We’ve seen distributors dabble in consumer electronics, but it looks like this trend is here to stay.
Ingram Micro is tackling consumer electronics head-on with its latest bid to buy distributor DBL Distributing Inc. The distie has signed an agreement to acquire the assets of the Scottsdale, Ariz.-based company, which distributes consumer electronics accessories and related products.
This is yet another indication that commercial and consumer technologies are converging, and that distributors are increasingly turning to the retail channel. Take Dell, for example. Not only is the PC-maker turning to an indirect sales model, it has made a deal with Wal-Mart to distribute its PCs. So you can pick up orange juice, a prescription, cat food and a PC, all in one place.
So, what does this trend toward convergence mean for the reseller channel? Although the Ingram/DBL deal isn’t a Canadian announcement, it’s a sign of what’s to come. The consumer electronics business is thriving, and disties will want to get in on the action, especially if other areas of their business have slower sales and tighter margins.
DBL, for example, reported sales last year of nearly US$300 million, following four years of double-digit growth. And its gross and operating margins are double those of Ingram’s core distribution business.
For resellers, this could be good or bad, depending on how they look at it. When it comes to commodity lines of business resellers may find themselves competing directly with retailers. This is already happening, of course, but the competition could become even tougher.
And that means they have to continue to focus on that value add. After all, it’s highly unlikely that Wal-Mart will start selling SANs and blade servers any time soon.
But this could also be an opportunity for resellers to cross-sell and come up with unique solutions for their customers. DBL offers more than 17,000 consumer electronics products from vendors such as Philips, Samsung and Sony. It also has its own line of custom audio and video installation products, called NXG Technology.
We’re already starting to see the convergence of high-tech with physical security in the custom installation market (which was Ingram’s strategy two years ago when it bought AVAD). The same could hold true for consumer and commercial technologies – particularly consumer technologies that can be networked into more complex solutions.
Like anything in life, change is what you make it. This latest shift in this ever-shifting industry could represent tougher competition – or it could be an open door to new opportunities.
Comment: cdnedit@itbusiness.ca