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					                               Distribution Outlook
                 The Impact on Sales of Computer Products
                  Prepared for the Global Technology Distribution Council


Richard March
rmarch@cmp.com                                 ®
                                      Reality Research & Consulting
                                               Distribution Outlook




Methodology

  Market projections are       Product purchasing volumes are
  based on purchase source     based on telephone interviews with
  data from phone              300 reseller organizations and 100
  interviews with 4,000        ASP and ISP organizations in August,
  North American (US and       September and October 2001.
  Canada) reseller             Combined data reflects +/- 5 percent
  organizations in July and    margin of error.
  August 2001. Data reflects
                               Reseller comments are based on
  +/- 1.6 percent margin of
                               telephone qualitative interviews with
  error.
                               reseller organizations conducted in
                               November 2001.




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IT Products Value-Added Supply Chain


IT Product Manufacturers: Computers, Software, Networking


         First Tier: Commercial and Industrial Distributors




   Second Tier: Resellers, Systems Integrators, Consultants



      End-Customers: Businesses, Public Sector, Consumers
 Note: Data in this study focuses primarily on business-to-business product purchases made by “Second Tier”
 organizations from “First Tier” organizations, and business issues between the “First Tier” and “Second Tier.”
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Market Dynamics
 The volume of computer product purchases by resellers in North America is
  estimated at $119.1 billion for the period from October 2000 through
  September 2001. This reflects a decrease of 8.3 percent compared to the
  prior annual period from October 1999 through September 2000.

 Computer product purchases by resellers made through distributors from
  October 2000 through September 2001 is estimated at $71.5 billion. This
  reflects a decrease of 7.5 percent compared to the prior annual period.

 In 2000 and 2001, the estimated volume of computer product purchases
  made by resellers through distributors remained consistent at approximately
  60 percent of all computer product purchases by resellers.

 Although an economic downturn resulted in a smaller market, the overall
  distributor market share remained constant year to year.




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Market Dynamics
 Overall value of distributors to resellers’ businesses remained consistent in
  2001 versus 2000. Asked to rate the value of their primary distributor to their
  overall business on a scale where 1 is “No Value” and 5 is “Extremely
  Valuable,” resellers rated distributors’ value at 4.




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Purchases by Resellers Made Through First-Tier Distributors

   In Billions of Dollars (North America)*

                                             $77.3
                                                                            $71.5
             $69.4




             1999                            2000                           2001
            Percent of total computer product reseller purchases:
              58%                              60%                              60%
 *reflects January-September for each year and October-December of prior year
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Reseller Purchases Financed with Distributor Credit
In this $71.5 billion market,
distributors financed $39.3 billion
in purchases by second-tier resellers
in 2001. This represents 55% of all
purchases.

In 2000, distributors financed $32.7
billion in purchases by resellers,
representing 42.3% of all purchases.
The increased volume of credit in 2001
sought by resellers reflects a shortage
of capital amid an economic slowdown
and a greater reliance on distributors
by resellers for financing.

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Purchases Financed through Distributor Credit
What percent of all of your computer product purchases made from all distributors in the past 12 months were
based on some form of credit extended by the distributor?




                                                                                                                               2001
                                                                                                                               2000
                                                                                                             55%




                                                                                               42%




Conclusion: Distributors historically have served as the financial infrastructure of the two-tier supply chain for computer products.
This credit function benefits product manufacturers that are unable to administrate financing for thousands of resellers, and, in turn,
benefits cash-constrained resellers with credit to fund product purchases.
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  Business Value of Distributors
  Considering such issues as access to product information, credit and ordering and shipment of products,
  please rate the value of your primary distributor to your company’s overall business. (Rated on a scale of 1 to
  5 where 1 is “No Value” and 5 is “Extremely Valuable”.)


