Most manufacturers today have one main game plan: to expand the channel base. And partners’ just love to hear this news. What baffles me is why partners like this strategy so much!
For manufacturers it makes sense to widen the channel base. They get to explore more geographies, the products get more bandwidth in the market and the brand awareness only gets bigger.
But what does a broader or wider channel base mean for a partner? Does it mean that he gets to sell more products? Or does it enhance his up selling skills to be able to sell products that offer higher margins?
Not really. All that channel expansion plans means is that there will be players in a marketplace that is already overcrowded and underutilized. Overcrowded because there are already too many partners concentrating on selling PCs or its components, with margins hovering in single-digits. Underutilized because there is a partner who knows the difference between an HDD and RAM and is struggling to make a living from this trade. Without realizing that newer areas, which have fewer players, will give him a better chance of survival.
Instead of just looking for a way to take on more products, partners need to look at areas of specialization and take on products that offer growth paths in that area. Zooming in on a new technology/product is also a good idea, as it offers the first-mover advantage. For this, it is essential to keep up with technology trends and market movements.
Growth is essential for business, but unplanned growth if it goes out of hand can be troublesome to manage. Taking on products, without a clear plan could prove challenging.
And lastly, sometimes more is not always better, it is just more.