Internet Resellers Attractive To Those With Backroom Offerings

Distributors will continue to offer more services and backroom capabilities to attract new VARs, said executives at the eighth annual CRN Channel Roundtable.

Internet resellers are especially attractive because of the product-revenue volume and the huge opportunity to provide more than just product, distributor executives said.

"The question you have to ask is, what's the value-add? It's actually with the distributor, not with the Internet site," said Jeffrey McKeever, chairman and chief executive of MicroAge Inc., Tempe, Ariz. "Will Internet resellers be profitable? I don't think there is any money to be made in the product. It's a question of what do you do to the product?"

The Internet will be the key, said Steve Raymund, chairman and chief executive of Tech Data Corp., Clearwater, Fla. "Nobody will be able to operate without a Web site for order tracking, order placement, product information and so on, which creates an opportunity for a distributor with the resources to assist them in that regard, creating kind of a reseller-in-a-box Web site," he said.

Most distributors are recruiting Internet resellers with new programs, but the solutions will take time to develop, said Raymund. "You don't snap your fingers and have an elegant solution overnight," he said. "It does require some discipline to lay out your plans and proceed in a methodical fashion to identify what's the highest priority and try to execute on that first."

Resellers increasingly are using the Internet because the distributor is expanding its Web-related programs, said Bob Huang, president and chief executive of Synnex Information Technologies Inc., Fremont, Calif. "Some [resellers] do come to us [for the purpose of] using our Web engines," he said.

Distributors need to take a proactive approach in bringing resellers E-commerce solutions, rather than waiting for resellers to come to them, said Scott Munro, chairman and chief executive of Savoir Technology Group Inc., Campbell, Calif.

"If you can bring them a solution to take to their customer base with a quotation engine [and] sales force automation, you can end up as a distributor being a host function," he said.

The Internet brings new resellers that want solutions quicker than in the past, said Jim Illson, president and chief operating officer of Merisel Inc., El Segundo, Calif.

"The most interesting phenomenon I've seen is the speed and turnaround time in which people require the goods from us. It's almost a 'you've got to have it immediately' need and we see a lot of pressure to be able to turn around, respond quickly and in many cases drop ship the products directly from our warehouse to the end user," Illson said.

Realizing the importance of backroom capabilities, some Web integrators have offered distributors a piece of their companies in exchange for taking over backroom functions, said distributor executives.

Although opportunities abound, no distributor has the capacity to attack all markets, said Mike Long, president of Gates/Arrow Distributing, Greenville, S.C., so companies try to focus on certain markets to attract new customers.

"Obviously you still have the big guys that are going after market share, but there's a lot of value-add niche spots in the market that are still profitable. There's going to be opportunities going forward for everybody," Long said. "It's really time for distributors to make a commitment of what business are they in and you see the two big guys doing it and some of the smaller-tier guys doing it and there's a whole host in the middle that still have that decision to make."

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