                                              1                 2                   3                  4                  5




                                                                                                        4.0                      2001
                                                                                                                                 2000



                                                                                                        4.0




Conclusion: The value of the primary distributor to the reseller’s overall business is consistent year to year, but the sluggish economy
in 2001 has led to more specific evaluation and appreciation of distributor services, resulting in higher importance and satisfaction
ratings of the individual distributor services provided.
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     Resellers Explain the Business Value of Distributors
 “Those distributor services such as product availability, logistics and support are all
  competitive advantages that we utilize as part of our business process. We find that
  product availability and the ability to provide products and support on time is
  something that our customers value.”

 “We think they (distributors) are continually improving their processes. They are doing
  more than they used to do. Things like on-line tracking of orders are improvements.
  There’s also the tech support and other services that they are adding that make a
  difference in our business.”

 “It’s service, quick response, the support on the product – all the technical support.
  When we do have issues, they call back in a timely response. The value to our
  customers is that I can guarantee I will have it (the product) to them the next day.”

 “Right now, product availability and tracking of shipments are the big things. Knowing
  when it (the product) is going to arrive so I can schedule my staff to meet it at the
  customer’s site is critical. I can’t afford having people sitting around.”




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    Product Purchase Sources
    Considering the following purchase sources, what percent of your company’s computer product purchases (including systems,
    software and networking hardware) were actually made and ordered from the following sources in the last 12 months?



                           Distributor telesales rep                                                               38%



                           Distributor Internet site                                            23%



   Direct through product manufacturer rep                                       12%



                     Local Reseller (Gray Market)                                12%



           Online retailer/catalog Internet site                           7%



            Product manufacturer Internet site                          5%



  EDI-based or XML-based distributor order                            3%


Conclusion: Although purchases through telesales reps account for the highest percentage, more than one-fifth of purchases are now
made through distributor Internet sites. This is consistent with distributor efforts to encourage Internet purchases. Also, purchases
made through online retailers and catalog sites reflect significant volumes of products sourced by these online retailers and catalog
sites from distributors.                                                            ®
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 Product Purchase Sources – ISPs/ASPs
 Considering the following purchase sources, what percent of your company’s computer product purchases (including systems,
 software and networking hardware) were actually made and ordered from the following sources in the last 12 months?



                       Distributor Internet site                                                    31%



                      Distributor telesales rep                                                   29%



 Direct through product manufacturer rep                                   12%



       Online retailer/catalog Internet site                              11%



                 Local Reseller (Gray Market)                         7%



        Product manufacturer Internet site                            7%



EDI-based or XML-based distributor order                       2%




 Conclusion: The volume of products purchased by ISPs and ASPs from distributor Internet sites and distributor telesales reps is
 nearly equal, reflecting a higher reliance on e-business processes by ISPs and ASPs compared to traditional resellers.
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Pre-Sales Information Sources
Considering the following sources of information related to purchasing, which one of these is your primary source for pre-sales product
information in the purchasing process?




Product manufacturer Internet site                                                                                   45%




                 Distributor telesales rep                                         17%




                 Distributor Internet site                                     15%




              Product manufacturer rep                                       14%




Online retailer/catalog Internet site                                   10%




Conclusion: Product manufacturers are developing their reseller-dedicated sites as product information sources. Distributors,
conversely, are regarded as purchase sources by resellers.
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    Pre-Sales Information Sources – ISPs/ASPs
    Considering the following sources of information related to purchasing, which one of these is your
    primary source for pre-sales product information in the purchasing process?


    Product manufacturer Internet site                                                                                    47%




                  Product manufacturer rep                                              20%




                      Distributor Internet site                                         20%




                     Distributor telesales rep                             9%




                                                                      5%
   Online retailer/catalog Internet site

Conclusion: These findings are consistent with the reseller segment: Product manufacturers are developing their reseller-dedicated sites as
product information sources. Distributors, conversely, are regarded as purchase sources by resellers.
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        Product Category Purchases
        Considering the computer products purchased by your company for resale to end-customers, what percent do the following product
        categories represent of your company’s total dollar product purchases in the last 12 months?




