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Channel crossover into CE area

Ingram Micro Canada sees more growth in consumer electronics than any other IT area and as such has invested significantly towards being a gateway for both IT and CE VARs

Ingram Micro Canada is positioning itself as a gateway for the channel and its vendor partners to the CE/IT crossover market.
Today, the goal for both the channel and vendors in this space is incremental revenue with CE products. To that end, the Mississauga, Ont.-based distributor has made substantial investments in this area to maximize and develop opportunities.

John Henderson, the director of consumer electronics and private label at Ingram Micro Canada manages a dedicated CE team of 10 people who are focused exclusively on 45 vendors offering CE products.  

The company is also challenged with understanding this new market segment. According to Henderson, his team is tasked with defining its retail and B2B strategies for CE in concert with the vendor partner sales teams.

“An obstacle for many VARs has been access to Tier 1 CE brands. Over the past few years, we have earned the confidence and trust of our CE vendors and will be launching, later this month, a CE Commercial Solution Provider Program that will enable resellers’ seamless access to some of the top brands in consumer electronics such as Sony, Samsung and Toshiba,” Henderson said.

The program will include a digital signage boot camp later this fall that will educate and train resellers on the CE/IT market.  

Ingram’s strategy for the CE/IT crossover is to provide resellers interested in this segment with access to a wide selection of CE products. The distributor wants to aggregate the complete solution, especially with digital signage, which Henderson said will be a key focus for his team this year.

Ingram is working on bundling displays with software and financing for solution providers. Ingram can even connect these IT resellers with installation specialists. His team will also work with IT resellers in developing customer CE/IT solutions for this market.

“We have worked very hard over the past three years to expand our line card from one vendor in 2004 to the largest portfolio of CE product of any distributor in Canada.  We have recruited a team of market experts directly from the CE industry and we are in a better position today than we have ever been to provide the guidance and experience needed for IT resellers to enter this market,” he said.

A good example of an IT solution provider that understands the CE/IT crossover is Caretek. According to Henderson, Caretek targets its existing customer base offering Ingram Micro’s CE line card into premium, incentive and employee purchase programs.

“Rather than a VAR’s customer looking to other sources for promotional items, Caretek can sell them products such as portable GPS, LCD TV’s, or Harmony remote controls.  This further entrenches the VAR in their customers’ business and provides them with incremental revenue at higher margins,” Henderson said.

On the flip side, Sony understands the convergence between CE and IT. Henderson said Sony has made a concerted effort to tap into this market, recognizing that this can be a huge segment of incremental revenue. “They have approached this market cautiously and worked closely with us to minimize and eliminate conflicts with their retail business,” he said.

The margin potential is higher on the CE side. However, Henderson said it does depend on the application. Digital signage, for example, carries between 10 per cent to 20 per cent margins. If a reseller incorporates a finance solution into the package, such as Ingram’s leasing program, those margins may rise, he said.

Henderson believes the margins over time will erode, so time is not a luxury VARs have in this up-and-coming market segment.