New opportunity for resellers!

Enabling supplies, service and information for all assets of the customer is the new opportunity for our resellers. Read what Mark Dawson has to say. 

 

Previously, I wrote how imaging supplies resellers are ideally positioned to pivot out of the bloody red ocean of toner and ink cartridges, into the lucrative blue ocean of monetising information relating to all assets at the customer, all users of those assets, and all providers of those assets.

I remember many years ago, when I first started to learn about MPS, one of the surprises for me (I was much younger and somewhat naïve) was that most enterprises did not even know how many copiers and printers they had, let alone how efficiently these were being used.

I remember how seductive it was for a reseller to present the CFO and/or CIO with a tool that identified all these hard copy output devices and showed who was printing what, when and where. Such information was very powerful in helping C-Level executives understand and reduce costs.

These days, enterprises must manage a myriad of assets. It varies from enterprise to enterprise, but typically, if there are 100 printers, there are usually about 500 users and about 2,000 assets. These include coffee machines, water coolers, AV equipment, servers, PCs and many others. It usually works out at 4 assets per FTE.

There are multiple providers. Some perform well: others less than well. Some may operate a call centre, others a web portal. Some may offer both. In any case, the user is faced with multiple different contacts and methods of communicating. Some are automated. Some are manual. None are streamlined.

It is not easy for enterprises to get an overview of which assets cause the most disruptions to workflows, which providers deliver good service, and which users are a nuisance.

Imagine a tool that allowed enterprises to streamline all of this into one collaborative platform that facilitates intuitive management of all assets and service contracts. Imagine if this tool were available as a mobile technology app that could be used in any type of business setting including environments where no PCs or desktops were present.

Imagine a tool that enables both end-users and service providers to directly communicate with each other, thus eliminating unused/badly used portals, telephone calls and e-mails, a tool that interfaces with existing systems, including CRM, ERP, Helpdesk and Job-Ticketing. Frustration would be reduced, productivity would increase, and employee wellbeing would improve.

For our imaging supplies resellers, there is a lucrative opportunity to increase sales and take out costs at the same time. Customers will “stick” when satisfaction levels increase. Customer Experience (CX) has now become the key battlefront. According to Gartner’s Customer Experience Survey of 2017, more than 80 percent of companies recognise they must improve their CX game.

The Forrester Analyst Group says that 72 percent of companies have set CX improvement as their #1 priority. CX Specialist firm Walker says that by 2020, CX will overtake price and product as the key brand differentiator. Salesforce.com says that 70 percent of buyers have said technology makes it easier for them to move their business. Microsoft says that 68 percent of buyers have higher expectations of service compared with one year ago.

Print may be flat or even in decline. But most organisations still print something and therefore our resellers have an opportunity to use technology to make existing cartridge customers stickier and simultaneously reduce dependency on cartridges for revenue, by generating new revenues from providers of other assets to their customers. Now our resellers, directly or indirectly, can seduce the CFO/CIO with valuable information about all the assets.

For more information about this opportunity, please contact me at mark@iopbv.com

What can Independent Channel Resellers of Printer Supplies Expect?

Change brings lots of exciting opportunities to look forward to. Hear what Mark Dawson has to say on what Independent Channel Resellers of printer supplies can expect.

  We are living in a period of unprecedented change, driven by technology and changing social habits. Some call it the Fourth Industrial Revolution. Change brings lots of exciting opportunities to look forward to. However, there are several elephants in the room… and they cannot be ignored. The biggest one is volume. The market is flat, evidenced by HP’s latest quarterly investor earnings call. It acknowledges that we are entering the end game with further consolidation inevitable. Two more elephants: By 2020, 50 percent of the global workforce will be millennials. Gen-Y prints less. Gen-Z doesn’t print. Two outcomes: Reduced consumption as these habits arrive in the workspace 

