Sure, it’s nice to have a choice in the grocery store between Heinz ketchup and the cheaper no-name brand, but is it something resellers will go for in the distribution world?
This concept isn’t exactly new. Many distributors have been offering unbranded products for years – and not just PCs. Synnex has a contract assembly operation, for example, building network security appliances, servers and workstations (primarily with Sun).
Ingram has also dabbled in it with its V7 house brand, and it’s clearly had some success with the concept, since it’s decided to move forward and expand the V7 product line in North America. V7 is a no-name alternative in the IT and consumer electronics space – though Ingram will also be co-branding products with well-known vendors.
This could be bad news, however, for some of Ingram’s “B” vendors. Unless you’re a tier-one vendor (or popular tier-two vendor), you could be headed for the door.
Ingram says this will give it an opportunity to consolidate vendors in specific product categories to focus more on tier-one vendors. Does that mean less choice for resellers? Well, in the display product category, Ingram represents 43 vendors – and that might be just a little bit too much choice. After all, we need a choice of 43 displays like we need a choice of 43 pasta sauces at the grocery store.
But will resellers go for it? Ultimately, it will come down to the product itself. Sometimes, there’s simply no substitute. An iPhone, for example, is all about the brand, and people who buy it are making a statement. But when it comes to a CAT6 networking cable, brand is significantly less important – in fact, customers could probably care less who makes it, so long as it’s decent quality and the price is right.
This is what Ingram is banking on. It’s choosing to come out with accessories and small-ticket items where brand is less important than price. With its V7 line, pricing is five to 25 per cent less than similar products from top-tier vendors. And, typically, the draw of house brands is higher margins for resellers.
Ingram launched the V7 brand in Europe a decade ago, and brought it to North America on a limited basis in 2005. It plans to roll out V7 products manufactured by its vendor partners this year, such as networking cables made by Belkin (CAT5e, CAT6, USB, fibre optic, VGA and DVI). Another deal is in the works to co-brand laptop bags and cases with Targus. Other accessories that won’t be co-branded (but will be manufactured by OEMs) include ink toners and batteries.
Ingram sees its brand as competition for third- and second-tier vendors that can’t afford to offer the same value, financial stability or long-term customer support. Good news for resellers, but not such great news for those third- and second-tier vendors.
