The Future of
Distribution in EMEA
TCA white paper – October 2016
TCA white paper
The Future of Distribution in EMEA
Welcome to the TCA
> Introduction
The onset of cloud technology, the consumerisation of IT, instability in
the global, societal and economic environments, and a shift to services
selling - these are just a fraction of the challenges faced by today’s
technology distributors. Along with decreasing margins and increased
competition from new areas, distribution is undergoing a bumpy ride.
But distributors have done more than simply weather the storm. Many
Robert Norum
CEO, Technology Channels Alliance
in the sector have reinvented what they sell and to whom, and launched
new technologies and services to boost their revenues, thriving in often
tumultuous trading environments.
Across Europe, amid fierce consolidation and
a tough economic climate, the distribution sector
is steady and continues to make gains in specific
It is often said that the only thing constant about our industry is the pace of change.
Over the past few years we’ve witnessed the move from hardware to services, and
from services to X-as-a-service, cloud computing, the inexorable rise of mobile –
and now IoT and AI are moving centre stage.
Our challenge in the channel is to evolve and prosper, adapting our business
models, our business and marketing strategies and the way we work with our
partners. These changes have been felt globally, but the challenges and
consequences vary depending on the maturity and state of both local and regional
markets – and this is particularly true across EMEA.
These regional differences are why our industry needs the Technology Channel
Alliance (TCA), a brand new membership organisation founded by Esprinet, Exertis
and Westcoast to represent the specific needs and interests of local and regional
distribution channels across EMEA.
Our aim is to provide a localised forum for best practice, information and ideas
sharing, as well as driving vendor discussions and tackling industry issues. We will
be providing regional knowledge, white papers, localised case studies, and specific
research in EMEA, as well as an independent voice facilitating dialogue and
collaboration through the channel.
This is our first white paper and appropriately it focuses on the future of
distribution in EMEA. It will be the first in in a regular series of white papers
exploring the major developments and issues confronting the channel in EMEA.
I hope you find it useful and I look forward to hearing from you.
[email protected]
areas such as cloud, datacentre services and
consumer electronics. While the bigger players,
like any market, continue to dominate the
headlines, the more localised, regional
organisations have been adapting their strategies
and listening to their VARs to provide them with
the services they need.
“If the key talent
of a distributor
is reinvention and
chameleon-like
adaptability, what
will the next
reincarnation be?”
According to research from CompTIA, almost
60% of channel players said they expect to maintain a stable level of
involvement with distributors, while another third predict increased
activity. Of the combined firms anticipating increased activity with
distributors in the next year, 63% were either MSPs, resellers or VARs.
Vendors, however, are more likely to anticipate a status quo relationship.1
But if the key talent of a distributor is reinvention and chameleonlike adaptability, what will the next reincarnation be? And how can
distributors prepare for this future?
This white paper will address what we see as the most fundamental
areas impacting the channel over the next three to five years. We’ll look
at the continued rise of technologies such as cloud computing and up
and coming trends, such as artificial intelligence (AI) and the internet of
things (IoT), including how the consumerisation of IT might spill over
into distribution. And, while perhaps not quite as glitzy, channel financing
still plays a vital element in the role of distribution, so we’ll also look at
how this might alter, given these new technological advancements.
1
https://www.comptia.org/resources/the-role-of-it-distribution-in-a-cloud-world
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TCA white paper
The Future of Distribution in EMEA
1 Cloud computing
Arguably the biggest change in the channel in recent years has been
the onset of the cloud as a distribution method for technology. Now an
all-encompassing term for anything delivered as a service, from email
to infrastructure, cloud has forced channel players to re-examine their
entire business strategies.
The reality is that cloud isn’t going away.
IDC predicts that worldwide spending on
public cloud services will grow at a 19.4%
compound annual growth rate (CAGR) from
nearly $70B in 2015 to more than $141B in
2019. The research firm predicts Softwareas-a-Service (SaaS) will remain the
dominant cloud computing type, capturing
“IDC predicts that
worldwide spending
on public cloud
services will grow at
a 19.4% compound
annual growth rate...”
more than two-thirds of all public cloud
spending through most of this period.