                          Hardware systems                                                             28%




Components (e.g. memory, boards, cards)                                            15%




        Conclusion: Hardware systems are by far the the most frequently-purchased product category. The sizable percentage of
        component purchases, however, indicates that a portion of resellers’ customers are upgrading systems at the component level
        instead of purchasing new systems, which is related to the recession.


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      Product Category Purchases (continued)
      Considering the computer products purchased by your company for resale to end-customers, what percent do the following product
      categories represent of your company’s total dollar product purchases in the last 12 months?




                           Network hardware                                                           14%




          Printers/monitors/projectors                                                           12%




 Application software (incl. Internet Tools)                                                  11%




Systems software such as network OS                                                           11%




                              Storage Products                                             10%




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         Product Category Purchases – ISPs/ASPs
         Considering the computer products purchased by your company for resale to end-customers, what percent do the following product
         categories represent of your company’s total dollar product purchases in the last 12 months?




                                Network hardware                                                                       27%



                                Hardware systems                                                                23%



Components: memory modules, boards, cards                                                 13%



 Application software (incl. Internet Tools)                                         10%



                Printers/monitors/projectors                                       9%



    Systems software such as network OS                                           9%



                                  Storage Products                              8%




        Conclusion: Connectivity infrastructure needs among emerging ISPs and ASPs drive their purchases of network and system
        hardware. As a result, ISPs and ASPs represent a separate customer segment for distributors with product and support
        requirements that are different from resellers.
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              Distributor Importance Ratings
              Considering the following reasons as to why your company purchases computer products from distributors, please rate the
              importance of each reason on a scale of 1 (not important at all) to 5 (most important).
                                                                 1                 2                  3                  4                  5

Ability to determine product availability, shipment                                                                            4.2

          Lowest price compared to other sources                                                                             4.1

      Relationship/trust with distributor sales rep                                                                        4.0

      Post-purchase logistics (order tracking, etc.)                                                                     3.9

                      Ability to aggregate purchases                                                                   3.8

    Pre-sales information on a variety of products                                                                   3.7

      Post-sale tech support on multiple products                                                                    3.7

                      Credit extended by distributor                                                             3.5

           Marketing and sales tools from Internet                                                             3.4

            Conclusion: The high importance ratings of core business-to-business services provided by distributors are related to the economy.
            Because of the slowdown, resellers are seeking greater efficiencies in costs and operations to remain competitive. As a result, they are
            placing high values on services that help achieve these objectives.
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      Distributor Importance Ratings (continued)
      Considering the following reasons as to why your company purchases computer products from distributors, please rate the
      importance of each reason on a scale of 1 (not important at all) to 5 (most important).

                                                              1                  2                  3                   4               5

Outsourced service for logistics and delivery                                                                 3.4

                        Online configuration tools                                                  2.9

                         Training and certification                                         2.5

                                     Lead generation                                        2.5

                      Ability for on-line invoicing                                        2.4

    Outsourced configuration and assembly                                                2.3

Ability to provide an “electronic storefront”                                        2.1

                                      Joint sales calls                            2.0

    Conclusion: Services such as on-line invoicing and providing an “electronic storefront” are somewhat less important than the core
    business-to-business services identified in the prior slide. Also, the highly publicized failures of “dot.coms” have reduced the
    motivation among resellers to radically transform their businesses into e-commerce operations.
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           Importance Ratings:
           Pre-Sales Services Provided by Distributors
           Rate the importance of each reason on a scale of 1 (not important at all) to 5 (most important).
                                                             1                  2                  3                  4               5

     Lowest price compared to other sources                                                                                4.1

 Relationship/trust with distributor sales rep                                                                            4.0
Pre-sales information on a variety of products
                                                                                                                    3.7
                 Credit extended by distributor
                                                                                                               3.5
      Marketing and sales tools from Internet
                                                                                                              3.4
                        Training and certification
                                                                                             2.5

                                    Lead generation                                          2.5

     Outsourced configuration and assembly                                              2.3

                                     Joint sales calls                            2.0
      Conclusion: In a sluggish economy the ability to provide competitive prices becomes more important. Business relationships and trust also
      increase in value as resellers become more competitive through stronger partnerships with their distributors.
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              Importance Ratings: Logistical Support & Services
              Provided by Distributors
              Rate the importance of each reason on a scale of 1 (not important at all) to 5 (most important).


