GTDC Newsletter: Winter 2008 Edition

• Distributor "E's" of Doing Business Stood Out Again in 2007
  Independent Industry Cost Study Under Way in the New Yea
• GTDC Expands in Europe, Appoints Peter van den Berg as Region's First GM
• In the News: IT “Distribution 2.0" Hits Its Stride
• Start 2008 With a Better Understanding of Your Business and Distribution
• Welcome to Ingram Micro’s Alain Monié
• GTDC Gains GTS Perspective

Efficient
IT distributors have always operated on thin margins that have caused many prospective investors and analysts to do a double-take. When scrutinizing selling, general and administrative (SG&A) expenses as a percentage of sales, the business model is much more understandable; distributors basically do a heck of a lot at a very low overall cost. In fact, as sales reached an all-time high last year, distributors were driving their SG&A to record-low levels. Vendors rely on distributors because it’s virtually impossible to achieve the same economies of scale through in-house resources and infrastructure – particularly when you take into account the ebbs and flows of international economies. In other words, why build and manage the capability at enormous cost when it already exists at consistently low cost along with the benefit of selling as part of comprehensive solutions. The speed and proficiency of distributors cannot be beat.

Effective
IT solution providers and resellers prefer to do business with distributors because they can get what they need — comprehensive solutions, service and support — from a select number of sources at highly competitive prices. It’s a far better proposition compared to buying direct from numerous manufacturers in business for a completely different purpose. These customers’ purchases also aggregate into substantial credit advantages with distributors, whose services are built specifically based on channel requirements in conjunction with vendor objectives. This industry came into existence with the “right products at the right time and price” foundation in place. Those benefits are still of fundamental importance, but the value of distributors today deeply extends into areas never even considered years ago, which segues to the next point.

Evolution
Distributors have steadfastly evolved through many challenges and pressures, methodically transforming their business models based on changing customer and business partner expectations. Consider how services expanded from the “pick, pack and ship” premise in the early years to a comprehensive range of offerings that now include demand generation, specialized communities, advanced technical support, custom configuration, software licensing, channel marketing, training, managed services, and much more. Distributors once faced perceptions that e-business upstarts would ultimately replace them. Instead, they have emerged as e-business leaders, integrating online capabilities that are now among the world’s best, with transaction volumes exceeding those of many household corporate names.