Why Evolution In The Distribution Market Is A Positive Force
By Jason Bystrak, D&H Distributing
D&H has confirmed several truths as one of the three remaining broadline channel distributors in the wake of the recent Tech Data/Synnex merger. First and foremost: Change in the marketplace is good. It drives progress and creates opportunities. The fact that three strong distribution companies are serving the IT channel only reinforces the value of the distributor as a strategic advisor, a value-added partner, and an aggregator of services that can help MSPs and VARs succeed and grow.
The second conclusion: Consolidation also brings the differences between competitors into starker contrast. That’s a positive thing as well since it reinforces the value propositions of the companies that have been robust enough to persist and succeed over the years. (And D&H is going into its 104th year.)
We know that distribution isn’t going anywhere, even as larger players converge. The channel partner community will always need distribution options outside just an enterprise-focused offering. Small and mid-tier companies make up close to 99% of the businesses in our economy. They’re a vital and immutable part of what makes North America a profitable market. SMB and mid-market reseller organizations need distribution services that cater to their unique requirements. Many of these resellers are focused on growth and moving “upstream” to support larger end customers, yet need augmented resources to cost-effectively realize those goals, including professional services, sales enablement, and financing options.
A distribution company that’s focused on SMB and the mid-market will inherently be nimbler and more responsive than a larger-scale counterpart. A more agile company also will likely be better positioned to offer customized services and to adapt more rapidly to market developments. If 2020 has taught the world anything, it’s how essential it is to meet challenges and pivot in the face of disruption. Resilience is key. When large players consolidate, it makes the remaining competitors all the more relevant. The companies left standing have confirmed the validity of their partnership models. They’ve earned the right to carry on—and thrive.
The flip side of market consolidation is that it can be accompanied by shifts within those merging entities. Major revolutions often result in redundancy of personnel, fluctuations in company direction, or reductions in credit extensions. In addition, when the amount of distribution companies contracts, resellers and technology providers may feel the need to reexamine their partnership strategies to remain diversified. It’s rarely wise to put all of one’s eggs in a single basket, so to speak, and run the risk of sourcing from only one or two suppliers. Such developments may generate opportunities for new and fruitful business partnerships that might not otherwise have been established.
If credit extensions are curtailed, it might affect the ability of certain partners to scale and grow as the post-COVID economy starts to revitalize. Such added financial flexibility can help partners profit from a technology upgrade cycle that we foresee on the horizon, fueled by the sudden growth of hybrid and remote workplace environments that are now becoming more permanent.
It’s also advantageous to have access to a distributor that’s focused on North America, as opposed to companies whose offerings are diluted across a range of global markets. Ideally, a distribution company should be able to deliver service from a tenured team that is both easily accessible and immersed in the dynamics of the partner’s native marketplace. Your distribution partner should be investing in your local channel, dedicating resources and developing opportunities in that space, helping MSPs and VARs to grow in that arena.
The distribution industry has evolved beyond being just a product-based business. It’s transitioning toward services and hosted offerings, including the expanding “XaaS” or everything-as-a-service model, which allows end users to consume technology on a monthly subscription basis. As our offerings become less commoditized and more service-based, the ability to establish solid ongoing relationships with channel partners has become that much more crucial. As one of the largest distributors in the channel, that’s part of the value we plan to bring as the industry emerges from pandemic conditions. With fewer organizations in contention, there may be more opportunities for partners to discover the significance of that agile, partner-centric model.
About The Author
Jason Bystrak is Vice President of Cloud and Services at D&H Distributing.