and changed procurement behaviour, facilitated by the other elephant, technology. Millennials do not call and do not want to be called. They communicate through social media. They source online. If a printer cartridge does not arrive as part of a managed service, it will be procured with three mouse clicks. Amazon is not so much an elephant: more like a leopard. Amazon Business launched in the U.K. in April 2017 and by mid-December had 90,000 companies buying office supplies. It is growing in Germany and France and just launched in Spain and Italy. Office Depot referenced it as a key factor in shareholder value erosion. Resellers beware. There are other elephants too. The share of MPS will grow further. Historically focussed on the corporate segment, providers are now penetrating SME, the traditional hunting ground for independent resellers. Continued page migration from desktop to floor-standing devices reduces further the accessible market for transactional  resellers. In difficult times it is natural to seek support from friends. Yet, OEMs are reigning in their channel support while increasing direct sales activities. Most wholesalers have direct divisions. Yesterday’s partners are today’s competitors. So, what’s to look forward to? One of our industry’s thought leaders, Ian Elliott of E&S Solutions, provides us with a pertinent reminder that technology is a great leveller: “It does not matter if you are a one-man band or a multi-million dollar business, you can make your business look, feel and behave like a multi-billion dollar business by deploying an integrated information technology platform and learning how to use it.” I don’t suggest trying to beat Amazon at its own game, but I do recommend that resellers combine a cohesive digital marketing strategy with an improved value proposition. Priority should be given to tools that enhance customer stickiness. One such tool is eesyQ. This mobile app connects all users with all assets and with all providers of assets in any organisation. For printers and copiers, supplies and service are automatically requested simply by scanning QR codes with a smart phone. For those selling cartridges transactionally, this is exciting. For those already delivering MPS, eesyQ brings important efficiency gains and cost reductions. Reseller value propositions can also be strengthened by brands that provide margin enhancement for the channel. One such brand is IBM. A range of IBM printer cartridges are available under license for use in HP’s LaserJet range. A selective distribution strategy avoids commoditisation. Intelligent positioning multiplies reseller cash margins. New revenue streams can be created by entering the 3D space. One particularly exciting vertical is education. Schools around the globe need resellers to help them with tools for STEM learning. This market will exhibit explosive growth. Resellers currently supplying printer cartridges to schools are well placed to take advantage. There are lots of opportunities for the reseller community to increase competitive advantage and to grow sales and profits.

 

The Future of the Imaging Supplies Industry is More than Imaging Supplies!

Mark Dawson discusses how the biggest trend impacting society is a shift away from ownership of objects to placing more value on experiences. Read more to find out why Mark thinks we cannot ignore technological and behavioural changes.

 

We have all read the OEM-sponsored white papers telling us that print is not dead, that physical documents remain critical to modern business processes and that our industry has a bright future.

I agree with most of those points. However, there is a danger. A trap. No amount of marketing can protect an industry that is myopic, or ignores technological, societal and behavioural changes. Ask Kodak.

Yes, the global imaging supplies business is huge—commonly valued at about US$80 billion. However, can you show me an OEM that is growing share, or one that is increasing the EBITA it generates from supplies?

Toner cartridges are not going to go away in a hurry. There is no extinction event on the horizon. But this is not a pleasant space in which to operate. The market is mature. Significant consolidation is long overdue. Cut throat competition results in constant price compression. So, it is one big blood red ocean out there. New oceans are required. Blue ones.

Technology is driving change. Change always presents opportunity. But sometimes we need to look beyond technology to identify the most pertinent drivers of change and then build business strategy accordingly.

The single biggest trend impacting everything in society is a shift away from ownership and accumulation of objects to placing more value on experiences. The need and desire to deliver “Everything as a Service” promotes technological innovation. Not the other way around.

From Google, to Facebook, to Uber and countless others, the big winners are clearly companies whose products are not objects at all, but services and experiences. Closer to home, this movement is ultimately what forced HP to break itself up, and what made IBM dump its PC business and focus on services.

There is desire in every enterprise to change. Like consumers, these businesses no longer want to purchase assets. Rather, they want access to what those assets deliver. They want to pay only for what they use, as the concept of “Everything as a Service” takes hold.

I read somewhere that in the U.S., employers prefer not to hire workers anymore. Apparently, more than a third of the U.S. workforce is now “on-demand”.

The imaging supplies channel may not fully appreciate it, but it is ideally placed to take advantage. OEMs and channel resellers have evolved from selling objects like copiers, printers, faxes, to renting them, then moved on to MPS/MDS business models. Often they transform into full MSPs. The corporate enterprises served by these providers have millions of assets outside of hardcopy devices, which present a huge opportunity to pivot out of all things hard copy, into provision of supplies and services to an infinite existing (and future) installed base of other assets.

Success cannot be attained without focus as most channel resellers can attest. They are strong in serving the public sector, logistics, finance, construction, manufacturing companies or whatever. Providers of print, however, can extend their reach to deliver other supplies and services. This is done by applying their proven MPS models to the other assets within their current vertical markets.

HVAC – Heating, Ventilation and Air Conditioning represents just one group of assets. There are many more. I ask, which industry knows more about transitioning from a purely transactional sales model to a pay-as-you-go model than the imaging supplies industry? The skills, experience and knowledge acquired during this transformation must be applied to many other groups of enterprise assets.

