Online retailers posing threat to distribution

Amazon has always posed a threat to the channel because of its ability to serve smaller customers but it is also having an impact on distribution.

According to Context resellers have been buying up to 30% of their stock through Amazon and fellow etailers.

A small number of those surveyed even admitted to buying everything through etailers with product availability the main reason, with price not far behind.

The latest annual ChannelWatch report from channel watchers Context makes sobering reading for distributors that are already facing fierce competition from each other.

There is some good news though with Context noting that this year so far has been good for distribution, with that tier of the channel growing 5.1% year-on-year in H1.

The other comfort is that the advice to help combat the etailers is to focus on value-add, which is something the vast majority of distributors have become experts at doing over the last few years.

The transformation of IT distribution has been driven in a large part by the growing presence of major etailers and changing reseller expectations. Smaller resellers especially feel increasingly that their interests are not being looked after by distributors, and they’re flocking online as a result,” said Adam Simon, global managing director at Context.

“However, it’s not time for distributors to hit the panic button. By focusing on things like customer service, training and adding value in areas like the cloud and multiple new service areas they can find ways to differentiate. Reassuringly, distributors continue to invest in infrastructure and skills to support their clients,” he added.