PC distribution channels forsmall and medium businesses(SMBs)     Base hypotheses and thoughts                            ...
The PC is not a product buy for SMBs – it is a solution buyPC sales to SMBs is complex  SMBs ( businesses with <1000 emplo...
Further, the SMB market is not just one single market – it is a market spaceSMB is a business space encompassing manymarke...
As a result, there is no one solution to selling PCs to SMBsDifferent channel structures exist for selling to SMBs  Both d...
The outlook for the PC sales channels for SMBsRetail – a key channel for developed SOHO markets  The retail channel will b...
The outlook for the PC sales channels for SMBsThe rise of the DMR as an alternative channel  DMRs – direct online selling ...
The outlook for the PC sales channels for SMBsVARs will remain important  Even as the share of sales by them are decreasin...
The outlook for the PC sales channels for SMBsDirect selling is not dead  Though there will be a gradual shift towards ind...
So, what’s the way ahead?There is no “one size fits all” solution………  Multiple channels will exist – and will need to be m...
What will decide the choice of channel?The right channel choice will depend on key factors  SMBs are complex. Therefore, t...
In conclusionSome overarching truths despite the choice ofchannels  The PC is not a product buy to an SMB, the CIO is not ...
Thank you for your time!I look forward to hearing from you!                           All I seek is an opportunity        ...
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PC Distribution Channels SMBs

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PC Distribution Channels SMBs

  1. 1. PC distribution channels forsmall and medium businesses(SMBs) Base hypotheses and thoughts Pavan V Vyas
  2. 2. The PC is not a product buy for SMBs – it is a solution buyPC sales to SMBs is complex SMBs ( businesses with <1000 employees) focus on entire PC solutions while making their PC related buying decision. Therefore, PC sellers need to focus on: Post purchase PC management Mix and match the bundling of products and services to make customized offerings – consider including optional remote and on-site management services to avoid downtime, increase ease of maintenance, and provide better availability Integrated PC solutions for improved operations Provide software and hardware capabilities that can help with IT operational challenges such as encryption, security, remote PC management, among others Help customers with their buying process Build advisory tools, relationships. Provide evidence to help SMBs obtain comparative analysis between solutions - a proxy to “shopping around”. Also help them quantify the business benefits of buying a particular PC family Additional support Provide financing help and support to help SMBs afford purchase and refresh of PCs Provide training and installation services
  3. 3. Further, the SMB market is not just one single market – it is a market spaceSMB is a business space encompassing manymarkets There are four distinct sub-segments within the small and medium segment – with different needs, wants , and buying behavior • Businesses with 1-10 employees, behaves almost like a consumer • Unsophisticated IT – uses help from family and friends to research, buy, setup, SOHO and maintain computers at their business • Price conscious, shops around, may make emotional buying decisions • Businesses with 10 -250 employees, small IT presence and budgets • Rely on VARs or local service providers to compliment IT operations beyond theirSmall business skeletal IT staff • Mostly rational decisions but rely heavily on advice from VAR or service provider • Businesses with 250 -500 employees, have a well structured IT department but Medium require help with complex IT issues and challenges business • Rational buyers with reasonable IT budgets, perform due diligence related to IT buys but rely on advice from VARs, DMRs, or partners • Businesses with 501-1000 employees, much like enterprises (in fact considered enterprises in many markets) Mid market • Sophisticated buying processes with differentiated CIO functions, rational IT budgeting and buying, may use direct or indirect buying processes for IT buys
  4. 4. As a result, there is no one solution to selling PCs to SMBsDifferent channel structures exist for selling to SMBs Both direct and indirect sales channels currently serve the SMB space – the needs of particular business size, vertical, and geography deciding their choice Direct channels • Direct sales force who sell to customers through face to face meetings are still needed in some markets , particularly in the mid-market and medium business segments • Internet enabled direct selling is another business model that has wide appeal in the SOHO and small business segments in developed markets • Company owned retail formats are also attractive to a few segments Indirect channels • Analysts believe the PC market will move towards increased reliance on indirect sales across all segments of the SMB space – led by the growth in emerging markets and by mid market firms across markets • All indirect channels will come to play a role – • All types of retail stores multi-brand electronic retailers, superstore retailers such as Walmart • Digital market resellers • Value added resellers and system integrators
  5. 5. The outlook for the PC sales channels for SMBsRetail – a key channel for developed SOHO markets The retail channel will become a key part of the commoditized PC distribution business, particularly for the SOHO space in developed markets • Nearly half of all SOHO businesses prefer to purchase their PCs at retail stores, particularly in developed markets • 27% of all PCs purchased by US SMBs in 2010 were through the retail channel – this included small businesses and enterprises • As the technology maturity and price consciousness of small businesses increase in developed markets, the retail format is becoming a preferred channel for the sales of PCs • Retail formats allow small businesses to shop for multiple brands, features and functionality and price, all in one place • Other than specialty retailers like Frys, Best Buy, Circuit City, retailers such as Walmart and Sears who have electronics departments will also become a key place where SOHO and consumers will shop for computers • This will also include the purchases made online from the stores of these websites and other online retailers such as Amazon
