Survival will Depend on Core Competence
In recent times, the Indian IT market has seen all-round development in terms of investment, size, variety, lifestyle, participation, and demand. However, the resellers are yet to experience the real taste of success owing to the gradual decline in profitability.
Saket Kapoor, managing director of Green Vision, an IT product reselling firm and secretary of Progressive Channels Association of Information Technology (PCAIT) said, “The profit margin for Indian IT reselling business is diminishing due to rising fuel cost, infrastructure cost, and human resource (HR) cost. Now, how to survive in this competitive scenario is a burning question.”
According to Suresh Pansari, managing director of Rashi Peripherals, an IT and Electronics product distributor, “Profitability is the back-bone of business survival. Increase in profitability depends upon the quality or value-addition by the reseller, and strategy adopted by him or her. The better knowledge of product, better services, and support can increase profitability.”
Commenting on the recent price hike (7-10%) by LG on its monitors and Optical Storage Devices (OSDs) and possible such simulations by other IT firms, Kapoor opined that such things will not have significant impact on resellers’ business. However, the sharply increasing realty costs is one of the major threats to the resellers, he pointed out.
In addition, it is difficult task for new business entrants to retain quality staff and possess good infrastructure, he informed. Many renowned vendors are indifferent as far as resellers’ margin is concerned, and as an obvious result of it – several resellers are picking up new brands, which come with better margins, he added.
Talking about the possible solutions on this situation, he suggested few measures – All resellers need to focus on selling products in high volume, then even with low margin per unit – the total profit will increase. Secondly, the resellers need to improve service offerings and thirdly, each reseller should have core competence and dedication.
He pointed out, “Core competence in this regard has 3 components – financial soundness, technical capability, and entrepreneurial quality. Channel business, being the bridge between the vendor and the customer, will always survive. However, to be in channel business, every reseller has to have at least 1 of the above mentioned core competences.”
Echoing Kapoor’s suggestions, Pansari remarked, “With the booming economy and growing retailing sector, many players are entering the market with better selling skills as compare to channels. In order to survive, we need to capitalize on our core business strength and build customer-based approach to fulfill their needs.”
While explaining the common mistakes that many resellers repeat, Pansari pointed out, “Many resellers offer products without highlighting product quality and features. Those resellers, who focus on product or brand, by adding value, they always grow business. Product awareness is the key element missing as far as their quality of selling is concerned.”
He added, “If the resellers (including very low level) cannot raise their levels, then in the customer-driven economy, they will just perish. In the current volume driven business, increasing numbers is the basic requirement to survive, without which it will be difficult – unless the resellers have very high value addition and survive based on that.”
As the PCAIT secretary communicates, channel will always be there. Distribution of IT and electronics products can’t be thought of without it in this subcontinent. However, to survive as resellers, they need to be active and strategic. Out of these 3 components indicated by Kapoor, technical capability and entrepreneurial quality can obviously be enhanced through efforts. MD of Rashi Peripherals is also stressing on quantity of products, quality of selling, better service, and support.
Thus, our resellers will have to concentrate stringently on these aspects. Today’s customer is vastly aware of the (latest) products, (their application) potentials, and (best offered) prices owing to various easy-to-gain information sources. Now, resellers have to be competent to respond promptly to these field-savvy customers’ queries and demands. It’s no more just a question of selling a product at a fixed or bargained price, but an issue of building bands of loyal customers – through creating impressions in their minds with deep knowledge, diligent service, suggested (additional) economy, and extended relationship.