                                                                    1                  2                  3                  4               5

   Ability to determine product availability,
                                                                                                                                   4.2
                                                   shipment

Post-purchase logistics (order tracking, etc.)                                                                               3.9


   One-Stop Shopping, ability to aggregate                                                                                 3.8
                                                  purchases

                                                                                                                         3.7
Post-sale tech support on multiple products

Outsourced service for logistics and delivery                                                                      3.4


          Conclusion: Distributors have become service sources as well as product sources for resellers. The combination of product purchasing,
          logistics support and outsourced services allows resellers to strengthen their balance sheets and focus more on their core
          competencies such as solution sales and support.
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          Importance Ratings:
          E-Commerce Services Provided by Distributors
          Rate the importance of each reason on a scale of 1 (not important at all) to 5 (most important).

                                                               1                  2                 3                  4                   5




                                                                                                    2.9
                     Online configuration tools



                    Ability for on-line invoicing                                           2.4




Ability to provide an “electronic storefront”
                                                                                      2.1




        Conclusion: With the collapse of “dot.coms,” e-commerce services for many resellers are not as important as core logistical and
        support services. An exception are large Internet-based resellers such as CDW, Insight and PC Connection that rely on electronic
        storefront and virtual warehouse capabilities of distributors to meet end-customer purchasing needs.

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       Financing Terms
       What credit terms are used by your company to purchase computer products?


                                        Net 30 days                                                                        85%


                                          Credit card                                                            71%


                                 Cash on delivery                                                48%


                                        Net 15 days                                27%


End-user financing (through distributor)                                       22%


                                        Net 45 days                            20%


                           Net 60 days or more                           13%


                                  Escrow Account                    6%


                                                  Other                  12%




    Conclusion: Use of a variety of financing terms reflects constrained cash-flow and reduced access to capital among resellers related
    to the economic slowdown.                                                        ®
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    Number of Distributors Used for Purchases
    How many distributors or wholesale companies did your company purchase computer products from in the past
    12 months?




                                                                                                               15




Conclusion: The number of distributors used for purchase is directly related to credit issues discussed in the prior slides. As reseller
needs for credit increase, they may exceed credit limits set by existing distribution partners, which will force resellers to open
accounts with new distributors.


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 Role of Primary Distributor
 What percent of all of your total purchases through distribution are made with your primary distributor, the
 distributor used most?




                                                                                                                        65%




Conclusion: Although credit needs may require resellers to increase their number of distribution partners, the majority of purchases by
a typical reseller organization are made through one primary distributor. Business relationship issues such as trust between the reseller
and the distributor sales rep, as noted in a prior slide, are the key drivers in determining the primary distributor.

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           Distributor Satisfaction Ratings
           How would you rate your company’s satisfaction with your primary distributor in the following areas, where 1 is not satisfied at
           all and 5 is extremely satisfied?
                                                            1                  2                   3                4                  5

  Timely info on product, pricing, availability                                                                             4.3


     Timely order confirmation and tracking                                                                                 4.3

        Accurate and on-schedule shipments                                                                                4.2

Aggregation of multiple products and brands                                                                           4.0

             Ability to handle product returns                                                                      3.9

             Access to necessary credit terms                                                                     3.8

               Access to informed account rep                                                                     3.8