Worldwide spending on Infrastructure-as-a-Service and Platform-asa-Service will grow at a faster rate than SaaS with five-year CAGRs of
27.0% and 30.6%, respectively.2
However, the figures from IDC don’t tell the whole story, particularly
across Europe, where cloud has also not seen the uptake it that has
occurred elsewhere in the world. According to a Eurostat study3, only
19% of European businesses used cloud computing services in 2014.
Compare that to a recent RightScale study4 that reports 82% of US
enterprises as having a hybrid cloud strategy (up from 74% in 2014).
Predicted worldwide
spend on public cloud
services (2015 –2019)
Source: IDC
$70bn
2
$141bn
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TCA white paper
The Future of Distribution in EMEA
Therefore, while the US adoption rates are likely to flatten out as the
sales compensation models and train their technical teams. Technical
market matures, many in Europe are yet to adopt the technology.
help was rated as the number one priority for VARs in recent CompTIA
This slower adoption rate is, according to Alessandro Cattani, CEO at
Esprinet, for two reasons. “The channel in Europe is not yet ready for
strategy, educate their technical staff on how, where, when and why
such a profound change. Resellers need to have major training and
cloud services are applicable to their customers, will all be essential.
change their sales compensation structures. Large organisations are
Many distributors have gone beyond just simply adapting their existing
adopting the technology, but the smaller companies are reliant on
offerings or tailoring education and marketing to suit a cloud marketplace.
resellers who are not yet ready themselves,” he says. “The other major
“ The channel in Europe
is not yet ready for
such a profound change.
Resellers need to have
major training and
change their sales
compensation structures.
Large organisations are
adopting the technology,
but the smaller companies
are reliant on resellers
who are not yet ready
themselves.”
Alessandro Cattani
CEO, Esprinet
In 2014 Westcoast in the UK opened its first datacentre, which
inhibitor in Europe is the lack of good, high speed
enabled it to offer Microsoft cloud services directly to SMEs and help
connectivity.” As the infrastructure grows and
them forge a way into selling cloud services. Alex Tatham, managing
connectivity becomes more pervasive, so the
director at Westcoast, says the company’s greatest advancement in
adoption of cloud will increase, Cattani predicts.
cloud so far was becoming a Microsoft Certified Service Provider. “Of the
With cloud here to stay and uptake to increase
several hundred partners we have sold this to in the past year, more
throughout the next decade, how can distribution
than half of them are new to Westcoast.
position itself to take maximum advantage?
It has been a huge success for us,” he
Many in the technology sector and beyond see
adds. The distributor is also offering
cloud computing as the death knell not only for
resellers cloud ‘their way’ – whether
distributors, but also VARs and solution providers;
that’s through renting space in the
what need is there for a distributor or reseller
datacentre, offering cloud services, or
when the technology is simply delivered as a
being able to bring cloud solutions
service when required? With little technology
together to help VARs understand the
actually on premise, and security and data
best solution for customers.
protection provided by the vendors, what role is
there for logistics or integration?
Furthermore, financing for a traditional
Rather than being warehouses for
physical technology, distributors will
become warehouses for data, having
technology sale was a one-off capital expenditure,
flexible IT systems that can help VARs
yet with cloud computing it is a recurring,
deal with complex end-user cloud
operational expenditure, meaning a fundamental
solutions, according to Niall Ennis, MD
shift in remuneration techniques.
at European distributor Exertis. And, this
Undeniably, this fusion of changes has hit the
4
research5. Training from distributors to help VARs change their business
“Technology as a utility
is nirvana. But it is
going to be immensely
difficult to work
everything together
onto a single monthly
bill, like a mobile
phone contract.”
complexity is where distributors are
channel hard, but it has also not been the grim
capitalising on cloud, by becoming cloud
reaper it was so readily predicted to be. Distributors
aggregators. By bringing together
across Europe have already adopted new approaches,
different levels and types of cloud
focusing on new types of training, marketing and
services in a bundle for VARs and most
financing. New technologies demand new
vitally being able to bundle together the
specialists and play to new audiences who need
billing and financing alongside the
targeting by different marketing techniques.
services, distributors can enable VARs to
Vendors have also relied on distributors to help
conduct the selling and customer services
VARs adapt their own business models, change
element at which they excel, he says.
