Mike,

I think you summed it up pretty well.

I think the problem is that there is an identity crisis in the Distribution/VAR/Manufacturer businesses. I don't think its the fault of the vendors, but just the nature of a competitive industry. Everyone's looking for a way to cut some costs to be more competitive. Everyone thinks they can do better than the other guy. When something is working or not working, somebody is always trying to find a better way. As a result everyone tries to be everything to everyone, or tries to replicate what someone else is doing that appeared to be working. Then somebody always tries to cut someone out of the loop, so the person cut out of the loop then tries to fight back and cut someone else out of the loop. Everyone wants to get as close to the manufacturer as possible, every one wants to get as close to the client as possible. Then support comes to play, and then everyone realizes why they want to hide and get as far away from the customer as possible. Then finance, availabilty, or lack of competition to effect change comes to play, and everyone learns why they need to get as far away as possible from the manufacturer. Its vicious cycle that constantly changes and goes around in circles. It would be OK, if everyone learned from the mistakes, but what usually happens is that history repeats itself and the cycle goes around and around in circles. But thats not the vendor's fault, times change, and what worked in the past may not still work later down the road. And peoples business change, and sometimes jsut want to do something new, or capitolize on the talents of a new asset or staff member. This creates the identity crisis. I think the most successful vendors (distributors/VARs/Manufacturer) are the ones that solve this identity crisis and are clear on exactly what it is that they want to be, and the roile they need to play, and the advantage of what they offer.

For distribution its simple: "availabilty and finance". Get gear to people quicker, consolidate shipping costs nationwide to lower end cost of to delivery locally quicker. Thats what a distributor does. And the distributer that does it best will have the abilty to acheive lowest cost and the most clients. But I do not think that "distribution" necessarilly has to limit target client base or deliver lowest price. That is another issue realted to "margin". I think the mistakes distributors make is that they confuse needing "margin" with "adding value". Margin is tied to the type of client and the cost to support them. You charge more margin if the customer will be more headache such as lower volume purchases or less loyal in its buying patterns, or typically pays 30 days late. Charging higher margin allows a distributor to keep those difficult client and still ahve financial gain, effectively increasing volume and profits. Where the problem comes in is "adding value", what everyone typically wants to do to increase margins. But by adding value often the end result is the distributor crosses the line of their role, and often gains an identity crisis of what they are. A distributor adding value is really a Mega-VAR. Their is nothing wrong with that, but its a good way to alienate a VAR channel. And the Mega-VAR should expect a certain amount of the VAR channel to reciprocate and try to go around them. So I think a distributor needs to be careful about what value it is that they add, meaning adding value to make them a better distriubtor compared to adding value that someone else lower in the food chain already offers.

But the big secret is realizing the core essential value a company uniquely offers. I've had difficulty with this in my own business. For example, a WISP can't be both the best distributor and the best ISP, they are two different businesses with contradicting demand. In our case even deciding what message goes on marketing mailers. What is it exactly that WISPs provide?

We learned some of our core unique benefits were....
"Broadband is already in the building" -  quick guaranteed availability.
"If your business lost Broadband for a day, what would it cost you?" - 2 hr repair time, true diverse path redundancy, again optimizing availabilty to broadband.
These are things that we can uniquely offer that are worth paying for.

I can attempt to sell 99.99% reliabilty, lower price, better service, faster speed, until I am blue in the face, and deliver those features in many cases, or possibly the best compromise of all three. But the truth is, everyone else also can offer those messages in some shape or form. If you look long enough, there will always be someone faster or someone cheaper. I'm more effective selling availabilty, my unique asset to my targeted prospects. (Why I can offer availabilty better, is another discussion). If it all boils down to one core thing, "availabilty", why do we bother with any other messages?

I think the same needs to apply to distriubtors. Defining why people buy from them and focus most on that. The other value add is just gravy, to help increase margin, but not the reason people buy. For example, I buy from Electrocomm for two reasons.... They gave me terms, and they carry stock of a couple products I need regularly. I buy from Trango, because they are the only place to buy it from. I bought from WISP-Router, because they tended to have stock of Mikrotik and PacWireless antennas, and easiest for me to order after business hours with their unique web system, and when I always ordered last minute UPS red, its important that the distributor had everything in one place. (PS. I no longer buy from them anymore for other reasons). The point I'm making is, for distriubution to WISPs, it is also because of "availabilty". Availabilty can be expanded to many sub-categories (but still availabilty). "availabilty at the right cost", "availabilty with the lowest shipping costs", "availabilty because of ease of ordering", "availabilty because terms avaoid cash flow barriers", "Availabilty- because unique authorized channel for a specific manufacturer", availabilty because the staff is knowledgeable and can help you find what you are looking for", "availabilty when things break, with fast RMA turnaround". But a distribuotr can add these value-adds without losing their identity of what it is that they do.

If I were looking for a job in distribution, I would pick a distributor who could clearly describe their role and value in two words, and was the most competitive at offering that. And then my screening process afte that would be to investigate what there policies were on customer service to understand what value they put on a customer, to make sure their policies would not alienate clients. I don't care how good a company delivers its core competency, if they do things that alienate clients clients don't like to do business with them.

Thats my 2 cents on distribution.

To answer Jeff's question. Who someone likes to buy from is not always who they buy from for reasons beyond their control. For example, I really like to buy from Electrocomm, they offer everything that I'd want from a distributor, except, they don't carry the products that I most use. (although not by their choice, I'm a Trango house". I really liked to buy from Defacto because of service, but again, I use Trango. I think a better question to ask is what product are people buying today? And that is going to be telling you where they buy from. Comparing the big distributors like Tesscos, Electrocomms, and Talley's, are not fair to compare against small distributors of OEM components. If WISPs want spare parts for Mikrotik or StarOS OEM system, sales aren't going to be going to Tessco and Electrocom for those products. For sales people it depends who their target client base is. I like Tessco because they have availabilty of anything for a fair price, if I can wait for the gear. Its always the last-in-line place I shop, because they can always get what I need, and no need to look further. But they are never the fist palce I call, because their availabilty is worse than others after considering their shipping policies that suck. I can order from Double Radius and have the gear tommorrow at ground shipping costs. I usually call ElectroCom first (if product they would carry), as I like the people, and I know they'll try hard to get me what I need at a fair price. If I'm looking for a hard to find item, I might go straight to WinnComm, because on those special order items, WinnComm might actually already have it in stock at a heavy discount. Does someone want to get all the specialty order business, or do they want to get some of the orders in a higher volume business of standard common stock stuff? So again it goes back to, what is it that a distributor is trying to be. The goal may not be to be something to everyone. Their just needs to be a solid market for what you offer.

If I was a sales person looking for a job, the other thing I'd look for is a vendor that was generous on offering terms. Offering terms is the number one way to attract business. But there is risks to that, and you need a distributor in the position that it is standard proceedure for that risk to be taken, to optimize ease of sales for everyone.

Tom DeReggi
RapidDSL & Wireless, Inc
IntAirNet- Fixed Wireless Broadband


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