       Conclusion: Satisfaction ratings with core, business-to-business services provided by distributors are closely linked to the high
       importance values that resellers assign to these services. The ability of distributors to provide timely and accurate order and shipping
       information are critical factors in helping resellers retain customers in a challenging market.
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         Distributor Satisfaction Ratings (continued)
         How would you rate your company’s satisfaction with your primary distributor in the following areas, where 1 is not satisfied at all
         and 5 is extremely satisfied?
                                                               1                  2                  3                   4                 5


                    Pre-sales technical information                                                                 3.7


                         Post-sale technical support                                                               3.6


Navigation, information and functionality of site                                                             3.4


  Outsourced logistics and delivery of products                                                              3.3


    Marketing and sales tools from Internet site                                                       3.0


 Outsourced systems configuration & assembly                                                           3.0


      Conclusion: The increasing complexity of solutions such as voice/data and storage area networks (SANs) that are sold by resellers
      require technical information on a cross-platform and cross-product basis in pre- and post-sale environments. As distributors become
      the aggregation point for purchase of these complex technologies, they also become the source of tech support and information.
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                Distributor Satisfaction Ratings – ISPs/ASPs
                How would you rate your company’s satisfaction with your primary distributor in the following areas, where 1 (not satisfied at
                all) and 5 (extremely satisfied)?               1                  2                    3                 4                   5

 Provides timely order confirmation & tracking info
                                                                                                                                       4.3
         Provides timely info: pricing, availability &
                                      warehouse location                                                                              4.3

                    Accurate and on-time shipments                                                                               4.2
                    Ability to handle product returns
                                                                                                                                 4.1
Provides aggregation of multiple products & brands
                                       under single order                                                                       4.0

         Provides access to necessary credit terms                                                                              4.0

          Provides access to informed account rep
                                                                                                                          3.8
       Provides necessary pre-sales technical info –
              compatibility & support requirements                                                                      3.7

               Conclusion: High satisfaction ratings with distributor services signify an increasing reliance by ISPs and ASPs on distributors
               as business partners, which is reflected in the high importance values that ISPs and ASPs place on these services. This
               indicates that distributor services are diversifying to meet needs from new business models such as ISPs and ASPs.
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               Distributor Satisfaction Ratings – ISPs/ASPs (continued)
               How would you rate your company’s satisfaction with your primary distributor in the following areas, where 1 (not satisfied at
               all) and 5 (extremely satisfied)?

                                                                 1                  2                  3                   4                  5


Navigation, info & ordering functionality on
                                                                                                                   3.5
                                            Internet site

                    Post sale technical support                                                                    3.5

       Ability for distributor to outsource -
                                 logistics & delivery                                                        3.2


Marketing and sales tools from distributors
                                                                                                           3.1
                                            Internet site

   Outsourced configuration and assembly                                                                   3.1


       Conclusion: The reliance of ISPs and ASPs on Internet-based sources for information and purchasing places more of an emphasis on the
       usability and navigation of Internet sites. The satisfaction ratings imply that distributor Internet sites are meeting the increased demand
       from ISPs and ASPs.
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           Satisfaction Levels:
           Pre-Sales Services Provided by Distributors
           How would you rate your company’s satisfaction with your primary distributor in the following areas, where 1 is not satisfied at
           all and 5 is extremely satisfied?

                                                                 1                   2                  3                   4                  5


                  Access to necessary credit terms                                                                       3.8

                    Access to informed account rep
                                                                                                                         3.8

                     Pre-sales technical information
                                                                                                                       3.7

Navigation, information and functionality of site
                                                                                                                 3.4


    Marketing and sales tools from Internet site
                                                                                                          3.0


 Outsourced systems configuration & assembly                                                              3.0

      Conclusion: Distributor services such as access to credit and information are important to resellers in building bids and responding quickly
      to business opportunities. The distributor’s ability to aggregate access to these services saves resellers time, which is reflected in the
      satisfaction ratings.                                                                ®
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                 Satisfaction Levels – ISPs/ASPS:
                 Pre-Sales Services Provided by Distributors
                 How would you rate your company’s satisfaction with your primary distributor in the following areas, where 1 (not satisfied at
                 all) and 5 (extremely satisfied)?
                                                                         1                  2                 3                   4               5