Alex Tatham
MD, Westcoast
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“Not investing in
cloud as a distributor
is like not investing
in a warehouse - it’s
a mistake.”
With such as plethora of vendor solutions around
Taking the X-as-a-service model one
cloud VARs need help understanding what will work
step further, many have questioned
best for their customers, and this is where
whether technology services will soon
distributor knowledge and experience can play to
become a utility. This would mean all
their best advantage. “We can be the backbone to
technology, from servers, storage, or
cloud adoption,” Ennis says. “By bundling the
computing power right down to laptops
services, it gives vendors and VARs confidence that
and software simply available at the
all the elements are in one place.” And, as cloud
touch of a button, with users billed
adoption rates increase across Europe, this
monthly for what they consume.
opportunity will only grow over the next five years,
he adds.
The future, according to Gustavo Möller-Hergt,
Gustavo Möller-Hergt
CEO, ALSO
However, most executives for this
“Collaboration will be
crucial. Distributors
must work with cloud
service providers and
ensure they can justify
a return on their
investment.”
paper agree that this is not in the short
to medium term for the sector.
CEO of European distributor ALSO, will be hybrid.
“If everything is a service then there
“Cloud is not a business model – it is a virtual
needs to be endless capacity,” says
warehouse. Not investing in cloud as a distributor is
Möller-Hergt. “There’ll always be
like not investing in a warehouse – it’s a mistake,”
customers who want or need their
he says. Large corporates and smaller organisations
technology on-site; even in the future,
will invest to have some applications in the cloud
it will not be a case of black and white
and some on premise technology.
when it comes to technology as a service.”
To take advantage of this hybrid future, ALSO
Tatham agrees: “Technology as a
has launched its own cloud platform: the ALSO
utility is nirvana. But it is going to be
Cloud Marketplace. “It is a consumption-based
immensely difficult to work everything
rather than a transaction-based business model,” Möller-Hergt says.
together onto a single monthly bill, like a
“We do have a traditional catalogue of different services from our
mobile phone contract,” he says. But, he
providers, but our resellers package only the services that their end-user
adds, distributors should be prepared for
need – and we help them to sell these services.” Globally, the three
the market to start heading this way in
largest players, Avnet, Tech Data and Ingram have also developed their
the future and adjust their processes
own cloud platforms. This strategy requires a large upfront investment,
and business models accordingly.
Gernot Teufel
Global Director IT, GfK Research
says Jeremy Davies, CEO of channel research firm CONTEXT. “At the
enterprise level this makes sense, bigger distributors can focus on the
bigger customers and provide a bespoke service, including maintenance.
But at a mid-tier and small business level becoming an aggregator is the
major opportunity for distribution over the next five years,” he says.
Gernot Teufel, global director IT at research firm GfK agrees.
Aggregation is key for the smaller players, he says, however before
investing too much in cloud all distributors should take a close look at
what already exists. “Collaboration will be crucial. Distributors must work
with cloud service providers and ensure they can justify a return on
their investment.”
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2
Source: Worldwide Public Cloud Services Spending Forecast to Double by 2019, According to IDC
3
http://ec.europa.eu/eurostat/documents/2995521/6208098/4-09122014-AP-EN.pdf
4
http://www.rightscale.com/blog/cloud-industry-insights/cloud-computing-trends-2015-state-cloud-survey
5
https://www.comptia.org/resources/the-role-of-it-distribution-in-a-cloud-world?c=48829
TCA white paper
The Future of Distribution in EMEA
2 Financing
Financing is the lifeblood of the channel
– without distributors providing credit
lines to VARs, the channel could not
function. For many during the downturn
in 2008, sceptical banks that were
unwilling to risk additional financing to
VARs were replaced by distributors that
were more familiar with their businesses.
Jeremy Davies at CONTEXT says that
even though the technology will change,
the need for financing deals upfront and
credit lines will still be a cornerstone of
a distributor’s role over the next few
years. “One of the areas that cloud
technology highlights is the complexity
around how to bill customers. A monthly
“One of the areas that
cloud technology
highlights is the
complexity around
how to bill customers.
A monthly billing
plan is one option,
but with hundreds of
customers this could
become a complex
and unwieldy task for
most VARs.”
billing plan is one option, but with
hundreds of customers this could
become a complex and unwieldy task
for most VARs.” Instead, he says
distributors will be able to offer this
service on top of more traditional upfront
financing options.
