By Stuart Wilson
We’re starting to get some real Middle East channel transparency now in terms of understanding where vendors, distributors and resellers sell to, what products they sell and what their customer base looks like, but we’re still lacking a very important element: real numbers. It’s about time that those companies doing well stood up and challenged their peers by putting some real financial data on the table.
We’re starting to get some real Middle East channel transparency now in terms of understanding where distributors and resellers sell to, what products they sell and what their customer base looks like, but we’re still lacking a very important element: real numbers. It’s about time that those companies doing well stood up and challenged their peers by putting some real financial data on the table.
This plea extends beyond top line sales volumes. In other markets where sourcing detailed accounts of vendors and channel partners is a painless affair, you can actually move beyond the top line and start examining and comparing other factors such as profit margins. Only when we reach this level will we really start to understand the comparative success of companies in the Middle East market.
Let’s ask a simple question: which regional broadline distributor in the Middle East has the best profit margin? Sounds simple enough but nobody — not even the vendors — really knows the honest answer. Yes, I know that companies do not ‘have’ to disclose financial statements, but in my experience, it is those that do — even when there is no legal obligation to do so — that are the ones truly leading their respective market. They have nothing to hide, no one to fear and maintain complete confidence that their business model will allow them to continue to prosper as the market develops.
There are many channel companies, especially distributors, in this region that would love to be bought by a major player from Western Europe or even the US. One of the biggest fears that these potential acquirers have is the lack of financial transparency in this region and the inherent lack of trust that they have in the facts and figures they are given access to. These are factors that continue to stop several big names from taking the plunge in the Middle East. If they don’t believe the figures, they’re not going to stump up the cash.
I’ve just reread an earlier paragraph in this column and realised that I used the word ‘leading’ there, which I really shouldn’t have done. Because, if there is one wishy-washy word that is used ad nauseam by vendors and partners in this region — frequently without any justification — it is the phrase ‘leading’.
I’ve lost count of the number of times during Gitex that a ‘leading’ vendor appointed a ‘leading’ distributor to sell its product range that was highly successful and ‘leading’ in its product segment.
In terms of annoyingness, the use of the word ‘leading’ is only rivalled by the pointless percentages that vendors continue to dish out on a regular basis. From this point on, we’re going to ban pointless percentages in Channel Middle East and flag up the companies that continue to pump them out. By that I mean the 200% year-on-year growth rates in units sold, which gives you no idea if a vendor has moved from 1 unit to 3 units or 10,000 units to 30,000 units. Without a base quantity to judge these ridiculous percentage rises against, it is nothing more than marketing fluff and spin.
We need to start banishing these vague statements to channel history in the Middle East and replace them with real numbers. That is the only way for outsiders to truly appreciate the scale of the opportunity and quantify the growth rates that exist in this region.
So, if you’re brave enough, start highlighting the real financial figures for your channel business and demonstrate with numbers just how well you are doing in the region. It is time to shine a light on the companies prepared to take this step and start asking serious questions about those preferring to stay in the shadows when it comes to financial transparency.
It’s time to lose the ‘leading’ statements and present some cold, hard financial facts in the Middle East. That’s the genuine facts by the way, not the massaged ones. This is the only way for the Middle East channel — comprising vendors, distributors and resellers — to move to the next level of channel transparency and wider acceptance on the global stage.