If you are a small business specializing in network infrastructure equipment and/or services, you have a broad market to sell to that includes thousands of enterprises, WISPs, regional service providers, utility companies, and municipalities across North America... that is if you can reach them. So how does a small, growing business reach these companies and expand their customer base with limited resources and staff? Distributors and/or resellers may be the answer. Distributors and resellers are part of the supply chain or channel in North America, and this can be a very effective tool for companies with a limited sales force. In total, the channel is made up of the following four key components:
Think of the supply chain as a pyramid, with your company at the top. You utilize a few distributors, who in turn have relationships with many resellers, who then sells to a large number of end user customers.
Distributors - A distributor/wholesaler will be the entity that your company works with most closely. In order to get the best pricing to the end user, distributors will buy products in volume and warehouse them. Although the distributor's role is varied, it always includes working with the reseller, and typically includes handling the payment of the sale, helping your company market your product, and training resellers and/or end user customers on the benefits of your product. Distributors typically will not offer overlapping products or services in their portfolios, in order to keep harmony among you and the rest of the manufacturers they represent. In turn, they ask you to view them as an integral partner in your sales chain.
Resellers or VARs – Resellers, in turn, buy from distributors and sell to end users. Sales are often small and can be for one-off projects, which is why resellers turn to distributors, instead of directly to your company – the distributor has already purchased products at a lower price through volume pricing. This process helps to make your company's product more appealing and affordable to end-user customers, while keeping your margins intact. Note: Although most resellers are VARs, the difference is that a VAR provides an extra service or feature to the sale. An example of this would be installation, training, network design, or something else that brings value to the deal.
A reseller is an essential component of a savvy vertical sales strategy. It is not practical for a small to medium sized company, like yourself, to reach thousands of smaller customers that, in total, generate substantial revenue. Thus, partnering with a distributor that has strong relationships with key resellers throughout the region is important.
End User Customer – The end user customer is the bank, school district, utility company, WISP or any other business/entity that will ultimately be buying and using the manufacturer's product.
Tips to keep in mind
The sales channel is straightforward and should benefit your business. There are, however, a couple things to keep in mind. First, a signed contract with a distributor or reseller does not necessarily equate to revenue. Although distributors and resellers will connect you to key customers and provide product support, they are not always held accountable to reach certain revenue goals. Therefore, it is wise to have two to four distributors working on your behalf. Also, when interviewing a distributor, make sure you ask what companies they represent and do they have preferred customers that may compete with your business. What are the upfront costs, if any? What resellers are key partners? What type of incentives do they offer, in the way of marketing dollars, co-op dollars, training, etc.? What is their sales strategy? Although this is not an exhaustive list of questions, it will get the ball rolling in the right direction.
Lastly, if your company is an integrator or installer, then the approach to the channel may be slightly different, as these tasks may be done in–house by the reseller or distributor. Despite this there are distributors and resellers who partner with outside companies for this skill, so keep looking and asking questions.
Below is a list of key distributors throughout the U.S. and Canada. Keep in mind that this list is not exhaustive and there are additional distributors that you may want to consider.
When effective partnerships are made in the channel, an efficient and effective sales strategy is sure to follow. For a small company with limited resources, the channel is critical for broad product reach. Distributors and resellers have the reach and tools to get your product in front of customers nationwide, while keeping your bottom line intact.
Emmy Johnson is the Principal Analyst and Founder of Sky Light Research, specializing in wireless backhaul equipment and the applications that drive them. This includes, microwave point-to-point radios, millimeterwave point to point radios; and wireless Ethernet point-to-point bridges. She has over 15 years of experience as a market analyst with firms such as Cahners In-Stat Group and Synergy Research Group where she was the lead analyst covering a wide range of wireless and data networking technologies. This diverse background has given her a solid understanding of core network technologies. She can be reached at emmy[email protected].