Distributors have been talking about value-added service for quite some time now. All agree that it’s the only way to survive in the emerging highly competitive scenario. But most channel partners 360 Magazine spoke to complained that this was hardly the case. Except for a select few, most distributors do not provide any value-addition, they said. But most distributors do have service centers in different cities. And most try and provide quality products and services. However, providing high-quality products and service reliability is no longer enough. Both manufacturers and channel partners demand much more from the new age distributor. So what does value-addition mean in the current sense of the term? The basic definition of value addition says it’s any factor added to a product to increase its value or price. In reality value addition can be split into three sections —presales, support sales and post sales.

Presales This is one aspect of value addition, which is ignored by most of the channel. But this is as important as either sales or post sales support, and especially so when a new product is launched in the channel. Many partners enter the market without a clear understanding about the pros and cons of the business. That is where a distributor can play a lead role by enabling them to understand the pitfalls in terms of deliverables or credit. True value-added distributors empower the channel by educating them about new products, invest in marketing campaigns, and more importantly, ensure that the product is available across the country. Says Navinder Chauhan, marketing and communications manager, Rashi Peripherals, “Distributors not only need to educate the channel but also train its internal staff about the product. Only when the internal staff is aware about the latest offerings and its technicalities will they be able to pass on this knowledge to the channel. In addition, distributors also have to ensure that the product available wherever there is demand.”

Post Sales The manufacturer promises the warranty on the product. But the onus lies on the distributors to provide it. Hence, distributors need to have systems in place to track products under warranty, and take steps to be closer to the channel partner as well as the end customer. Most distributors 360 Magazine spoke to are either putting in place new systems or upgrading legacy systems. Says Chauhan, “Value addition doesn’t end with sales. It extends to the post delivery phase as well. The distributor should put systems in place to provide support at the lowest cost, and ensure that the entire supply chain function as a single entity.” Beyond this, distributors also need to ensure the continuity of a product line by either launching upgrades or replacing it with a new product if the existing one is being phased out. “If a product line dies out then providing warranty would prove to be a serious challenge,” says Chauhan. Adds Kulkarni, “The distributors’ role is to reduce the risks involved in the business and provide the channel with an efficient service model.”

Requisite Factors Any distributor should first add value to its manufacturer partners by giving them the right kind of support. Says Paras Shah, Neoteric, “The instrument to penetrate into the market is the channel partner. The distributor should give the channel proper direction about business strategies.” Different distributors have expertise in different areas. They can hone this expertise wherein both manufacturer as well as the channel partner can benefit from it. “I believe it is not about having few exclusive partners or a few hundreds. What is important is to have the right strategy for that market,” says Shah. Thorough knowledge of a product is a key component in effective distribution. Therefore, product training remains a primary factor. But today the challenge for the distributor is different. Distributors should identify methods to conduct the training without taking the sales force out of the field for an extended period of time. One method that has been working successfully is online training with many distributors setting up robust online training websites for partners. Profitability is another key factor. Says Aditya Bhuwania, “Unless a distributor is profitable, the partner cannot be profitable.” But J. Kulkarni of Redington feels that channel partners do not need help from distributors to maintain profitability. According to him, the distributor can help the partner to access business opportunities, which it may not be able to do on its own due to geographical or financial restrictions. In terms of sheer profitability, there is very little the distributor can do. However, ensuring that they run a profitable business is something the distributor can do. For instance, large tender queries can be addressed more effectively through distributor participation. Since a small reseller may not be able to comply with these requirements the distributor can step in to fulfill the demand.

Finally The goal of a distribution company should be to make sure that the right product is made available at the right time in the most efficient and cost effective manner. Distributors not only need to procure the product from the channel and sell it to the next level but also ensure that it in turn successfully sells to the next level by creating demand for it. A single weak link could affect the whole chain.