July-Sept Most Crucial For Distributors
July-Sept Most Crucial For Distributors
Upasana Rajpal, EFY News Network
(Thursday, June 28, 2012 6:23:22 PM)
A lot of vendors have their year-ends in September and distributors build up to Q3.
Thursday, June 28, 2012:
MUMBAI, INDIA: neoteric infomatique ltd, a national distributor of IT and related products, has launched a 'LaCie Summer Bonanza' for all LaCie channel partners.
neoteric regularly comes out with schemes for channel partners on behalf of vendors. It has 45 branch locations across the country, four zonal warehouses and employs 720+ people. It caters to over 30 brands.
EFYTimes spoke to Abhijit Ghosh, GM, neoteric infomatique ltd, to know more about the pattern of schemes for channel partners and the distribution challenges it faces.
You came out with a scheme for LaCie channel partners recently. Is it not the vendor who comes out with schemes for distributors and partners alike?
AG: Yes, but only when the manufacturer is present in the country, it will come out with the scheme. There are a few products for which the distributors act as vendors and are supported by the vendors. The schemes we come out with are run by us, supported by the vendor and decided after discussions with the vendor, its full consent and even the support on the funding.
When we prepare the scheme or the EDMs for the scheme, they are duly approved by the vendor. There are times when we come out with a scheme even though the vendor is present in India, like we do for Wacom. We come out with schemes on behalf of Wacom only when any new product is launched as we want to get into more channel base in the IT segment and non-IT segment. They are meant to entice new partners to join the bandwagon.
Such schemes help you get in more partners?
AG: Yes, absolutely! The scheme for LaCie did not do that well, but it is a build up to the next quarter. The next quarter, i.e., July, August and September (JAS), is one of the biggest quarters in the distributor fraternity as a lot of vendors have year-ends in September, primarily Apple. Therefore, we are building up to that quarter.
Is that when you come out with more schemes and see more sales happening?
AG: Yes! JAS and January, February and March (JFM) are the two biggest quarters in the entire year. March is primarily toward the government institutions as their funding gets exhausted by March 31, and they can't carry it forward over to the next year. But JAS is definitely bigger.
JAS is also the biggest education quarter of the year. The vendors come out with a lot of schemes in this quarter. Students, institutes and the faculty get into the buying mode. Also, all PC vendors will be seen coming out with new schemes and various other efforts.
What other kinds of schemes do you come out with for your partners and how often?
AG: We do new schemes for Wacom almost every alternate quarter. When new products are launched, we need to get in more channel partners. Initially, Wacom came out with a professional series of tablets where the partners were focusing on to professional segments and confined to production or animation houses. Those were the partners we were catering to, then. With the consumer series that can even be sold to normal consumers, we went deeper into the retail segment, such as the IT retail outlets and also getting in small-time channel partners.
For LaCie, we have come out with a scheme for partners after almost two years as the business has now revived. We have also joined hands with new brands like AJA Video Systems and Promise Technology. We are exclusive distributors for Promise Technology. It is a new brand and was earlier available through Apple in India, the only third party brand, which Apple used to distribute. That relationship no longer exists, so we have now tied up with Promise.
What are the key challenges you face in the distribution channel?
AG: Distribution is primarily operation based. There are different divisions in distribution. Depending on how extensive is your operation, you tend to face a lot of different challenges such as supplying on time, material not reaching on time, or some damage in transit. All of these are operational challenges.
Another problem is on the financial front. Overall, we have 10,000 channel partners across the country. We have to assess their credit and continuously keep a track on them. Some partners may vanish from the market after doing some Rs 30 to 40 lakh of business. Keeping a track of them continuously is important.
Next, having a process of keeping an entire record of all the 10,000 partners is difficult. We do business with about 4,500 channel partners every week on an average out of the 10,000 partners. Every week, we bill to 4,500 channel partners. So, we have to keep a close tab on them as you never know when they go bust.
Sales is also a challenge for us in terms of commitment from the ground level, what exactly we are talking at the top level and finally, the execution at the ground level. We have to keep a constant check on that as well.
As even we buy from vendors, maintaining our credit line is a challenge. Say, we have 30 product lines and all of them take exposure on a distributor. Some vendors would ask for bank guarantee, some for LC and some even ask for upfront payment. Organising the funds at the right time and for the right businesses is important.
Another challenge we face is on the services front because a lot of channel partners or retailers expect that since we are distributors, we should also get into the services part. We have a service wing under the banner of F1 services. There are certain products that we service through that wing.
However, a lot of vendors want to service their customers directly, and taking care of that is a huge task. It happens that around 70 or 80 per cent of the customers are satisfied at times. The vendors face the challenge of reaching out to all the locations and that is when they tie up with the distributors who get into the services part of it.
What is the kind of support that you get from manufacturers in terms of marketing and also the challenges you face?
AG: In terms of marketing, almost every vendor has a marketing development fund (MDF), which is attached to its sell-in (whatever buying it does in a quarter). For instance, we agree on about a Rs 10-crore target in a quarter. So, some vendor has a policy of 2 per cent of that sell-in or 4 per cent and the maximum goes up to 5 per cent in some cases, but not beyond that. That is on the marketing side of it.
We do need support from manufacturers in the challenges we face. Whatever parts have to come to us, wherever we are providing services, we have to rely on the vendor. There is a continuous process where we have to replenish the service parts. A few vendors have a call centre facility. We have also taken a toll free line and set up our small, internal call centre for certain product lines to handle the end-customers or the partner challenges over the phone for primary level of services.
For extensive services, they have to either come to our service centre or the vendors. Vendors do provide support, but when they are unable to reach out, they expect us to get into the services and do a tie-up on the service front.
Do you have any defined marketing strategies for the year?
AG: We define our marketing strategies for about a quarter or a maximum of six months. It is a kind of a roadmap that defines what exactly we are going to do in that much time. We have a separate marketing team of almost seven to eight people. Every individual is dedicated to a particular group and then, in alignment with the vendor, we prepare the entire plan on the marketing front. Then, in consensus with the vendor, we agree that these are the four or five things that we will do in this quarter and another set of things in the following quarter.
It is basically a three- to six-months' plan. Accordingly, the budget is allocated by the vendor internally as it also has to take the budgeting from the headquarters. We send the plan for the next quarter or the next six months in the first week of the ending quarter.
These are mostly on the lines of the scheme that you come up with?
AG: No, not only schemes. We do a lot of end-customer road shows, conduct workshops and seminars at the educational institutes or corporates as we are also distributors of products such as the iPad and Mac. A lot of hard selling is required because even today, the Mac or iPad is not a pull product in India, at least. Schemes are just one of the aspects.