight that battle anymore," he said.

Alternative sources now account for about 5 percent of Sierra Computers' sourcing purchases, he said. Both McBride and A-Prompt's Stolly also said many alternative sources and direct marketers have a distinct advantage over distributors because of their online ordering systems. McBride said he finds it much easier to get pricing for a software product such as Microsoft's Terminal Services license from one of the e-tailer sites than the Ingram Micro site, for example.

Stolly said the process of giving a distributor more revenue should not be as cumbersome as it is. "If it takes 20 minutes to place an order, I'd rather pay a little more and order it in a quarter of the time," Stolly said.

While price and availability and ease of doing business are continuing to drive solution providers to shop alternative sources, solution providers are also more likely to characterize those sources as minor, rather than major or strategic. If this year's Sourcing Study has any message for distributors, it is that their ability to forge close relationships with solution providers is crucially important in a market where relationships ultimately trump price and availability.

Wes Herschberger, CEO of MapleTronics, a solution provider based in Goshen, Ind., said he has seen a number of distributors rise and falter over the years when it comes to establishing relationships with MapleTronics.

"I have been in this business for a long time and seen one distributor replace another time and time again as the king," he said. "It always comes down to the same key thing: the people that are contacting us. It's all about how strong the relationships are that we can build with these people."

STEVEN BURKE contributed to this story.