Distributors, or disties, play a significant role within the channel ecosystem. These companies bridge the gap between vendor and reseller or MSP, and in recent years have adjusted their business models in response to the changing channel.
Successful distributors can simply handle procurement or billing processes, or they can proactively go out to their resellers to provide training and resources to educate them about new technologies and products.
As such, disties often define their own role. The relationship between disties and their vendors and resellers, and their understanding of those partners’ businesses often directs the level of support they will need to provide.
There is no doubt the channel is changing, and distributors across the UK are evolving countless aspects of their businesses. John Nolan, managing director for the UK and Ireland at Westcon-Comstor, discussed the increasing dominance of subscriptions.
He said, “Perhaps the biggest change in the channel is the presence of subscription models. With talent and chip shortages, the desire for scalability, and the allure of predictable, recurring revenues are among the key drivers for this change. In fact, according to research from EY, over 90 per cent of tech companies are now embracing these models.”
This transition has not been without challenges. Nolan explained, “The problem for partners is that subscription models are inherently different from traditional one-off purchases. They require different infrastructure, sales techniques, and customer support. It’s also common for vendors to not offer their entire portfolio on a subscription basis.
“This often puts partners in a difficult financial position. Distributors are uniquely poised to help with this, offering flexible payment services so that billing cycles between partners and end users are fully aligned. This allows end users to make the most of their budget, locking in vendor discounts and maximising the value of their investment.”
Nolan added that swift cloud adoption is also having an impact here. He said, “Distributors are also evolving their portfolios to prioritise cloud-native solutions that inherently appeal more to customer’s preferred buying methods.
“And it’s not just about the solutions distributors offer, but the services. Distributors sit on a goldmine of data. By expanding their services and offering broad integration capabilities and analytics they can position their partners and vendors to succeed.
“It’s also important to understand that distributors aren’t immune to these market pressures. It’s incredibly difficult to find and retain top level talent. One way we’ve adapted to these conditions is with our award-winning apprenticeship programme. We’ve had some phenomenal success with apprentices rising through the ranks into senior positions.
“This allows us to build our workforce and equip them with the skills we need for the future, while also offering young people the education and on-the-job training they need to jump start their careers in tech.”
Lee Sinclair, sales director, BNS Distribution, pointed out the adaptions distributors have had to make to deal with shipping delays. He said, “With shipping challenges due to Brexit and the delays in transportation we have had to become more savvy in what promised deliveries we offer to our resellers and in what volumes of products we hold in stock.
“Manufacturing delays have increased and in order to maintain as smooth a flow of product to market as possible we have to be more efficient internally and more transparent externally. Our online end to end order fulfilment system has had to be highly efficient and well managed. Delivery dates are more difficult to predict due to custom delays. Manufacturing delays due to parts shortages have disrupted some product manufacturing plans.”
Jeff May, UK sales director at Konftel, discussed how some distributors are moving towards offering solutions. “Over the last few years we’ve noticed how successful distributors now offer solutions rather than just products. Multimedia platforms and instant communication access requires whole solutions, rather than just individual components.
“Individual vendors obviously specialise at what they do. Distributors can bring different pieces of the puzzle together and pull the best of breed into a complete package to help resellers capture more sales.”
The relationship between distributors and vendors can be crucial in navigating challenges in the marketplace or the emergence of new technological innovations. Darren Garland, managing director, ProVu Communications, highlighted the intelligence vendors can bring to industry-wide issues.
He said, “In light of the chipset shortage, we have been working very closely with our vendor partners to forecast demand and minimise any potential disruption to the supply chain. Where there may be long wait times, our vendor partners are helping us to secure lower pricing to help our customers to secure projects with the hardware available, and wherever possible without any impact on the price. We are also seeing more of our vendor partners look to help our customers secure larger projects through project registration programmes.
“The key thing needed at the moment is clarity; we’re finding the more open we can be with our partners, the more they appreciate our joint efforts to support them and their business. We’ve always maintained close relationships with our vendor partners, this has proved invaluable over the last 18 months.”
Westcon-Comstor’s Nolan described the way in which some vendors have responded to the shift to subscriptions. “Vendors are naturally responding to the increasing demand for subscription services by investing resource into evolving solutions to suit public and hybrid cloud environments.
“With enterprises looking to deploy workloads across both public and hybrid cloud settings, vendors are supporting this by marrying the cost effectiveness of the public cloud while also keeping sensitive or regulated data secure on dedicate hardware. It’s a more flexible and subscription ready approach, which very helps partners sell their solutions more effectively.
“Vendors are supporting their distribution partners by becoming more tightly integrated with distributor’s cloud and billing platforms. This does two main things; it allows the vendor’s and customer’s billing cycles to be aligned easing financial strain on the partner, while also making it easier for customers to acquire technology. Often third-party billing creates additional hurdles for customers to jump through, so by integrating with a distributor’s billing platforms it helps smooth out the purchasing journey for customers.”
Some distributors find it can be valuable to focus on particular vendor relationships to navigate challenges hand-in-hand. Sinclair, from BNS Distribution, said, “BNS Distribution is fortunate in having a good and close relationship with Grandstream as our primary vendor.
“This focus on a single key vendor makes it much easier to maintain a good level of communications, which ensures a lot of product availability and delivery challenges are resolved by working closely together.”
Amidst this change, distributors have also had to adapt how they work with their reseller or MSP partners. Garland, from ProVu Communications, said, “We’re seeing more of our reseller partners coming to us for more customised services. When it comes to distribution, there is no one size fits all. We’re working closely with a number of our partners to develop our systems and services to complement their own offering.
