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Sun 29 Jun 2008 11:33 AM

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Distribution gripes

Vendors often say they are not satisfied by the coverage they currently get from their distribution partners.

Vendors often say they are not satisfied by the coverage they currently get from their distribution partners. The answer to this problem will inevitably rely on recruiting a greater number of distribution partners to spread their geographical coverage. But are vendors fully appreciative of the work that their current distribution channel carries out?

Coverage and delivery are of course not the only services that distributors now offer vendor partners. Increasingly, as the Middle East market evolves and matures, distributors that prosper are those offering added value and shouldering a great deal of responsibility for the quality of the products and services they handle.

A modern distribution partner will take it upon themselves to train retailers. This even involves going to such lengths as, in commodity-driven product areas such as mobile devices, conducting "secret shopper" style drop-ins to retail partners and providing on-the-spot training of salesmen. Distributors are also responsible for aiding retailers in the implementations of any promotions.

Talking to retailers at a recent Distree event, one shop manager rather aptly described the retail channel as the "theatre" for products and proclaimed that vendors should, as such, afford them the support needed to put on a good performance. If retailers are the theatre for IT wares then distributors are the puppeteers - or at least the ones making sure the actors have all of props they need.

But perhaps one of the most important roles the value-added distribution channel now plays is that of communicator. In a retail environment where brands are plenty, consumers are highly discerning and shelf space is of a premium, distributors are able to make sure that the vendor's all important brand message filters through the channel and is disseminated to the customer.

Taking the example of the mobile devices domain, the message filtered to the customer through the channel is paramount to the success of a brand. For instance Microsoft - which produced the popular Windows Mobile platform for smart phones - the distributor is the perfect vessel to pass on its corporate message to consumers.

There are however, those distribution partners that feel the message might be being pushed a little too hard, and that vendors should devote more time and energy to supporting the distribution channel - especially as margins in distribution are traditionally tight. One distributor claims vendor relations with the distribution channel can be shallow and inevitably too brand focused.

This is perhaps even more relevant in the region's smaller and developing markets, where distributors and sub-distributors can be the sole representatives of the vendor's brand. In these countries the vendor is highly reliant on the distribution partner for the success of its products and geographical spread.

It has been a huge bug bear for some distributors in emerging markets that vendors have not been offering enough support, and have not been looking at the intricate requirements of such markets. Such support might be as simple as merely appointing a single representative to live and work in the country with the distributors and retailers, rather than flying-in someone from Dubai every once in a while.

Distribution appears on the vendor's balance sheet as a huge cost and is not, as one distributor described it, a profit centre. I have been told that the biggest challenge distributors often face is to justify the fees that they charge vendors.

It may be costly but the role of the distributor should not be taken for granted. Distributors have become a major aspect of the value chain - and their role is becoming ever more important as the call for service offerings grows louder, product lifespan shorter and vendors become more desperate to make sure their message is communicated to the end-user through the channel.

Julian Pletts is the assistant editor of Channel Middle East English.

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