I know a soft-spoken partner from the rapidly developing metropolis of Siliguri in the state of West Bengal who would maintain consistent pace of speech even in the midst of most crowded and violently loud market place.
In spite of his undisturbed and calm composure, his words would carry a surprising force, empowered by a superior intellect and an uncanny knowledge of life and people in the channel community. He told me, like many others in the channel, that IT resellers are increasingly leaning towards retail as a means to improve profit.
Undoubtedly, there are many who have capitalized on the retail boom and are steadily moving up the ladder.
In particular, there has been a humungous increase in sales of lifestyle products – and that include several from the IT counters. For instance, according to an estimate by 2007, India’s digital camera market will be close to 10 lakh units taking the market to a whopping Rs 650 crore as against Rs 100 crore in 2004-05.
Retail is today a high growth area where the share of the pie for the channel is increasing with every passing day though these accounts have been traditionally well guarded and serviced and in fact, exploited by the vendors themselves.
However, like all other seemingly lucrative avenues, this front too has its pros and cons. One cannot agree more with my Siliguri friend that although retail seems quite a rosy affair, the channel partners should not get into it just because their compatriots are turning retailers. With no proper strategy in place, including the lack of keenness to invest in services and manpower training, the very idea of entering into retail could simply boomerang.
There is no gainsaying to the fact that only a channel member, who has the conviction of handling the challenges, including hiccups like involvement of huge capital to ensure properly manner demonstration units, should venture into retail.
The vastness of Indian geography with peculiarity in each region would compel partners to look for specialized and different modules for sustaining their retail business in the respective pockets. To be successful, therefore, it is essential for a partner to look at different ways of approaching the customers innovatively. Some are experimenting by tapping specific verticals like education, pharmacy etc.
Another crucial factor is the limitation of a frog in a pond, that is to say that the influence of a channel partner or even VAR is limited to his own city or at best the territory. Although advantageous to an extent, this prevents a partner from augmenting his knowledge regarding the ever-flexible retail customers’ requirement, taste and also buying ability.
Basically, often, insincere guys with no long-term plans plunge into the retail arena. They never concentrate on growth in terms of reach or technical knowledge but use the module only for making quick profit. In an era when margins are shrinking, the only way to get closer to the customers is to improve on service. Also, there are some product lines which require greater focus to sell and partners involved in retail ought to understand they are not merely cosmetic or of chocolate variety which would sell off the counters on their own.
For additional margins, partners should invest adequately in manpower training to ensure effective understanding of the vendors products. By doing this, they can come closer to end customers. All these will dramatically raise business revenues and profits, as well as give better coverage to the vendors. There is another aspect to the entire story. Actually, partners in retail business also serve as a bridge between vendors and the end consumers.
Finally, a reseller has to be accurate and clear about what extra value he is giving at his retail counter, otherwise his outlet can end up becoming an experience zone where a customer would get a feel of the products, enjoy the demonstration and go back to neighborhood shop to purchase the products at heavily discounted prices.