This is the way to pivot into blue oceans that will deliver new revenue streams, and avoid myopia.

Blame the Internet

Dr Stanislav Malinskiy discusses how the internet has entered our lives and changed them forever.

 

The Internet has entered our lives and has changed them forever. At first glance it appears that it is all for the better. Useful and necessary information can be found within seconds: bus and train schedules, restaurants, local, national and international news, and updates on what your friends and relatives are up to. You can also quickly connect with your commercial partners to discuss and coordinate plans, make sales and promote new products and services.

The Internet has undoubtedly changed our behavior, the sources and amount of received information, and biased our decision-making and the manner of implementation. And the increase in decision-making process can be done quickly and efficiently thanks to the ever-growing volume of useful information.

And disinformation….

This is our modern reality. Many decisions, which may be correct today, may be outdated tomorrow. The vast amount of information and knowledge considered to be ultimate truth ceases to be such extremely quickly. So quickly, that sometimes we fail to recognize it.

Recently it was quite evident—as based upon the argument that laser printing devices were aimed at office printing while inkjets targeted home environment—that the cost per page for laser devices was a much lower than that of inkjets. Inkjet printers were unjustifiably expensive for use at the modern office. Are those “truths” so undoubtedly true today? And what of the speculation that OEM cartridges are fit for remanufacturing but compatibles are not? The vast amount of information that may be true and useful today can become useless and sometimes harmful for decision-making tomorrow.

There are more instances where outdated information is becoming available, thanks to the Internet. It has become the source of knowledge for the majority of specialists. Outdated knowledge accumulates and continues to be trapped in the web. It keeps on growing and is analyzed and searched for by Internet search engines. The best search engines offer their users the information as present day “truth” yet has already transformed itself from truth into a lie.

There is another unpleasant feature that the Internet possesses. Information placed on websites by their respective owners is rarely challenged. “Our company is the leader…”, “Our products have the highest quality…”, “Our brand is well-known internationally…” and the like. Such statements can be found on websites of both well-known, respected companies and unknown companies whose only virtue is their colossal activity on the Internet. The activity of highly professional marketers in social networks (SMM- Social Media Marketing) and within the field of web-site optimization for social media integration (SMO – Social Media Optimization) can push information to the top which is not the most up-to-date and not completely true. The SMM and SMO specialists promote to the highest rankings the information for which they are paid to promote within social media. They do not care about the quality or accuracy of this information. This becomes another source of false information.

And that is not all.

Unfortunately the Internet is a channel of totally fake information. The publishing of fake information often discredits a competitor company, the competitor’s products and non-existent defects. Many methods of unfair competition have become common on the modern informational market.

By providing information and knowledge, the Internet has become a very influential part of the modern market, because more and more buyers choose and purchase products this way. The power and influence of the Internet grows each year. The old generation specialists—whose first career steps were taken in times before the Internet through the study of professional literature—is being replaced by the new generation of specialists who were influenced by the Internet even when at school. Computer games, social media discussions, news feeds and popular websites are the main source of the new generation’s knowledge. They are the ones who have become the majority of buyers on the modern market, and set to become the overwhelming majority of customers.

Customers have always been an important part of any market. As such, they have the power to bring profit to some sellers and not to others. So, much research is conducted on customers and the creation of tools to influence them—from OEM to distributor to reseller to end-user. When you consider the dynamics of the development and its intellectual functioning of the Internet within the context of the modern market, the Internet can either become a “killer” for suppliers of quality products or a “driver” of high quality product sales. Today the market development is at the point of bifurcation. The direction the market will go is largely based on the actions of quality product manufacturers and the large distributors of such products. All that is required from them today is to focus the attention of potential buyers to the issue of quality (and not only the product’s quality, but also the quality of knowledge and the quality of information regarding the market).

The modern informational market has now reached status-quo. The sellers (resellers) are trying to offer the buyer a wide range of products of varying quality and at different prices. They are not emphasizing the quality of the products, nor on the quality of information, since they simply do not need to. Instead of explaining to buyers the value and economic benefits of quality products (as well as quality knowledge and information), the sellers simply adapt to the situation dynamics of the market. Such a situation puts the market chances of all companies “on the same desk” irrespective of whether they are a well known established or an unknown new one. The customer’s lack of quality knowledge and quality information regarding the modern market, its products and sellers makes this person a “hostage” to the knowledge which is only available on the Internet. They may not have access to the real truth in order to make a better decision.

