Distributors hold key to SMB market

For many vendors, the SMB market has been elusive. It’s expensive to reach this broad, disparate group of customers and they typically have little money to spend in return.

While VARs play a key role in creating demand for products and services in this market, distributors also play a role in helping them determine which solutions are sold to SMBs. Now more than ever, distributors deliver market direction to resellers — often because they’re more in touch with the specific requirements of SMBs than the vendors who supply the technology.

Vendors often treat the SMB market as a homogenous group, or simply don’t have the capability of reaching such a diverse group of customers. This is perhaps why distributors are often more successful than vendors in reaching the SMB market, since they bring together multi-vendor solutions for specific markets (such as security or VoIP) or verticals (such as education or banking).

Product knowledge and technical support are the key determinants in supplier selection and local dealers are the preferred purchase source for both products and services, according to the 2005 SMB and Enterprise Report from Evans Research Corp. The owner of an SMB usually has final purchasing authority with respect to IT products, says the report, while in larger companies the head of IT generally has the final say.

While resellers can significantly influence an SMB’s purchasing decisions, distributors are the ones who keep those resellers informed, providing the education, training and certification necessary to sell specific products and services. And some vendors are recognizing that distributors are the missing link in penetrating markets they previously haven’t been able to reach successfully on their own.

Oracle, for example, is trying to change the perception that its products are targeted at the enterprise space. It recently announced a distribution agreement with Tech Data Canada to extend its products – including Oracle Database and Oracle Fusion Middleware – into the Canadian SMB market.

What does Oracle get out of it? The company not only gains access to Tech Data’s customer base across Canada, it also gains marketing resources and logistics expertise to drive product sales to SMB-focused resellers.

Under the distribution agreement, Tech Data will recruit resellers interested in selling Oracle’s products to SMB customers. Both vendor and distributor will offer specialized sales and marketing resources, including authorization assistance, quote and bid preparation, order entry and part number retrieval, as well as sales and technical support. Initially, Oracle PartnerNetwork fees for resellers will be waived, since Oracle clearly sees distribution partners like Tech Data Canada — and their reseller base — as critical to reaching the SMB market.

Distributors may not play a direct role in influencing the SMB market, but it would be naïve to think they have nothing to do with it. With their role in educating the reseller channel, offering training and certification and providing vertical-oriented solutions, distributors have a significant influence on customer purchasing patterns, particularly in fragmented markets like the SMB space. And smart vendors have already figured this out.

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Jim Love, Chief Content Officer, IT World Canada

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Vawn Himmelsbach
Vawn Himmelsbach
Is a Toronto-based journalist and regular contributor to IT World Canada's publications.

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