“It’s incredibly important for our partners to be able to differentiate themselves in the market; Our services add value to this and act as an extension to their offering.
“But it doesn’t stop there, we always look to see how we can help our partners grow their business too. Thanks to the close relationships we hold with our vendor partners we are able to utilise their marketing activities to support our partners in attracting new customers.
“Through innovative campaigns, we are able to develop more end-user focused offering to drive demand from the bottom up. We know helping our partners win more business will ultimately help us to grow sales too.”
Garland outlined one example of ProVu Communications’ ability to develop a customised service that addresses a particular partner need.
He explained, “We like to take a personal approach to business and really get to know our customers. In 2021, we were approached by a partner who was looking to ease their router deployments. At this point, we were supplying routers, but they were a relatively new product line for us.
“Despite being relatively new to routers we took this particular partner on board and developed a whole new process for them. [This gave the partner] access [to] great pricing, but also [helped] to simplify their processes and improve their hardware fulfilment experience. Our approach has proved invaluable for this partner for whom we have shipped and provisioned over 5,000 orders in just 11 months.”
Sinclair, from BNS Distribution, said, “Our partner programme and email communications with our registered partners has helped to ensure we avoid serious issues due to product delays. At BNS Distribution we believe that an open and honest relationship is key to maintaining the good will of our partners.
“Using webinars and online training we aim to keep our partners fully aware of any issues that arise and of product decisions they can make to ensure delays do not disrupt network rollouts. We are fortunate in that we already have an excellent network of well-established partners and a fully operational partner programme.”
For Nolan, from Westcon-Comstor, explained the unique role of a distributor within the channel ecosystem. He said, “Disties play a key role in the channel as they typically bridge the gap between a vendor and a reseller.
“With the IT landscape changing, distributors are becoming more involved in helping partners negotiate commercial arrangements with vendors and balancing the initial investment in the setup of MSP resources such as SOC personnel and in-house systems.
“Distributors need to think about their offerings as part of a product and services ecosystem rather than the one aspect that brings in the most revenue. They need to understand the specific needs of each partner, be it a VAR, MSP or MSSP.
“Distributors have a unique role to play in alleviating financial pressures, by financing the purchase and aligning the billing cycle with the end users.
“This allows partners to take solutions that a vendor isn’t offering as a subscription and offer it to an end user in this way. This gives partners more flexibility with both the technology they have on offer and the purchasing options available to end users.”
Nolan discussed one way in which Westcon-Comstor has launched a new service in response to a changing trading environment. He said, “We’ve recently launched Flex, a flexible payment solution that can take the pressure off those that want to give customers choices but are fearful that they will run into headwinds with working capital and cashflow. With this, customers are invoiced directly from us, removing the need for third-party billing agents and brokers.
“Flex allows customers to unlock greater vendor discounts by increasing the deal size and maximising the value they get for their budget early on. It allows partners to match payments in with payments out, so the customer gets exactly what they want, how they want it, without affecting the partner or vendor’s cash flow.”
May, from Konftel, provided a vendor’s perspective. He said, “Solution sales are driving success on a wider and bigger scale rather than just individual products. It’s about helping to make a reseller’s life easier, saving them time and adding additional expertise to help them capture larger amounts of business.
“The days of being a ‘box shifter’ are long gone. Traditional account managers covering a broad portfolio need support from solutions specialists, so distributors are investing in these roles to ensure accurate and speedy response to their channel. Today’s distributors are much more than just a logistics operation. This is crucial but reliable deliveries are now part of a much wider service mix.”
On the horizon
The distributors that are quickest to respond to marketplace or technological shifts are invaluable to their partners, so taking the time to evaluate the changes on the horizon is crucial. Garland, from ProVu Communications, explained what he expects to see in the coming years.
He said, “The next five years will be an interesting time for the Channel. In a post-ISDN era, we see there will be a continued demand for desk phones and hardware, but there will also be differentiation in the market in terms of software options and an increase in demand for security products as people continue to upgrade to an all-IP system.
“We are always looking for the next thing that will revolutionise the comms market. Headsets are becoming attractive and starting to look and feel like consumer-led brands such as Apple. DECT, desk and video also remain strong. Going forward, more integration with winning comms platforms such as Teams is needed and is coming.
“I see a lot more merging together, be it integration of systems but also businesses with lots of acquisition and a huge influx of new businesses entering the sector. The future is most certainly bright.”
May, from Konftel, added, “The evolution of distribution will continue at pace. Some will just become a fulfilment operation supporting vendors who have more direct sales activities but others will continue to develop into solutions providers. In many ways the amount of physical boxes might decrease due to demand for software-driven services. It’s not just about physical goods moving. It’s services and software and solutions.”
Sinclair, from BNS Distribution, said, “BNS is anticipating more partner events, trainings and webinars to facilitate the ever-expanding range. Online meetings [will] bring resellers, ITSP and ISPs closer to the distributor or vendor.”
There is also the possibility of market consolidation in the years ahead, and this could create new opportunities for distributors. Nolan, from Westcon-Comstor, said, “Further consolidation in the market as a result of these trends feels inevitable. The UK enterprise market will continue to see growth despite changing economic conditions. New entrants will join the as marketplace and cloud-first solutions become more prevalent.
“Primarily driven by the efficiencies, distributors will rise in ranks as vendors will continue to rely heavily on them to scale their offerings, manage complex and time-consuming relations and handle billing processes across the ecosystem.”