The market players cannot influence the development of the Internet, nor can they influence the presence of various quality products on the modern market, and the presence of competitor companies. However they can significantly intensify the work on providing customers in the market with quality information and knowledge. For this they have all the possibilities: exhibitions, magazines, training courses, etc. It is necessary to form the pool of informational media and events, not forgetting the quality introduction of information (on the Internet as well) and its quality distribution (again on the Internet as well).

A dissatisfied buyer, who has bought products two or three times from “XYZ” brand, will be absolutely sure that “XYZ” is a low quality brand. But what of the aftermarket? It is, of itself, a brand—the other choice a customer has when they are not buying an OEM. Think of the harm done by the production and distribution of low quality products. Even a single manufacturer or distributor can cast a shadow over the whole industry. The buyer who has bought cheap, low-quality consumables two or three times will be absolutely sure that all aftermarket products are low quality as well.

It follows that the leaders of the aftermarket—the manufacturing companies (which treasure the interests of the industry and their own brand) and their distributors—must show leadership and take action.

Of course one might do nothing; leaving everything as it is. What happens next? Internet technologies will continue their development. The volume of information and knowledge within the Internet will continue to grow. The share of proofed and quality information will continue to shrink. Internet manipulation will gain traction resulting in the opinion regarding the aftermarket industry becoming worse. The only “perceivable” advantage will be the prices of compatible products. They will decrease, as will the margins…Time shall tell!

Does our industry have enough transformational leaders?

Since I joined the hardcopy supplies industry in 1987, I have held a variety of positions in a variety of organizations exhibiting a variety of cultures. I have reported to, and worked with, a variety of people with different “styles.” I have had the privilege of working with inspired leaders and benefited from their mentorship and vision. I have also experienced the “boss,” someone who demands compliance by virtue of their position and title, and where response is based on authority rather than goodwill. I know which culture I prefer! And I know which is more effective. As our markets become ever more challenging, transformation is required for companies to grow again. Our industry needs fewer “bosses” and more leaders. These leaders must create and deliver transformational change. “Knock on more doors.” “Be more aggressive.” “Make more calls.”  “We need more volume.” “Look, just sell more toner, will you?” These are not the solutions for toner cartridge (re)manufacturers whose value propositions have become stale and outdated. Such an approach does not address the changing nature of the market, the increased role of technology, the changing procurement habits of generations Y and Z, and the myriad of other challenges that I have referenced in previous columns. The model for “transformational leadership” focuses on visionary thinking and bringing about change. It is needed more than ever, given the current state of our industry. Transactional leadership, in which management attempts to maintain and steadily improve current performance, isn’t going to cut it. If your sales teams do not have new tools, new talk tracks, new solutions, new ways to engage new customers, complaining about the numbers on the weekly sales report is not going to fix it. Transformational leaders always have a vision. This is a realistic, convincing and attractive picture of what the business should look like in the future. This vision provides direction, sets priorities, and has mileposts for measuring progress. Analysis, creativity and intuition are essential for a vision to be realistic as well as stretching. Good analysis would include: the organization’s core competences, weaknesses, opportunities and threats; the intensity of competitive rivalry; bargaining power of both suppliers and customers; and crucially for our industry today, the threat of new entrants and substitute products and solutions; and knowledge of the macroenvironment, political, economic, social and technological. By understanding the current situation, thinking about how the market will evolve and by predicting how the competitors will behave, it is possible to develop the vision, and formulate innovative strategies to achieve that vision. Creating the vision and designing the strategies is one thing. Execution is something else entirely. This is where good leaders are worth their weight in gold. Transformational Leaders are successful because they motivate their teams. They explain the vision in a way that can be seen, felt, understood and embraced by all those that are needed to make it happen. They use the vision to create shared values that are meaningful and relevant for all team members. Transformational leaders successfully execute by coaching, guiding and mentoring. They don’t direct. They encourage rather than criticize. They recognize and optimize natural talent rather than point out weaknesses. They focus on the team and not on themselves. They inspire performance instead of demanding results. They develop rather than manipulate their people. Goodwill replaces authority. They generate enthusiasm not fear. Are you in a leadership position? Do you have a transformational vision for your organization? Are you motivating and inspiring your people to achieve it? Dwight Eisenhower said, “Leadership is the art of getting someone else to do something you want done because he or she wants to do it.”

Why you should hire more women?