                                                                                                                                      4.0
          Provides access to necessary credit terms

            Provides access to informed account rep                                                                             3.8

       Provides necessary pre-sales technical info –
                                                                                                                            3.7
                compatibility & support requirements

        Navigation, info & ordering functionality on
                                       Internet site                                                                      3.5

Marketing and sales tools from distributors Internet
                                                 site                                                             3.1

             Outsourced configuration and assembly
                                                                                                                  3.1


         Conclusion: The venture capital funding that was plentiful for ISPs and ASPs in prior years dried up in 2001, putting more cash-flow
         pressure on these emerging business models and emphasizing the importance of access to credit through distributors.
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              Satisfaction Levels: Logistical Support & Services
              Provided by Distributors
              How would you rate your company’s satisfaction with your primary distributor in the following areas, where 1 is not satisfied at
              all and 5 is extremely satisfied?
                                                                   1                2                  3                  4                   5

  Timely info on product, pricing, availability
                                                                                                                                  4.3

      Timely order confirmation and tracking
                                                                                                                                  4.3
          Accurate and on-schedule shipments
                                                                                                                                4.2
Aggregation of multiple products and brands

                                                                                                                            4.0
                Ability to handle product returns


                                                                                                                          3.9
                        Post-sale technical support


Outsourced logistics and delivery of products                                                                 3.3


    Conclusion: As noted earlier, the high satisfaction ratings on logistical topics such as ordering, tracking and shipping emphasize the critical
    role that distributors play in resellers’ customer-retention efforts.
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                 Satisfaction Levels – ISPs/ASPs:
                 Logistical Support & Services Provided by Distributors
                 How would you rate your company’s satisfaction with your primary distributor in the following areas, where 1 (not satisfied at
                 all) and 5 (extremely satisfied)?
                                                                             1                   2                  3                 4                5

        Provides timely order confirmation & tracking info                                                                                       4.3

    Provides timely info: pricing, availability & warehouse
                                                                                                                                                4.3
                                                                location

                              Accurate and on-time shipments                                                                               4.2

                              Ability to handle product returns                                                                           4.1

Provides aggregation of multiple products & brands under
                                                                                                                                          4.0
                                                           single order

                                      Post sale technical support                                                               3.5

  Ability for distributor to outsource - logistics & delivery                                                             3.2

           Conclusion: The ISP and ASP markets continue to mature and develop into secondary sales channels for computer products. As a
           result, the importance and related satisfaction ratings with ordering, tracking, shipping and other logistics are high.
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      Distributor Role in Business Development
      Which of the following services provided by distributors does your company use to help increase sales and/or
      enter new technology markets? (not asked in 2000)



 Phone or e-mail access to technology                                                                                              82%
                  solutions specialists
Local Seminars or technology product                                                                                     65%
                      demonstrations

       Internet-based seminars and/or
                                                                                                       42%
                    discussion groups

Subsidies or co-op money for technical
                                                                                               32%
                              training

   Subsidies or co-op money for sales
                                                                                         24%
                             training
      Conclusion: As distributors extend their service offerings, they are taking an active role in helping resellers expand into new
      technology markets. Typically, distributors provide resellers with a multiple-product “solutions view” of new technologies, which helps
      resellers build their overall businesses. This, in turn, raises reseller sales volumes, benefiting the manufacturers.
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Primary Customer Base
What size company makes up your company’s primary customer base in terms of largest percentage of sales in the
last 12 months?


