8447779800, Low rate Call girls in Tughlakabad Delhi NCR
PC distribution channels for SMBs: A multi-channel approach
1. PC distribution channels for
small and medium businesses
(SMBs)
Base hypotheses and thoughts
Pavan V Vyas
2. The PC is not a product buy for SMBs – it is a solution buy
PC sales to SMBs is complex
SMBs ( businesses with <1000 employees) focus on entire PC solutions while making
their PC related buying decision. Therefore, PC sellers need to focus on:
Post purchase PC management
Mix and match the bundling of products and services to make customized offerings –
consider including optional remote and on-site management services to avoid downtime,
increase ease of maintenance, and provide better availability
Integrated PC solutions for improved operations
Provide software and hardware capabilities that can help with IT operational challenges such
as encryption, security, remote PC management, among others
Help customers with their buying process
Build advisory tools, relationships. Provide evidence to help SMBs obtain comparative
analysis between solutions - a proxy to “shopping around”. Also help them quantify the
business benefits of buying a particular PC family
Additional support
Provide financing help and support to help SMBs afford purchase and refresh of PCs
Provide training and installation services
3. Further, the SMB market is not just one single market – it is a market space
SMB is a business space encompassing many
markets
There are four distinct sub-segments within the small and medium segment – with
different needs, wants , and buying behavior
• Businesses with 1-10 employees, behaves almost like a consumer
• Unsophisticated IT – uses help from family and friends to research, buy, setup,
SOHO and maintain computers at their business
• Price conscious, shops around, may make emotional buying decisions
• Businesses with 10 -250 employees, small IT presence and budgets
• Rely on VARs or local service providers to compliment IT operations beyond their
Small business skeletal IT staff
• Mostly rational decisions but rely heavily on advice from VAR or service provider
• Businesses with 250 -500 employees, have a well structured IT department but
Medium require help with complex IT issues and challenges
business • Rational buyers with reasonable IT budgets, perform due diligence related to IT
buys but rely on advice from VARs, DMRs, or partners
• Businesses with 501-1000 employees, much like enterprises (in fact considered
enterprises in many markets)
Mid market • Sophisticated buying processes with differentiated CIO functions, rational IT
budgeting and buying, may use direct or indirect buying processes for IT buys
4. As a result, there is no one solution to selling PCs to SMBs
Different channel structures exist for selling to SMBs
Both direct and indirect sales channels currently serve the SMB space – the needs of
particular business size, vertical, and geography deciding their choice
Direct channels
• Direct sales force who sell to customers through face to face meetings
are still needed in some markets , particularly in the mid-market and
medium business segments
• Internet enabled direct selling is another business model that has wide
appeal in the SOHO and small business segments in developed markets
• Company owned retail formats are also attractive to a few segments
Indirect channels
• Analysts believe the PC market will move towards increased reliance
on indirect sales across all segments of the SMB space – led by the
growth in emerging markets and by mid market firms across markets
• All indirect channels will come to play a role –
• All types of retail stores multi-brand electronic retailers,
superstore retailers such as Walmart
• Digital market resellers
• Value added resellers and system integrators
5. The outlook for the PC sales channels for SMBs
Retail – a key channel for developed SOHO markets
The retail channel will become a key part of the commoditized PC distribution business,
particularly for the SOHO space in developed markets
• Nearly half of all SOHO businesses prefer to purchase their PCs at retail stores,
particularly in developed markets
• 27% of all PCs purchased by US SMBs in 2010 were through the retail channel –
this included small businesses and enterprises
• As the technology maturity and price consciousness of small businesses
increase in developed markets, the retail format is becoming a preferred
channel for the sales of PCs
• Retail formats allow small businesses to shop for multiple brands, features and
functionality and price, all in one place
• Other than specialty retailers like Fry's, Best Buy, Circuit City, retailers such as
Walmart and Sears who have electronics departments will also become a key
place where SOHO and consumers will shop for computers
• This will also include the purchases made online from the stores of these
websites and other online retailers such as Amazon
6. The outlook for the PC sales channels for SMBs
The rise of the DMR as an alternative channel
DMRs – direct online selling retailers are emerging as the second fastest growing indirect
retail sales channel, after retail – for developed markets such as the US
DMRs (Direct market retailers) occupy a market niche – lying between
the large specialty electronic retailers and the large distributors
Have become popular as a one stop shop for all IT products – from
hardware to software – encompassing PCs as well, particularly for the
SOHO and consumer businesses
Small businesses in the US are increasingly cozying up to making their
PC purchases online – internet retail sales grew 15.2% in 2010 – and
this is driving the growth of the DMR channel as well
DMR channels are expected to become more popular in developed
