When Tech Data and Synnex announced their merger early this year, successfully forming the largest global distribution company rebranded as TD Synnex, most of the industry and the media were focusing on the changing dynamics of the top ranks and specifically their merger’s impact on Ingram Micro which has been an undisputed leader till now. More recently, US-based CDW Corporation, a provider of technology products and services for business, government and education, also announced the acquisition of Sirius Computer Solutions, Inc. A move perceived popularly as a response to the Tech Data Synnex merger, the objective of this acquisition is to accelerate progress via increasing their portfolio and enhancing delivery of customer-centric outcomes across the full technology solutions stack and lifecycle: A growth vision that makes them more enterprise-ready. However, little has been discussed about these mergers’ impact on the overall technology distribution industry, specifically on the smaller national brands.
In addition to being mutually beneficial, the TD Synnex merger also substantially enhances certain aspects for its customers. For one, the combined forces have broadened its product portfolio, giving its customers access to more vendors than before. The geographical footprint too has expanded wider, enabling better and possibly quicker supply. They have certainly picked the interest of the large resellers and MSPs catering to the Enterprise segment – they view this merger through the “what’s in it for me” filter willing to sway allegiance if convinced.
But what about the resellers catering to the small-medium business and regional players? For a smaller reseller, the factors that matter most when choosing a distributor are margins, product availability, ease of ordering, and shipping time.
- Larger distributors most often cannot offer the kind of margins that a competing smaller local distributor can offer.
- While they have a wide variety of products, it’s an operational nightmare to consistently maintain stock across all products, leaving some customers disappointed.
- Larger distributors tend to focus more on Enterprise customers and cater to their demands. Their processes, priorities and product suites are usually aligned with the needs of enterprise-level organizations, which may not be necessarily the same for SMBs.
- More prominent distributors’ order placement process, although completely automated and available on-demand over the internet, may be intimidating to smaller resellers who are possibly looking for particular products that are lost in the big mix.
- And of course, when there is shipping across the border, which is most likely the case when ordering with the larger distributors, there are shipping delays, taxes and conversion rates to deal with.
And this is the gap that the smaller and national distributors aspire to address. The audience and the demand gap can pave the way to beat the dominance of the large consolidations.
Specialization in product offerings can be a critical differentiator. The specialization will percolate to expertise, translating into customer service and post-sales support. It is a definite wow with customers, especially the smaller or start-up resellers, who aspire for smooth onboarding and customer experience.
Here is where national telecom distributors like Canada-based Gentek play a significant role. With their 30 plus years of experience in distribution to specialized niche areas such as VoIP and broadband, their industry knowledge is supreme. That combined with the new management intent on driving the transformation of the Canadian Technology segment by introducing and supporting new disruptive vendors and suppliers, Gentek seems to be set on grabbing the SMB distribution by the horn.
The customers can be assured of quality and choice when buying at smaller distributors like Gentek. Rather than herding buyers of all sizes towards big brands with exorbitant prices, Smaller distributors tend to offer a more comprehensive selection of the best-in-breed alternatives that meet the business requirements of all sizes. The SMB approach and expertise also translate to personalized and dedicated support and a seamless onboarding & post-sales experience.
Specialization is also an advantage for KGPCo, a key strategic partner to the world’s leading communication and technology companies. They bring in a joint combined specialization in Network Services and Supply Chain Solutions offering, an unmatched level of expertise that is ideally suited for smaller businesses (MSPs and Service Providers) that prefer complete one-stop solutions to build, optimize and manage networks.
Westcon-Comstor is another example of a distributor that built its strategy catering to smaller businesses and achieved success by embracing the channel success attitude, driving channel growth via training and value-added services that propelled its growth. Westcon-Comstor is a leading global technology distributor operating in more than 70 countries.
Graybar Canada, a Halifax-based wholesale distributor, deals with various products catering exclusively to Canadian industries. They are age-old players that have grown organically with branches in 30+ places in Canada, capturing remote markets over the decades.
Another US-born company, Anixter, is a leading global distributor of Network & Security Solutions, Electrical & Electronic Solutions and Utility Power Solutions for mid-sized organizations. Its biggest differentiator is its global reach, yet offering a local advantage. With an in-country presence in 50 countries and over 300 cities, they do business in more than 35 currencies and 30 languages, positioned to facilitate reduced shipping risks and costs.
The Canadian distribution landscape has been impacted by the merger of the leading Enterprise distributors, leaving behind a vast chasm. The smaller segment Canadian distributors are now grappling to fill the apparent gap in the landscape. Over the next few months and potentially within the next year, we expect to see the emergence of a more definite market leader catering to the SMB distribution segment. We are keeping an eye out to report these changes, so stay tuned for our next update.
Connect with the author: Monali Supramanyam