                                                                                                              32%
        One to 20 employees


                                                                                                              32%
         21 to 100 employees


                                                                                      19%
       101 to 500 employees



More than 500 employees                                                           17%


  Conclusion: Historically, small businesses (100 or fewer employees) have been the primary customer base for resellers. Small
  businesses represent a more stable market for resellers because the reseller typically acts as the outsourced IT department, which
  leads to a high incidence of repeat business. Additionally, when the economy rebounds from the sluggishness of 2001, computer
  product manufacturers expect small business will be a key segment to lead the recovery.
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Conclusions


 Although purchases through telesales reps account for the highest percentage of
  product bought by resellers, more than one-fifth of purchases are now made
  through distributor Internet sites. This is consistent with distributor efforts to
  encourage Internet purchases. Also, purchases made through online retailers and
  catalog sites reflect significant volumes of products sourced by these online
  retailers and catalog sites from distributors.



 The volume of products purchased by ISPs and ASPs from distributor Internet
  sites and distributor telesales reps is nearly equal, reflecting a higher reliance on
  e-business approaches by ISPs and ASPs compared to traditional resellers.




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Conclusions
 Distributors have become service sources as well as product sources for resellers.
  The combination of product purchasing, logistics support and outsourced
  services allows resellers to strengthen their balance sheets and focus more on
  their core competencies such as solution sales and support.



 Distributors historically have served as the financial infrastructure of the two-tier
  supply chain for computer products. This credit function benefits product
  manufacturers that are unable to administrate financing for thousands of
  resellers, and, in turn, benefits cash-constrained resellers with credit to fund
  product purchases.




                                                       ®
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Conclusions
 Although credit needs may require resellers to increase their number of distribution
  partners, the majority of purchases by a typical reseller organization are made
  through one, primary distributor. Business relationship issues such as trust
  between the reseller and the distributor sales rep are the key drivers in
  determining the primary distributor.



 As resellers assign high importance values to distributor services, their satisfaction
  ratings with these services are also high. The ability of distributors to provide
  timely and accurate order and shipping information is critical in helping resellers
  retain customers in a challenging market.




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                                                            Distribution Outlook




Conclusions
 The increasing complexity of solutions such as voice/data and storage area
  networks (SANs) that are sold by resellers require technical information on a
  cross-platform and cross-product basis in pre- and post-sale environments. As
  distributors become the aggregation point for purchase of these complex
  technologies, they also become the source of tech support and information.



 The ISP and ASP markets continue to mature and develop into secondary sales
  channels for computer products. As a result, the importance and related
  satisfaction levels with ordering, tracking, shipping and other logistics are
  highly rated by ISPs and ASPs.




                                                    ®
                                          Reality Research & Consulting
                                                            Distribution Outlook




Conclusions
 The value of the primary distributor to the reseller’s overall business has
  remained constant throughout 2000 and 2001. But the sluggish economy in 2001
  has led to more specific evaluation and appreciation of distributor services,
  resulting in high importance and satisfaction levels with individual distributor
  services provided.



 The high overall business value of distributors to ISPs and ASPs reflects the
  ability of distributors to address the information, purchasing and service
  requirements of these new businesses. As ISP and ASP business models mature
  and their market share increases, distributor-based financial and e-business
  services are likely to increase in value to ISPs and ASPs.




                                                     ®
                                           Reality Research & Consulting
                                                                Distribution Outlook




Conclusions
 As distributors extend their service offerings, they are taking an active role in
  enhancing resellers’ operating models by enabling expansion into new
  technology markets. Typically, distributors provide resellers with a multiple-
  product “solutions view” of new technologies, which helps resellers build
  their overall businesses. This, in turn, raises resellers’ sales volumes,
  benefiting the manufacturers.



 Historically, small businesses (100 or fewer employees) have been the primary
  customer base for resellers. Small businesses represent a more stable market
  for resellers because the reseller typically acts as the outsourced IT
  department, which leads to a high incidence of repeat business. Additionally,
  when the economy rebounds from the sluggishness of 2001, computer
  product manufacturers expect small business will be a key segment to lead
  the recovery.


                                                        ®
                                             Reality Research & Consulting

				
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Description: Sales Volumes document sample