markets and are expected to become popular with not just SOHO but
all across the SMB space
7. The outlook for the PC sales channels for SMBs
VARs will remain important
Even as the share of sales by them are decreasing due to growing retail and internet
sales, the position of the VAR is not anyway diminished in the SMB space
• In developed markets like the US, purchase channels are also showing a shift
from VAR/reseller to retail/online due to a combination of buyers' IT maturity
and smaller replacement batches
• However, 32 percent of expected PC purchases from SMBs with 50-999
employees are still expected to be made through VARs and DMRs, the primary
resellers in these channels
• In emerging markets (e.g., Brazil), nearly half of SB PC purchases are still
through the traditional VAR/reseller channel
• Small businesses, middle business and mid market firms depend on VARs for
providing them integrated offerings and in providing advice about their IT
purchases and refresh cycles
• In developed markets, desktops are becoming niche type devices and will
gradually be sold through specialist channels such as VARs – as they package
products and solutions together in a customized format
• In some countries, a face-to-face business relationship is critical to the sales
process – this will greatly increase the cost of sales for manufacturers if VAR
relationships are not leveraged
8. The outlook for the PC sales channels for SMBs
Direct selling is not dead
Though there will be a gradual shift towards indirect channels, direct selling is far from
dead – in fact, it will be critical in some markets
SMBs prefer a combination of both the direct and indirect sales
channel when purchasing PCs – mid market firms in particular, prefer to
buy directly from manufacturers
In mature markets, the direct channel comes second to retailer store
fronts, with a sales volume of less than 10 percent of the segment
Company owned retail store fronts are becoming a popular place for
consumers and SOHO businesses to buy PCs – this may be a trend to
watch in the future
The ability to directly order computers from the company website is
popular with SOHO and consumers – a trend that will not change with
time
9. So, what’s the way ahead?
There is no “one size fits all” solution………
Multiple channels will exist – and will need to be managed, developed, and nourished.
Some channel partners will need more support than others
Direct Direct channels will need to exist and diversify – from direct sales force for mid
channels market firms, company owned retail for key SOHO hotspots, and the ability to
deliver online purchases, PC makers cannot rule out any options
As retail becomes a leading channel for the sales of PCs to consumers and
Retail channel SOHO, relationships with retailers – both specialty and superstores will be
crucial
Particularly in the US today, and going forward in other mature markets,
DMRs working closely on developing DMRs will be crucial to maintain market
dominance
VARs are struggling as their value proposition is questioned, their services
VARs model is questioned – forcing them to move towards cloud based offerings. It
is critical to provide them support as they are key channel participants
particularly for desktops and in the mid market space
10. What will decide the choice of channel?
The right channel choice will depend on key factors
SMBs are complex. Therefore, there is no one choice for a channel – there is a need to
invest in the right channel for the right market - based on:
Market Mature markets and emerging markets show very different trends in their
maturity channel preferences. This may be a key determinant on the choice of channel
Market sub- SOHO and mid-market, though both part of the SMB space have very different
segment needs, wants, buying processes and therefore, different channel requirements
Geography Geographic and cultural differences may warrant a need for different channel
and culture structures – there is a need to study the country, its business environment,
regulations, and culture before deciding channel structure
Verticals and The industry context and business vertical will also decide the choice of
horizontals channel design. It will be essential to factor it all as a channel structure is
decided.
One country may need multiple channel structures – and these may be very different
from a seemingly very similar neighboring country
11. In conclusion
Some overarching truths despite the choice of
channels
The PC is not a product buy to an SMB, the CIO is not the only decision maker….and so,
there is no one mantra for success in the SMB channel
Sell PC solutions, not products
Not just sell PCs but provide solutions for managing connectivity, data recovery, and PC
management, consider including toll free technical support and immediate troubleshooting ,
plus onsite customer support programmes. Include training and financing support
Sell to the entire SMB, not to the CIO
SMBs are small – therefore every one in the company may be an IT decision maker. Sellers
will need to focus not just on the CEO, CIO, or the IT department. There is a need to focus on
understanding the needs of SMBs in great detail and bundling together the right offering
Invest in channel development
There is a need to invest in channels – enabling the channels with tools and aids to help
SMBs with making the right purchase decisions and therefore perform their role of
galvanizing sales – this applies to all channels – direct and indirect
12. Thank you for your time!
I look forward to hearing from you!
All I seek is an opportunity
“Give me a place to stand and I will move the
earth”
For more information, please contact:
Pavan V Vyas
+1 – 647-857-0639
<pavanvvyas@gmail.com>