For those that remain operate under the decade old traditional relationships with brand principles. You will notice it first on technology, followed with logistics faced with the same challenges, and the rest will follow. Across the entire supply chain will expect a decrease in sales, if intermediaries are expected to de-layer, it will be the function performed by the distributor to go first, since reseller relationship with the end user remains more important, if two need to let one to go.
Few factors contribute to the changes and challenges, one of them is mature use of the internet channel, where direct and instant reach for the manufacturer to the end user, make a lot of the function in the past dependency on the distributor become no more needed. Once the manufacturer can reach out to the end user, they will know which reseller needed to use for the order fulfillment and whether or not the use of distributors become no more necessary for most sectors and countries. As the world keeps moving forward, more and more products offer me-too at the more attractive price is available, not to mention for open source.
Moving toward cloud infrastructure, it puts the power in the hands of the managed service provider (MSP), since they are the one who provide all the services end customers need. Under the context, it also makes the traditional decade old traditional distribution channel not really needed. Maybe what is needed the most is the authorized partner for the said region, who can collaborate with the manufacturer to perform various value-added services (VAS).
As the world is moving to flat, the traditional country border may not need that relevant anymore. It matters only if the company operates in a single country or operates on a regional or global basis. Most technology vendors will have a lifespan of 10 years for their product, they need to either be publicly listed, and use the public fund to acquire other products or enter into the next wave of the big things. For those who can not be revolutionary and enter the next wave of big things, they will be falling. You will notice counter offer products will take over their market share in a very short period of time. And as the last, the company is either being acquired and ending their business venture.
For those decade old traditional distributors will face the business reality where they attempt to continue their glory past while meeting the changing world reality. We will notice more will start forming another company and practice the left hand right hand trick, attempting to bind the market with incorporating a list of low profile companies for their own fulfillment for most of the case directly. The rise of question channel integrity will trigger for the reseller who really serves the market to start questioning the value added for those past distributors.
This is one of the reasons we notice for more and more technology vendors falling, one after another, whether under the big name “take over, merge or acquired” it all in nake form tells you what is going on, they are falling. As from the technology sector, new emerging technologies always replace previous generations, but not all the existing technology vendors can automatically upgrade themselves to compete in the next wave of the big things. This is why, under the changes and challenges, we expect to see the change of ownership for those technology vendors, which will impact whatever existing channel partnership they forged in the past.
While the trend to decline traditional distributorship is underway, the rise of new forms of value added partners who can offer stronger access and relationships with enterprise end users is rapidly expanding and serves from country, to region and global basis. They are capable of performing a go to market campaign, local awareness, seminar and workshop, local consultancy, project management and complex turn key for the big project. The world keeps changing under the dynamic competition context, to compete in the future requires an adaptive business model that can quickly adapt itself for the new business situation. To borrow a term from the legacy martial artist, Bruce Lee, “be a water”, able to flow and adapt in all kinds of forms and shapes as per needed. The world is transitioning toward fourth industry revolution (4IR) industry 4.0, from the smart factory, AI robotics coexisted, to the rise of project economy and anywhere workspace, how are your business aligned with those changes?
E-SPIN Group in the enterprise ICT solution supply, consultancy, project management, training and maintenance for corporation and government agencies did business across the region and via the channel. Feel free to contact E-SPIN for your project requirement and inquiry.
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