The paradigm shift is happening again. The channel community in India has come a long way from trading in components to trading the add-ons for margins. During the last two years, they have emerged as champions for the branded PCs. This year has seen them concentrating on the emerging market of Notebooks/Lifestyle products. From a product for the elite class, these products have become the traded item with wafer-thin margins today. Indeed, the channel has learnt to survive and evolve with the product evolutions.
The core competency for IT channels had been CREDIT DISTRIBUTION. This ability and understanding acquired over the last 7~8 years has assured a strong grip for channels on small-time assemblers and upcountry markets.
Let me suggest a new core competency which the channels need to acquire ––“scalability”.
The survival will not guarantee success anymore. What we have been forgetting are the macroeconomic trends emerging in the global markets.
The ability of channel members to recognize these changes and adapt to them will reap the gains.
Four aspects of our times which I feel our channel community needs to watch out for are:
*The consumer landscape is changing and as the young generation takes on the challenge of knowledge-based industries like the BPO industry, the way the consumers will demand products will experience a sea change. The convergence of products on telecommunications and IT technologies is just the beginning. Have not seen PSPs being sold by any IT dealer yet.
*With high connectivity emerging all-round, there has been a sea change in the social aspects in the consumer behaviour. Today, consumers demand anything to everything which is in demand in the global marketplace. Forget technology, but the sheer transformation/shift in the behaviour is something to watch out for.
*With the shrinking world market, there is a pressure on the way we are going to treat our natural resources. The global watchdogs are emerging in India, too. Consumers will increasingly be looking at the technology innovations which will keep up with the robust economic demands and sustain environmental demands. The green aspects of a product are an added advantage. Are we not seeing some signs of the same by some vendors in the components, too?
*With the global marketplace being approachable and available, all businesses will clearly emerge into dumbbell-like structures where we will see the emergence of 2~3 large players in each segment and a host of smaller fast-moving players at the bottom. Like all channel partners are in the lower bulge of the bell.
Interlinking of biz eco-systems like importers/suppliers, producers and customers will ensure that business will be either mass/commoditized in the hands of the global giants or with the fast-moving business houses that can cater to customized demands of the new emerging consumers.
These are certainly signs which our channels should be looking towards to emerge victorious in the days to come. Change is the only constant; and if this has to be the watchword, then the channel’s roadmap is’clear-cut. Large vendors/distributors/importers will keep hammering on the core competencies of the channels.
The channels have to start looking at the value-added game. VARIndia – Value-Added Reseller – is the buzzword for the last couple of years, but alas to no difference but to a chosen few. They have stepped out of their domain of credit distribution to being Corporate Resellers to being the service providers. Value-Added Resellers are something different. They are part of our channel community who have moved forward by creating niche segments everyday/week/ month/year of their operation by adding value in their offerings and adding value for their consumers.
The winning formula for channels is going to be “scalability”. As I mentioned earlier, the channels list themselves as either box distributors/traders or as service providers or as corporate resellers/solution sellers or as retailers. Beyond that, the vision is limited. By scalability, I am going to the core of consumer buying behaviour. I relate our PC resellers’ business as that of customer value enhancement business.
I recall the story of a channel partner in Madhya Pradesh, who was giving 5-year warranty as standard on any PC sold by him, irrespective of the brand. I had asked him the viability of his decision. His reply was very simple: “I am in the business of profit and every time a customer walks in, I wish to give some value addition and get more out of his pocket.”
Today, value addition for each channel partner will be different, but the underlying principle remains the same. The golden rule is what value addition we bring for our consumers. The answer lies in the term “scalability”. The more we”are able to scale up the consumer and his expectations, the greater will be our learning curve. Remember I talked about the learning curve here, and not profitability. The reason is that today we are also sometimes at sea as to what is it that a customer requires. Product convergences and the levels of service expectations are teaching us new ideas everyday and channels which are quick to mould themselves to these changes will survive the digital war.
Scalability is going to be one such watchword for channel partners to keep measuring themselves against. All the systems and processes within the company will have to be tuned towards scaling the consumer. The consumer will keep varying differently for different channels. Like for a trader it is his assemblers; for assemblers it is their customers and for large service providers it is their internal employees first. There is a need to create strong WILL within every touch point to focus their energies on upgrade and upscaling the processes and products to meet the global consumer’s yardstick.
