Diversifying distribution: What opportunities are there for creating new revenue streams?
Whether it’s for better or for worse, the truth is that the way consumers and businesses shop for, and buy, tech products is different now from how it may have been when many distributors first started trading. As retailers and resellers try their best to keep up with the latest trends, the support they need from those further up the channel also continues to evolve.
But what does this mean for the distribution industry and how should companies be diversifying their services?
PCR speaks to a channel service provider, a warehouse AI assistant manufacturer, and one of the biggest distributors in the UK tech channel to find out what opportunities they’ve found in the changing distribution landscape from their respective positions.
Changes in the channel
It seems that not a week goes by without hearing about a new acquisition in the distribution space. Whether businesses are moving into new markets such as VR, gaming and the smart home, or adding additional strings to their bow and taking on channel services and marketing, the distributors making waves in today’s climate are savvy enough to know that it’s no longer as simple as throwing a few posters in with product shipments and leaving it at that.
Retailers, resellers and the like want and need more, and those most attuned to the needs of their partners are the ones that will seek out the new opportunities in this space.
“As the end user increasingly looks for business outcomes from their investment in technology, distributors and the wider channel need to innovate in order to remain relevant,” says Scott Lynn, services director at global channel services provider Agilitas.
“Distributors need to support their reseller partners by providing a broader range of specialist products that can be bundled together to deliver complete packages. Recent examples of this approach include solutions such as a ‘Device-as-a-Service’ that not only includes the technology but also the commercial models to support a flexible, on-demand subscription-based billing solution that delivers a recurring revenue stream for reseller customers.
“Distributors’ expertise as an aggregator of products is now being utilised through delivering that same model across a number of multi-vendor services. Reseller customers are demanding that distributors add more value by providing an end- to-end solution. This is where we are experiencing much more collaboration with channel services firms to deliver that solution through a partner ecosystem,” says Lynn.
Fulfilment warehouses are one area in which the industry is seeing a lot of innovation. Constant evaluation, along with the adoption of crucial technologies, is critical when it comes to improving profitability and staying competitive.
Although it might still seem like science fiction to most, robotics has become one of the most sought after technologies for warehouse management. One company making waves in this space is 6 River Systems – the creators of a warehouse robot called Chuck.
“Chuck is a turn-key, drop-in replacement for cart picking that uses powerful cloud-based software, machine learning, and AI to get smarter and more efficient as it works,” explains Fergal Glynn, VP of marketing at 6 River Systems.
Chuck is purpose-built for busy fulfillment centers that serve split case picking operations and promises to double and triple the productivity of warehouse workers, or associates as 6 River calls them – at half the cost of traditional automation and without requiring any new infrastructure or changing the warehouse layout.
Rather than manually assigning orders to Chuck, workers are guided through a cart-build process at induction. Advanced algorithms work together to minimise walking and maximise operator and equipment utilisation.
“Depending on daily volumes and order profiles, Chuck can support batch, discrete, zone, and cluster picking – simultaneously. Once badged in, Chuck leads the associate, displaying important task information – item image, description, quantity, location, etc. – ahead of time,” explains Glynn.
“Onboard lights indicate which side of the aisle to pick from and which order container to place the item into. And Chuck’s high powered mounted scanner captures all necessary product information, including lot and serial number, in a single scan – allowing the operator to pick hands-free. As associates complete jobs on one Chuck, the next Chuck is already in position and ready to tag in, keeping productivity up, and associates on task.”
Services, services, services
Aside from warehouses, many in the industry have come to realise that retailer and reseller services are key when it comes to finding new revenue streams and bolstering business.
“The technology market is continually evolving and, as a result, distributors are used to change. It’s important to always remain relevant to customers and be able to respond to the revolution in retail,” says tech distributor Exertis.
“Besides offering the products that consumers want, distributors need to add value and complementary services which retailers can take advantage of to serve their customers better. For instance, drop ship services are now seen as a key service and software has moved predominately to a digital delivery solution.
“Distributors still need to provide the core competencies expected such as product supply, credit, logistics, sales and marketing alongside providing innovation in services. The channel may have evolved but it still remains relevant.”
Agilitas provides its distributor partners with international services across a multi-vendor server, storage, networking, desktop, laptop and print product portfolio, including maintenance and professional services.
Agilitas’s Lynn agrees with the distributor that remaining relevant to customers is a big factor when looking to enhance revenue streams.
“Adopting innovative and up-and-coming technologies, exploring new markets, and going where the customer is going are all creating new opportunities for distributors and allowing them to enhance their revenue streams,” he says.
“Our recent research into the channel in 2020 revealed that the appetite of those who are ready to expand into international markets has never been stronger. In order to create new revenue streams and increase opportunities, distributors need to ensure that they are staying relevant for their customers and embracing ‘the customer is always right’ concept.
“As today’s buyers are more informed on products and services than ever before, distributors need to be consistently reviewing their products and value propositions in order to remain aligned to the needs of their target market.”
Lynn concludes: “With every industry now more competitive than ever before, the need for companies to innovate and stay ahead of the competition has never been higher. If companies want new revenue streams and opportunities to be created, they need to be innovative for their customers.”
Scott Lynn – Agilitas Services Director