Ennis agrees that traditional
methods of financing will remain in
the future, however he adds that
alternatives will emerge. “The way
organisations pay for technology will
morph from one-off payments to
Jeremy Davies
CEO, CONTEXT
device-as-a-service, with everything
wrapped in – the hardware, apps,
services, maintenance and billing all for a monthly fee with an upgrade
every two years, much like a mobile phone contract today,” he says.
“Several major vendors have rolled out ‘as-a-service’ models for PC and
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tablet, and this could go all the way up to server level in the future and
The main challenge facing distribution
become full lifecycle management.” Microsoft offers Surface-as-a-service
now and to 2020 will be the lack of
and Hewlett-Packard (HP) is also offering its notebooks as a service, with
information flow from vendor to
other vendors sure to follow suit.
distributor to reseller and then back up
Ennis says future financing could work as a risk share, with
distributors not just handling the billing, but also facilitating elements
real end-user demand and this causes
programme. “The days when a laptop
whole lifecycle – upgrades, break fix,
maintenance for a monthly fee – are not
too far away,” he says. “We would
finance the initial roll out and then be a
conduit for third-party finance partners
underpinned by a lifecycle contract.”
And this, according to Cattani, is
where things get more complex in terms
of risk. With monthly invoicing there is
resellers and distributors, he says.
“Distributors have little sight of
such as a consumer financing
vendor comes to us and we provide the
the chain from the customers to the
“The days when a
laptop vendor comes
to us and we provide
the whole lifecycle –
upgrades, break fix,
maintenance for a
monthly fee – are not
too far away.”
inefficiencies in stock, inventory and
supply chain. The real opportunity for
the future is to examine what resellers
are actually selling, taking these
numbers and adjusting the supply chain
to ensure it is streamlined, shipped and
priced accordingly.”
This is already happening within
most distributors, as business
intelligence technology gains
less risk upfront. However, if a customer
functionality and CRM and ERP tools
is unable to pay halfway through the
combine to make the information flow
contract then the VAR and/or distributor
through the supply chain. But, Aunkofer
is still liable. “The initial credit risk is
says, the process is still flawed.
less, but it will become a new world of
“Until this becomes fully automated,
an increasingly sophisticated contract
with no outside influence, such as
management,” he adds.
political or remuneration tactics, then
true transparency of information flow
Davies at CONTEXT gives a word of
caution. Distributors, he says, will still
in the supply chain will not happen.”
need to offer the more traditional
The idea, he adds, is that the information
financing options for the foreseeable
future. “Regardless of the technology
they are shipping, VARs will still need a
Niall Ennis
MD, Exertis
“The real opportunity
for the future is
to examine what
resellers are actually
selling, taking these
numbers and adjusting
the supply chain to
ensure it is streamlined,
shipped and priced
accordingly.”
Professor Rudi Aunkofer
GfK Research
flow will be so transparent, that eventually
distributors can accurately predict what
customers will be purchasing and when,
credit line of 30 days. With everyone
and therefore proactively modify their
talking up new technology it’s easy to
inventory and supply chain.
get distracted, but the future for distribution is as much as about
maximising the business in a mature market, becoming more efficient
and improving processes, as it is shipping shiny, new technology.”
This is a view echoed by Professor Rudi Aunkofer, of Gfk, who
recently completed a research paper – The Future of Distribution and
Supply Chain Management.
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3 The internet of things, artificial
intelligence and big data
More than six billion things are connected today, with the internet of
things (IoT) supporting total services spending of $235 billion, according
to forecasts from research firm Gartner. Gartner predicts that there will be
20.8 billion connected devices by 20206.
With everything from cows to cash registers all connected, IoT is
believed by many to be the next big thing. But where will distribution fit
in this brave new world? According to the latest research from CRN, a
combined total of 58% of respondents to research cited IoT and artificial
intelligence (AI) as the next disrupters for the channel by 20207.
Uptake is low across Europe now, according to Cattani, with many
watching the space to see what opportunities may arise in the future.
The challenge, he says, is that IoT is about data and analytics, and using
the data points to help businesses make more intelligent decisions.