According to the World Bank, aging populations, low investment and tightening monetary policy will constrain global expansion. In 2017, the world’s economy grew three percent. It is expected to maintain that level to 2020. But then it will get tough, says the bank. Major reforms are required to release further potential.

Changes that encourage women to enter and thrive in the workspace would be transformational. There are almost as many women as men on the planet. Yet in 2016, only 4.2% of Fortune 500 companies had a female CEO.

In Australia, according to Joyful Communications, there is an AU$8 billion gap in potential GDP, due to women who graduate from a university, but drop out of the workforce early. Only 15 percent of ASX200 company board positions are held by women. There is a female talent pipeline leak. It is costing serious money. The pattern is repeated in many countries.

In Japan, women are very well educated, but typically do not enter the workforce and stay. Goldman Sachs says that Japan could increase the female employment rate by more than eight million and add 15 percent to GDP.

According to the International Monetary Fund (IMF), increasing global employment rates of women would result in huge gains. If women worked at the same level as men in Egypt, the country’s GDP would grow by 34 percent. The UAE would see a 12 percent increase. Germany and France would increase four percent, and even the United States would see five percent more growth. Gender parity for India would mean US$700 billion of additional GDP in 2025. According a recent McKinsey study, advancing women’s equality could add US$12 trillion to the global economy.

Getting more woman into business is not just about closing the pay gap, providing flexible working hours and building better child care resources. There remains an inherent male bias to overcome. Yet women are well equipped with many of the qualities required for success in business. They have many solid business characteristics, including robustness and the ability to survive.

Steve Austad, chairman of biology at the University of Alabama, says women are better able to survive than males at any age. He studied this for 20 years. His database shows that all over the world, and as far back as records began, women have outlived men by five to six years. According to data from the Global Gerontology Research Group, there are 43 people in the world aged 110 or more. Of these, 42 are women. Women have higher pain thresholds too. Ask any father who has witnessed the birth of his children. Leave that task to men and see how long humanity survives!

Let’s agree then, that biologically, women are tougher than men.

But what about financial decision making? Terry Odean, a University of California professor, studied gender investor performance over a 20-year period. Individual female investors outperformed individual men by 2.3%. Female groups outperformed male groups by 4.6%. He concluded that men made more bad investment decisions than women. Men allowed one-upmanship and bragging to impact their behaviour. Men held onto their losses longer. Women were more emotionally detached and quicker to unload losing stocks. Men exhibited more bravado and greater reluctance to accept mistakes. The positivity illusion which clouds critical thinking affects men more than women.

We are in the Information Age. It is fiercely competitive, so we need better communicators. Women tend to be more skilled at that than men. Global businesses require expanding networks. Women are natural networkers. Retaining top talent requires relationship strategies. Women instinctively care about building relationships. Rapid changes in technology require more flexibility. Women have extensive multi-tasking abilities.

To drive improved performance, companies need more talent and stronger leaders of whatever gender and at all levels. The talent pool can be doubled as more women are included.  Is your business growing fast enough? How many of the leaders in your business are women?

Channel Distribution

No chosen approach is set in stone  forever. New channels can be evaluated at any time. Existing channel management can be improved at any time. Hear what Mark Dawson has to say. 

 

There are various ways manufacturers and brand owners can get their products to the end user. In the world of imaging supplies, most of us have come across suppliers or competitors that believe they can sell the same cartridge twice. That don’t understand why their wholesale price points should be different to their reseller price points, and don’t seem to care how their brand is positioned by different channels. This muddled approach gives our industry an unprofessional image.

A well thought out channel strategy is critical for sustainable growth. It is right up there with competitive advantage and branding as a basic building block of business strategy and goes hand in hand with pricing strategy. No chosen approach is set in stone forever. New channels can be evaluated at any time. Existing channel management can be improved at any time.

Start by understanding your target users. We can learn from the OEM segmentation. I added my interpretation of the number of devices:

  1. Consumer/Home User: probably with one or two hard copy output devices;
  2. Small Office Home Office (SOHO)/Micro Business: one or two devices;
  3. Small to Medium Enterprises: less than 20 devices;
  4. Enterprises: less than 100 devices;
  5. Large Enterprises (e.g. Fortune 500): more than 100 devices;
  6. Production Print Companies: main business is printing.

Consider: Which are your target segments, and why? Which segments are best suited to your current and planned products/solutions? What resources and infrastructure are available to reach the target segments?

For each of the segments, typical questions will include:

  1. How and where do customers purchase?
  2. What education/training do they need?
  3. Are additional products/services from other vendors required in conjunction with mine?
  4. Do the customers require any help with installation?
  5. Will service and maintenance be required after purchase?

