Dell Taps Distributors to Boost SMB Share

“We will ship product same day,” said Bradley. “VARs can’t wait an extended period to supply product to an end user.”

“Ninety-nine percent of our orders ship same day,” said Quaglia. “Getting access to product faster is one of the driving forces behind Dell’s going into distribution.”

With Dell’s longtime value proposition based on the build-to-order model, its partners are applauding the company for adapting its philosophy.

“The build-to-order model works well for areas like government where they don’t mind waiting a couple of weeks, but for commercial it’s very different,” said Bruce Geier, president of San Diego, Calif.-based Technology Information Group (TIG), which sold $75 million of Dell product last year. “You see that especially in SMB, with the longer delivery times it’s very difficult for a company like Dell to get traction,” he said. “But to now have product readily available changes everything,” he said. “You have to give Dell a lot of credit for changing with the times.”

Dell officials expect that the distribution agreements will yield new channel recruits to its portfolio. Bradley said that Ingram Micro was already working to uncover new prospects. “We’ve worked with Dell with their existing resellers, and now we can add our own reseller list, find the overlap and look for new ones.”

How will HP, IBM partners respond?

Quaglia said that Tech Data expects to turn up “new resellers that are not Tech Data customers and Tech Data resellers that are not Dell customers.”

It’s still unclear how HP or IBM partners will respond to the developments. Bob Verola, president of Vicom Computer Services Inc., based in Farmingdale, N.Y., said that even with the opportunity to buy Dell’s products through distribution, his company would likely sell the vendor’s desktops only on customer request. “We’re truly an IBM partner,” he said.

Bradley estimated that about 10 percent of Ingram Micro’s roster of resellers currently sells Dell products. He said that the distributor, which recently launched separate business units for its HP and Cisco lines, will not follow suit with a similar group for Dell.

Tech Data does not operate separate business units for HP or Lenovo, Quaglia said, and has no plans to open one for its Dell business. He declined to estimate the percentage of Tech Data resellers currently selling Dell systems.

None of the parties offered details of the financial terms of the deal, although both distributors noted that their success will be measured by the overall volume of sales generated. Other unanswered questions concern the availability of market development funds for resellers buying Dell product from distribution, and contractual terms and conditions such as product return policies. Resellers purchasing directly from Dell are eligible for market development funds.

Bradley said that Ingram Micro will rely heavily on its substantial compilation of internal market data and its telesales organization to drive marketing and sales.

“We have a data base of six years worth of clean data on a couple of million end user businesses,” Bradley said. “If Dell tells us where their product has a high propensity to sell, we will come up with a targeted marketing campaign to VARs or end users.”

Quaglia said that Tech Data had no special promotions planned for its new Dell line. “Time will tell how the marketing plan evolves,” he said.

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