While not a strong area for the channel now, over the next five years
some are bound to have found a way to take advantage of it.
Möller-Hergt at ALSO agrees and says he splits the term IoT
into commercial and consumer. “For large organisations, it is about
improving the performance of machinery with the help of big data and
an operating system. But the big issue for distributors is whether they
have the know-how to sell this?” Likewise, he adds, the consumer side
of IoT will also require investment, and this is where Möller-Hergt
currently sees the most opportunity. ALSO has already started to build a
separate business unit for IoT with members of staff protected from
pressure of the everyday business, focused on creating a business for the
long term. “It is worth investing in both the commercial and consumer
side; by 2020, IoT will be an enormous market,” he predicts.
This is reinforced by Teufel from GfK who says revenue from IoT
is likely to be more forthcoming than real cloud revenue. “We are
expecting products early next year from Sony, Microsoft and Intel, and
other vendors are investing heavily here. The channel is not quite ready
yet, but often IoT is easier to explain to customers than cloud, and it’s
up to businesses to explain this future technology to employees.”
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“The channel is not
quite ready yet, but
IoT is often easier to
explain to customers
than cloud.”
One area cited by many as where IoT has already
distributors we are well versed in adapting to new environments; IoT is
started to gain traction is the smart home. Davies
one of these new environments.” It is through new technologies like IoT
at CONTEXT says home appliances and home
and other areas such as big data and AI, where the channel can adapt
security are already garnering consumer interest.
and thrive, Cattani adds.
This, he adds, leads to more of a consumer play for
Big data is a difficult sell for VARs, according to Davies at CONTEXT.
distributors, something he believes will only grow
“At the moment it’s the preserve of large corporations; smaller business
over the next decade. The latest research from
don’t generate enough data to warrant the sort of data analytics that big
CONTEXT suggests that Germany will be the largest
data offers.” However, he says distributors could use big data and AI to
market over the next few years.
provide a level of sophistication to sales techniques and help manage
Aunkofer from GfK says in his research paper:
“In the future, the smart home or the internet of
their databases. For example, this could predict and anticipate the next
purchase by specific VARs and ensure those products are in stock, he adds.
things will open up new potential lines of revenue
HP is already utilising machine learning to help improve its partner
for distribution. On the one hand, this is because
portal. The vendor is using algorithms to search for patterns in massive data
the SME market will become involved in these
sets generated by partners using its portal across the world. Using machine
innovations more quickly and, on the other hand,
learning, HP is hoping to create a more tailored experience for partners.
distributors and specialist retailers will be far better
Gernot Teufel
Global Director IT, GfK Research
Cattani says Esprinet is already using some big data techniques, but
equipped to share their expertise with customers as
agrees with Davies that it is mainly an enterprise play. This, he says,
they did a few years ago in the case of convergence.
won’t change in the short term. “It’s still at the early stage and won’t
The ability to recommend the right product and
be going mainstream in the next few years. The one area it could really
provide the customer with the right locally
benefit could be retailers, as they look to develop more personalised
available service is and will remain the USP.”
marketing using big data analytics.”
Industry specific IoT skills could also be an
Do you think
you will have a
smart home in
the next year?
GER 22.8%
FRA 10.8%
UK
9.8%
SPA 8.7%
ITA
5.4%
Source: CONTEXT
advantage to the channel, especially for those just
Ennis says the big data arena is likely to herald a boom in server and
storage sales. “For distributors, we want to provide a whole big data
starting out, Teufel at GfK adds. The sector, at least from a commercial
solution bundle – hardware, software, data analytics as well as
perspective, is likely to be centred on healthcare, pharmaceuticals and
maintenance and support. For organisations looking at real-time
manufacturing. “Insurance companies are looking closely as IoT devices
marketing, this requires a support infrastructure. In the future,
that can measure blood pressure and blood count and send them directly
distributors could be partnering with ISVs who offer data analytics and
to a doctor. Other areas, such as wearables and watches for example,
wrap in the services and financing.”
that we already have, are likely to be tied directly to life and health
insurance premiums in the future.”
Manufacturing, where machine maintenance could be automated via
Big data, according to Tatham is where Westcoast is betting big.
“This will be a huge investment for us over the coming years,” he says.
