Gone are the days when the channel focused on moving product and that would be the end of the transaction. A decade ago, the term 'value-add' was not found in the channel dictionary. In those days, it was a case of efficient storage and supply, and perceived value-add was about being brilliant at holding stock or next-day delivery, and very little else. However, times have changed. With constantly evolving technologies and customer needs, the more progressive companies in the channel have started truly adding value.
"It's all about differentiation," says Simon Campbell-Young, CEO of Phoenix Distribution. "Much of what is touted as adding value is merely a service offered by many, but true added value lies in identifying and meeting the needs of customers they didn't know they had. This applies not just to the entire IT industry, but specifically to the channel, because many companies compete on the same terms. There isn't a lot of differentiation out there."
Phoenix Distribution has effectively created and captured more value through an approach that encompasses traditional distribution to channel and retail partners, as well as providing unique solutions such as its Electronic Software Distribution (ESD) offering. This value is felt by the company's channel as well as its vendors, as regardless of the specific approach, each involves forging highly collaborative relationships with selected partners and customers, yielding exciting results.
He explains that the actual logistical side of distribution - the moving boxes element - only forms about 25% of what the company does. "We stand out from the rest of the market because we operate differently to traditional distribution companies. We don't just sell products, we provide solutions."
These include high-level integration solution for banks, telcos and ISPs, as well as white label ESD store development. While every distributor wants to market to its existing customer base, thinking there's some "low-hanging fruit", Phoenix Distribution's approach not only adds value to its existing customer base, but opens doors to a previously unaddressed tier of customers. The company has developed custom ESD solutions for its retail customers, as well as banks and telcos, allowing them to provide additional value to their customers.
"As the company that created the first multi-vendor software download store in South Africa, we are exceptionally well positioned to provide the knowledge, the infrastructure and the solutions any company looking to break into this new area of business would require," says Campbell-Young. "The download stores we create are the customer's. The entire site is branded and personalised to the customer's requirements. With our expertise, the site is custom-built to allow companies to offer software products of their choice in the most cost-effective manner, giving them a competitive edge."
Phoenix Distribution is further enhancing its offering with its new Design and Sourcing division, which will provide specialist packaging, design and manufacturing of accessories such as Bluetooth headsets, tablet covers, mobile phone accessories and docking stations. In addition, the company offers enhanced category management by building optimised new shelving solutions for retailers, as well as helping clients understand attach-rate selling.
"The most important thing for distributors is to listen to their customers, keep an eye on the market, and never to accept the status-quo as the thing that will take the business through the next 10 years. Understanding the needs of customers and the economic value those needs represent requires an analysis of more than just gross margins. We therefore constantly focus on ensuring we don't 'drop boxes' and instead look at where we can meet our customers' needs and where we can offer that extra value that sets us apart," says Campbell-Young.
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