Technology increasingly relies on an ecosystem for successful delivery, reports the distribution industry. Technology companies are moving more and more goods and services through distributors, particularly to effectively reach and support the solution providers now commonly known as the “trusted advisors” of SMBs and many larger enterprises globally, it says.
“We’ve seen a poignant shift in how technology distributors are viewed and engaged today,” commented GTDC CEO Tim Curran (pictured), who delivered a keynote entitled Delivering New Value in Diversifying Channels. “Three decades ago, distributors were typically perceived as pick-pack-ship machines that also extended financing to VARs and other types of resellers,” he said. “Pricing, credit and on-time delivery remain critical, of course, yet by no means define what distributors and solution providers are all about in the digital era. It’s now about strategic problem solving that distributors, solution providers and vendor partners conduct together on all fronts.”
As Curran alluded to in his keynote, those fronts include unprecedented innovation in areas ranging from cloud, security and IoT to business intelligence, mobile solutions and hyperconverged infrastructure. “What often gets overlooked is the renewed higher dependency on partnerships for success in the interconnected ecosystems environment. Partnership innovation is as critical as technological breakthroughs,” Curran said.
Technology distribution industry trends reflect the progress, as YTD sales in the US are up considerably (based on NPD Distributor Track, which aggregates actual distribution industry sales-out data including GTDC member business down to the SKU level):
- US distribution industry sales this year are up nearly $2bn compared to the first seven months of 2017 and $3bn compared to the first seven months of 2016
- The 13-week revenue average tracked at 6% higher compared to the prior-year period (for the most recently reported week, August 12, 2018), which is more than double the forecasted 2018 U.S. GDP
- Three-month moving average of distributor sales over the past 18 months surpassed $5bn in the US, a new milestone
- Bellwether categories such as All PCs, Servers and Tablets grew 15% in the first seven months of 2018 compared to the same period last year
- Commercial Software & Platform as a Service accelerated 6% in the first seven months of 2018 compared to the same period last year, and the category’s overall growth rate has outpaced the distribution industry’s aggregate total hardware sales growth rate for the period
- Data Centers and Cybersecurity solutions are among numerous other bright spots, tracking at 5% and 7% growth over the past 12 months
- 400 new vendors were added to distributor portfolios in the U.S. alone over the past 24 months
Distributors are introducing a broad range of new services to address new market demands from both vendors and solution providers, he says. To help vendor partners better understand the increasing value of technology distributors at the center of dynamic ecosystems, the GTDC commissioned an independent report entitled Priming Partnerships in Changing Channels and introduced an online hub, GTDC Vendor Partner Central, with additional resources for companies at any stage of establishing or looking to strengthen distribution partnerships.
“Vendors are embracing indirect routes to market in unparalleled ways due to the efficiency and value,” Curran explained, noting that the new vendor guide to distribution partnerships was developed over the past eight weeks based on extensive interviews with channel executives, solution providers and distribution leaders worldwide.
“The channel’s impact begins with unmatched reach and trusted bonds established with end customers, often over many years,” Curran said. “Solution provider brands are superseding those of individual products, because the total solution is what really matters to end users … ensuring it works as promised or gets there with the channel specialist’s reputation on the line. Distributors and vendor partners need to collectively enable channel success, as it goes to the heart of what everyone in the industry must strive to achieve – the end customer’s ultimate satisfaction.”