“At present, predictive analytics is not quite there but it is on its way.
IoT, automotive sectors where in-car technology is reaching a new high
Using data to be able to predict product information and steal a march on
could also become new avenues for distributors to explore.
our competition is essential for our customers and we have to be involved.”
In Europe the car manufacturing sector is booming and Cattani says,
This desire for predictive analysis plays back into the research from
with the onset on IoT, technology within cars is only likely to become
GfK. As cited earlier in this paper, the channel research firm states that
more complex, requiring a different type of sale, and therefore
better information flow and transparency will enable distributors to
distribution method. “As more and more of the goods we buy become
make predictions through the supply chain and therefore more
connected, from drones to robots, so the go-to-market strategy for
efficiently run their inventory.
many of the vendors producing these will have to adapt – and as
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6
http://www.gartner.com/newsroom/id/3165317
7
http://www.channelweb.co.uk/crn-uk/news/2468767/iot-and-ai-set-to-be-biggest-
disrupters-of-channel-business-by-2020
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4 The consumerisation
of the channel
The technology sector has arguably been consumerised since the advent
of the smart phone. Consumers’ desire to have more technology at their
fingertips created a legion of tech-savvy employees who wanted the
same functionality in their technology at work. And, as more and more
technology blurs the boundaries between consumer and commercial use,
distributors will need to find a way to tap into this new market potential.
Jonathan Wagstaff, country manager UK & Ireland at research firm
CONTEXT, specialises in virtual reality (VR) and gaming. “More and
more distributors are moving into this sector and with good reason,” he
says. “PC gaming is growing fast and offers higher margins, particularly
around the peripherals. Multiplayer gaming is taking off and E-sports
earnings show that professional gamers for titles such as DOTA 2 can
now make more money than the winner of Wimbledon. Virtual reality
will drive this market forward even further thanks to VR spectating,
already in place for the HTC Vive.”
And VR will not just be in the consumer domain. Wagstaff predicts
the usage in the commercial sector will be huge with education already
taking off. Reading University in the UK has a VR lab looking at the
impact of the technology, Wagstaff says, and Dr Mathew Nicolls of the
Department of Classics at the university has created a virtual ancient
Rome to help his students see what the world would have been like8.
“Medical institutions are already using [headsets such as] Oculus Rift to
teach medical procedures and some amazing discoveries have already
been made, such as how VR helped paraplegics to regain some muscle
movement and sensation at Duke University. Every hospital and medical
organisation in the developed world is going to want this technology.”
VR is already high on the priority list for many distributors.
Möller-Hergt says he believes VR will drive high profits for distribution.
But, not necessarily in the headset devices. “The device is a
transactional sale, but the interesting part is what is behind it – the
content. The content is the greater opportunity because it represents
recurring revenue. We will obviously still sell the devices, but we can
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achieve higher margins by partnering to manage the content.” Tatham
way of doing this is through education,
says Westcoast will be shipping products by Christmas. “There are a lot
but not on features and functionality.
of specialist PC gaming resellers and VR is likely to go through these
“Consumers and businesses users want
organisations first. They are able to build bespoke rigs for gamers to
to know what this technology will do
enable them to adopt VR technology, and this is where we are already
for them, so retailers, and therefore
building relationships.”
distributors and vendors, have to be able
Research from CONTEXT reinforces this view. In its European Virtual
Reality Survey, Context found that 26% of people would prefer to buy
to demonstrate what the real benefits of
the technology are.”
from a specialist technology retailer9.
By forming relationships with
And this is a crucial element for distributors; building gaming or VR
retailers for specialist products such as
businesses will require them to foster closer relationships with retailers
VR, it opens other doors to associated
and e-tailers on the consumer side, and most importantly, with the
consumer products, says Davies.
education and medical verticals for B2B, says Wagstaff.
Esprinet, for example has already tapped
The co-opetition between distributors and retailers/etailers has
into the consumer market with its Nilox
always been an uneasy relationship, however Davies at CONTEXT
brand, selling everything from
suggests the two could co-exist more profitably in the consumer sector
wearables to hoverboards. Cattani, says
as distributors look to move out of their traditional markets. “Why
it makes sense for these highly technical
wouldn’t a distributor subcontract Amazon’s logistics? Amazon is the
products to go through distribution.
expert at shipping small products anywhere, distributors are better at one-off
“Fulfilment alone will not be enough
items and much bigger orders. Distributors are great at consolidating
though, we will need to add services. We
orders, so the two could profit from a new type of relationship.”
have a lot to learn from other markets
However, Teufel at GfK says the current confidence of retailers in
such as FMCG and healthcare.”
