Technology has always been driven by innovation, disruption and – most importantly – rogue start-ups willing to change the state of play. In 2018, start-ups are just as important to technological innovation as ever before. However, can the same be said about the importance of new kids on the block within the Channel’s supply chain? With so many well established distributors already dominating large areas of the Channel, what chance does a start-up have of being successful? And more importantly, are they even needed in today’s market?
Despite the highly competitive nature of the market, Channel stalwart Dave Stevinson focussed on building GNR Technology in May last year after Entatech went under. According to Stevinson there are ‘five main challenges’ when setting up a distributor in the Channel: ‘Finance, Infrastructure, Vendor, Clients and Staff’. And while those five pillars are as relevant to a start-up as to an established firm, one factor which is specifically relevant to new companies is setting yourself apart from the crowd. As Stevinson explains: “At GNR we have deliberately focussed on moving to uncontested space and focussing on providing services to our vendors that assist them in meeting their business outcomes. We purposefully avoid head-to-head competition with the more established distributors. Ours is a blend of traditional distribution with a critical services element.”
It is a similar story at recently establish distributor nSpire. Based in Dorset, managing director Zack Fowler has been trying to find niche areas of the market to exploit. While Fowler insists that nSpire is ‘extremely competitive’ on the ‘traditional’ front, it is within another area which he believes his company is already excelling. Specialising in refurbished tech, Fowler believes that nobody is as competitive on price and quality as nSpire is. “We are unlike other distributors in as much as we focus a lot of our time of selling refurbished tech and more importantly selling it at good prices,” he says. “It is an industry that is growing rapidly and there is plenty more room for expansion for us moving forwards.”
Fowler believes that the refurbished technology market is a potential cash cow for resellers to increase their margin. However, scepticism among many means that a large number of resellers and retailers are ignoring the market altogether. Fowler is therefore taking it upon himself to change that mentality. “If we have a new client who is unsure about refurbished technology then we will let them trial it first,” Fowler explains. “They will perhaps buy one refurbished laptop or a PC and then see how it does. If they don’t sell it within a month, then they can give it back to us, without having to pay a penny. Most of the time, they will sell it – at a big profit to them – and then they will invest more in our products. Another way in which we are encouraging buyers to open an account with us is by giving away £25 in pre-approved credit to anyone who signs up.”
And it is not just the smaller fish that are having to find alternative market avenues to target. As Jon Atherton, director at Ci Distribution, explains ‘to be successful you must be niche and offer value’. He adds: “For example, Ci Distribution is recognised as the leading Rugged distribution business within the UK, the products are not a commodity. This is a solution led sale, requiring my sales people to understand product cycles, quote and ultimately supply a solution that will be fit for purpose for three to five year cycles. We offer additional DaaS (Device as a Service) through our Configuration Centre in Caerphilly, from there we can offer a multitude of solutions for the reseller/end-user from asset tagging, disposal, BTO, device upgrades, imaging, 3rd party software, AV, finance options, etc.”
Atherton, who had previously worked at Exertis and Entatech, adds that over the last decade ‘distribution comapnies have become more cost efficient and leaner in their transactional business’ but added that ‘the Channel requires Tier 2 and niche distributors without question’ to give ‘new vendors and start-ups a route to market’.
Meanwhile, Centerprise International founder Rafi Razzak claims that putting the right people in the right positions is what drives success at a start-up disite. “The key challenges is attracting the right vendors and showing why you can provide a better value than broad distie,” he says. “To do this you must have the right competency of resources, adequate financial credit worthiness, focused and specialised distribution and investment in expertise. Having expertise in the management within CI has been instrumental to our success. Jon Atherton has been instrumental in managing the strategy as well as Darren Perks and Iain Gillogaley.”
So while start-ups rely on being (and will need to continue being) creative in order to find a gap in the market, those who have been there and done it are adamant that experience is the key to success. One thing is for sure, start-up distributors are still needed, will continue to be successful but they will need a good business plan (and to take a few risks) if they are to punch above their weight.