Most of the available Channel Strategies can be broadly grouped as:

  1. Direct to user (one step)
  2. Via Resellers (two steps)
  • Via Wholesale Distributors (three steps)

They are not mutually exclusive. Companies can operate with two and sometimes all three. Consider carefully how to most profitably match the needs of the end-user to the channel. The closer you are to the user, the higher will be your gross margin. However, direct sales models often carry a very high cost of sales. Technology can mitigate that to some extent.

For Segments 3, 4 and 5, I advocate the use of “Natural Partners”. These resellers already have relationships with your target users delivering other products/services. When your value proposition is strong, Natural Partners can be educated, trained and incentivized to promote your products and services. Building a network of Authorised Reseller Partners (ARPs) can be very powerful.

Geographical location, import licenses, freight costs and other factors will determine whether Natural Partners can be engaged directly or whether a Wholesale Distributor is required. Using different channels simultaneously may deliver incremental volume. It can also increase the risk of channel conflicts. These usually revolve around price and territory.

When using multiple channels, price points for each step must allow a fair margin for each partner. If users can buy from one channel at a lower price than from another, partners will seriously push back. Such conflicts can disable an entire strategy, so price points must be carefully mapped out and robustly managed.

This in turn requires strong disciplines in the sales process. Today our markets have never been more competitive. Deploying multi-channel distribution strategies is a key success factor to capture maximum market share. These need to be carefully planned and executed to avoid conflict and to maximise market share.

 

Channel Distribution

There are various ways manufacturers and brand owners can get their products to the end user. In the world of imaging supplies, most of us have come across suppliers or competitors that believe they can sell the same cartridge twice, that don’t understand why their wholesale price points should be different to their reseller price points, and don’t seem to care how their brand is positioned by different channels. This muddled approach gives our industry an unprofessional image.

A well thought out channel strategy is critical for sustainable growth. It is right up there with competitive advantage and branding as a basic building block of business strategy and goes hand in hand with pricing strategy.

No chosen approach is set in stone forever. New channels can be evaluated at any time. Existing channel management can be improved at any time.

Start by understanding your target users. We can learn from the OEM segmentation. I added my interpretation of the number of devices:

  1. Consumer/Home User: probably with one or two hard copy output devices;
  2. Small Office Home Office (SOHO)/Micro Business: one or two devices;
  3. Small to Medium Enterprises: less than 20 devices;
  4. Enterprises: less than 100 devices;
  5. Large Enterprises (e.g. Fortune 500): more than 100 devices;
  6. Production Print Companies: main business is printing.

Consider: which are your target segments, and why? Which segments are best suited to your current and planned products/solutions? What resources and infrastructure are available to reach the target segments?

For each of segment, typical questions will include:

  1. How and where do customers purchase?
  2. What education/training do they need?
  3. Are additional products/services from other vendors required in conjunction with mine?
  4. Do the customers require any help with installation?
  5. Will service and maintenance be required after purchase?

Most of the available Channel Strategies can be broadly grouped as:

  1. Direct to user (one step)
  2. Via Resellers (two steps)
  • Via Wholesale Distributors (three steps)

They are not mutually exclusive. Companies can operate with two and sometimes all three.

Consider carefully how to most profitably match the needs of the end-user to the channel. The closer you are to the user, the higher will be your gross margin. However, direct sales models often carry a very high cost of sales. Technology can mitigate that to some extent.

For Segments 3, 4 and 5, I advocate the use of “Natural Partners”. These resellers already have relationships with your target users delivering other products/services. When your value proposition is strong, Natural Partners can be educated, trained and incentivized to promote your products and services. Building a network of Authorised Reseller Partners (ARPs) can be very powerful.

Geographical location, import licenses, freight costs and other factors will determine whether Natural Partners can be engaged directly or whether a Wholesale Distributor is required.

Using different channels simultaneously may deliver incremental volume. It can also increase the risk of channel conflicts. These usually revolve around price and territory. When using multiple channels, price points for for each step must allow a fair margin for each partner. If users can buy from one channel at a lower price than from another, partners will seriously push back. Such conflicts can disable an entire strategy, so price points must be carefully mapped out and robustly managed. This in turn requires strong disciplines in the sales process.

Today our markets have never been more competitive. Deploying multi-channel distribution strategies is a key success factor to capture maximum market share. These need to be carefully planned and executed to avoid conflict and to maximise market share.