Jeremy Davies
CEO, CONTEXT
Given the growing trend for
distribution is low. “Distributors have to increase the loyalty of retailers,
to ensure they are not just looking for the best price.” He suggests one
“ In a B2B market,
shipping some
products by drone will
happen. For this to
occur we’ll need
established airways and
suitable landing sites.”
distribution within the consumer sector,
how long will it be until distributors are shipping products by drone?
‘Where do you think
you will buy VR devices
and accessories?’
The general public and
gamers choose their
top three channels
Source: CONTEXT
Not as long as we might imagine, according to Davies at CONTEXT.
General public
to occur we’ll need established airways and suitable landing sites –
26.3%
Specialist technology retailer (large chain)
23.2%
Specialist technology retailer (large chain)
16.3%
Online retailer (not Amazon)
16.1%
Amazon
18
“In a B2B market shipping some products by drone will happen. For this
Gamers
20.3%
something businesses are more than capable of making happen.” Intel,
he says has launched some new technology based specifically for B2B
drones, and if Amazon can make a success of it, then why wouldn’t
distributors look to this in the future.
Amazon
15.5%
Mass market retailer
(supermarket/hypermarket)
8
https://www.reading.ac.uk/classics/research/Virtual-Rome.aspx
9
https://www.contextworld.com/documents/20182/367799/CONTEXT+VR+survey+press+release
+July2016.pdf/b1a5e7b7-293a-4d73-a7c9-63f268c04f4b
19
TCA white paper
The Future of Distribution in EMEA
5 Executive summary
Cloud has already had a huge impact on the channel and will continue to
do so. Distributors are likely to become cloud aggregators or brokers of
cloud services, bringing together various platform and services bundles
to VARs, while managing the billing side of their accounts.
Large distributors are launching their own cloud platforms, but this
takes investment and distributors should examine the ROI for such an
undertaking.
Cloud will drive changes to billing and therefore channel financing will
be impacted. A USP for distributors will be having the ability to offer
billing as part of their services, and take the burden off the hands of the
reseller, leaving them free to sell and deal directly with customers.
Traditional methods of financing will still be required alongside a more
contractual-based risk share. Credit risk will move to contractual
management, as VARs look for help with managing services-based sales.
IoT is on the cusp of mass adoption, with the first area likely to be large
manufacturers and smart homes. Distributors should look to develop
specialist skills in vertical sectors to help them take advantage of IoT.
Big data will be for larger organisations only. But many distributors
should be looking to use a combination of big data with AI to help them
better predict and analyse their sales. This will help them to better
manage their inventory and supply chain.
The consumer sector is a huge opportunity for distributors, particularly
around gaming and VR. Distributors will need to work with specialist
resellers to penetrate these markets.
Particular sectors for VR will include medical institutions, educational
establishments and sales environments.
This consumerisation of distribution will lead to closer relationships between
distributors and retailers/etailers in a spirit of renewed co-opetition.
20
About the TCA
The Technology Channels Alliance (TCA) has been created to
define and promote the role of wholesale distribution as part of
the end-to-end technology channel in EMEA.
Its primary objective is to ensure that technology vendors
understand and make full use of the benefits of working with
local and regional channel partners across EMEA.
The TCA will also be enablers and advocates of new
technology to ensure channels in EMEA are educated and
optimised to deliver on the promises new technology makes.
This will include events, research and case studies to help our
members work more closely with vendors and other channel
partners to address industry issues and opportunities.
How to join
For more information, visit technologychannelsalliance.org
call Robert Norum on +44 (0)7767 624662 or email
[email protected]
Founder members
Founder members comprise Esprinet, Exertis and Westcoast.
Registered address:
87-88 Harcourt St
Dublin 2, Ireland
+44 (0)7767 624662
[email protected]
www.technologychannelsalliance.org
@TCA_EMEA