Tech Data CEO: 3 Things A VAR Needs To Know To Make The Most Of A Distribution Relationship


Despite a growing bond between VARs and distribution, Tech Data CEO Bob Dutkowsky said that most VAR partners aren't taking full advantage of the relationship. In fact, he said that the average Tech Data VAR uses only between 25 percent to 50 percent of the distributor's available capabilities.

He said, however, that there are some key areas that VARs would find useful. Dutkowsky said that the three biggest areas that he sees Tech Data resellers missing out on are technical capabilities, inventory and configuration.

"My advice to a reseller would be to really get to understand the full set of services that [the distributor] can offer and find the perfect match of what you do yourself and what we [can] help you do. And don't do the things that you can't make money at and that you're not good at, because we can do them better, faster [and] cheaper," Dutkowsky said.

[Related: Tech Data CEO Highlights 'Best First Quarter Ever' For Sales, But Earnings Down Overall For Q1]

1. Technical Capabilities

While resellers all view Tech Data differently and approach the distributor for specific tasks, Dutkowsky said it is important that resellers recognize the "deep technical skills" available to them. Whether it's a broad range of tasks or just one area that the reseller might not be as strong in, Dutkowsky said that distribution can be a great way to fill in those technical gaps to make sure the clients are serviced fully.

2. Configuration

Beyond taking advantage of the technical aspects of the business, in some cases, the distributor can provide specific configuration capabilities for their partners, but many don't take advantage of that, Dutkowsky said. For example, he said that if an end user wants a specific sound card in a laptop, some resellers have staff that do that. Resellers that don't have the staff to handle that task can turn to distribution, he said.

Beyond just outsourcing to free up staff, Dutkowsky said that, because of the distributor's scale, it can be much more efficient at configuration. While a reseller might be able to do one such configuration a month, Tech Data does thousands, meaning the company can do it "better, faster [and] cheaper" than a reseller can, he said.

"Configuration is another skill we have, another value-add, that not every reseller takes advantage of. But some do," Dutkowsky said.

3. Inventory

Smaller resellers often keep inventory on their shelves, but Tech Data can ship inventory within two days almost all of the time. Some smaller resellers have made the choice to completely outsource their inventory to the distributor, he said.

"Why should [a VAR] have any inventory?" Dutkowsky asked. "We're like their virtual inventory. Not everyone takes advantage of that."

Why are resellers holding back?

The reason why a reseller might not take advantage of some of these options is because they are historically used to doing these things themselves. They might have a configuration center, inventory and maybe a staff on site for technical problems.

"They're not just going to stop doing it because we can do it, but that's where we spend our time with the resellers, showing them all of this breadth of capability that we have," Dutkowsky said. "We're constantly investing in more things to help our resellers be successful in the market."

The challenge on the distributor side of the equation is making sure to communicate those options to the resellers, he said.

"That's, in our case, the $27 billion-a-year question," Dutkowsky said. "We're telling them about all these other kinds of value-adds that we have, and hope that they explore those offerings with us."

PUBLISHED JUNE 2, 2014