SMB Solution Providers Still Value Distributors, But Fall Back On E-Tailers


Although online e-tailers like Newegg and Amazon have gained ground with VARs looking to purchase technology products, IT distribution remains the dominant source of products for the channel.

Newegg, Amazon and TigerDirect are known for their cheap prices and convenience, however, VARs and solution providers are sticking with distribution, according to Todd Swank, senior director of product marketing at Equus Computer Systems, a Minneapolis-based system builder.

"Distribution adds a lot of value to the reseller community that they don’t get from Newegg or Amazon when it comes to training, support, financing options," said Swank. "E-tailers only focus on price, getting product out there and turning around inventory. Distributors are focused on helping the VAR and reseller community build their business for the long term."

[Related: HP To Synnex Varnex Attendees: The Channel Is Our Priority]

Berkeley, Calif.-based ArcSource Consulting utilizes all methods in making purchases, said Dave Monk, CEO of the IT and cloud solutions provider.

"We are a majority distribution, over 65 percent [but] we use Ingram Micro, Amazon and Computer Buyer Warehouse, and it really depends on the type of product and where we're set up to resell and make the tax complications much less complex," said Monk.

When it comes to choosing a source for products, it depends on the type of product and how fast it ships, said Monk.

"It's a mix of pricing consideration and inventory consideration [as] every type of product is widely varying," said Monk. "If they say they can readily ship today, they must do what we ask for [and] when we are competing on the thinner margin products, we do know our clients check Amazon, so we check for the retail price that we need to charge and sometimes we can refulfill if our distribution partner doesn’t have something in stock."

Scott Samborn, chief business development officer and principal of Vantage Point Solutions Group, primarily utilizes distributors such as Ingram Micro, Tech Data and Synnex, and feels that he has better ties going through distributors as opposed to online e-tailers. Only when the distributors are out of stock will the Salisbury, Md.-based managed service provider use Amazon or Newegg, Samborn said.

"If I need to buy 10 Lenovo PCs and I'm buying from Newegg, Lenovo has no idea who I am, so for me there is no benefit to buy from Newegg and Amazon," said Samborn. "To them I am just another little fish in the big sea."

Partnering with distributors is significant for solution providers, said Samborn.

"It's a different channel when I spend half a million dollars with Lenovo or HP [where] I become a bigger fish," said Samborn. "The benefits we get are streamlined ordering where we order things online and in bulk, and we get advice when it comes to ordering parts and finding that correct machine, so there is value for us there as well."

Luigi Giovanetti, co-founder of CPU Sales and Service, a Waltham, Mass.-based solution provider, also uses distributors to get its products and will only turn to Newegg and Amazon when distribution is out of a product.

"The reason we go through those secondary sources are to fill out an order but we always go through distribution; we never go around the other way first," said Giovanetti. "We only have to do that if a customer has a request and we can't find it with distribution; I have to find it at Amazon or Newegg to keep the customer satisfied."

The value of the partnership between the two companies is the main benefit of using a distributor, said Giovanetti.

"[Distributors] are certified with manufacturers and can help us with problems or questions, looking to confirm configuration and issues," said Giovanetti. "The main reason we go through distribution is the relationship we have with them."

PUBLISHED NOV. 22, 2013