  6. 6. The outlook for the PC sales channels for SMBsThe rise of the DMR as an alternative channel DMRs – direct online selling retailers are emerging as the second fastest growing indirect retail sales channel, after retail – for developed markets such as the US DMRs (Direct market retailers) occupy a market niche – lying between the large specialty electronic retailers and the large distributors Have become popular as a one stop shop for all IT products – from hardware to software – encompassing PCs as well, particularly for the SOHO and consumer businesses Small businesses in the US are increasingly cozying up to making their PC purchases online – internet retail sales grew 15.2% in 2010 – and this is driving the growth of the DMR channel as well DMR channels are expected to become more popular in developed markets and are expected to become popular with not just SOHO but all across the SMB space
  7. 7. The outlook for the PC sales channels for SMBsVARs will remain important Even as the share of sales by them are decreasing due to growing retail and internet sales, the position of the VAR is not anyway diminished in the SMB space • In developed markets like the US, purchase channels are also showing a shift from VAR/reseller to retail/online due to a combination of buyers IT maturity and smaller replacement batches • However, 32 percent of expected PC purchases from SMBs with 50-999 employees are still expected to be made through VARs and DMRs, the primary resellers in these channels • In emerging markets (e.g., Brazil), nearly half of SB PC purchases are still through the traditional VAR/reseller channel • Small businesses, middle business and mid market firms depend on VARs for providing them integrated offerings and in providing advice about their IT purchases and refresh cycles • In developed markets, desktops are becoming niche type devices and will gradually be sold through specialist channels such as VARs – as they package products and solutions together in a customized format • In some countries, a face-to-face business relationship is critical to the sales process – this will greatly increase the cost of sales for manufacturers if VAR relationships are not leveraged
  8. 8. The outlook for the PC sales channels for SMBsDirect selling is not dead Though there will be a gradual shift towards indirect channels, direct selling is far from dead – in fact, it will be critical in some markets SMBs prefer a combination of both the direct and indirect sales channel when purchasing PCs – mid market firms in particular, prefer to buy directly from manufacturers In mature markets, the direct channel comes second to retailer store fronts, with a sales volume of less than 10 percent of the segment Company owned retail store fronts are becoming a popular place for consumers and SOHO businesses to buy PCs – this may be a trend to watch in the future The ability to directly order computers from the company website is popular with SOHO and consumers – a trend that will not change with time
  9. 9. So, what’s the way ahead?There is no “one size fits all” solution……… Multiple channels will exist – and will need to be managed, developed, and nourished. Some channel partners will need more support than others Direct Direct channels will need to exist and diversify – from direct sales force for mid channels market firms, company owned retail for key SOHO hotspots, and the ability to deliver online purchases, PC makers cannot rule out any options As retail becomes a leading channel for the sales of PCs to consumers and Retail channel SOHO, relationships with retailers – both specialty and superstores will be crucial Particularly in the US today, and going forward in other mature markets, DMRs working closely on developing DMRs will be crucial to maintain market dominance VARs are struggling as their value proposition is questioned, their services VARs model is questioned – forcing them to move towards cloud based offerings. It is critical to provide them support as they are key channel participants particularly for desktops and in the mid market space
  10. 10. What will decide the choice of channel?The right channel choice will depend on key factors SMBs are complex. Therefore, there is no one choice for a channel – there is a need to invest in the right channel for the right market - based on: Market Mature markets and emerging markets show very different trends in their maturity channel preferences. This may be a key determinant on the choice of channel Market sub- SOHO and mid-market, though both part of the SMB space have very different segment needs, wants, buying processes and therefore, different channel requirements Geography Geographic and cultural differences may warrant a need for different channel and culture structures – there is a need to study the country, its business environment, regulations, and culture before deciding channel structure Verticals and The industry context and business vertical will also decide the choice of horizontals channel design. It will be essential to factor it all as a channel structure is decided. One country may need multiple channel structures – and these may be very different from a seemingly very similar neighboring country
  11. 11. In conclusionSome overarching truths despite the choice ofchannels The PC is not a product buy to an SMB, the CIO is not the only decision maker….and so, there is no one mantra for success in the SMB channel Sell PC solutions, not products Not just sell PCs but provide solutions for managing connectivity, data recovery, and PC management, consider including toll free technical support and immediate troubleshooting , plus onsite customer support programmes. Include training and financing support Sell to the entire SMB, not to the CIO SMBs are small – therefore every one in the company may be an IT decision maker. Sellers will need to focus not just on the CEO, CIO, or the IT department. There is a need to focus on understanding the needs of SMBs in great detail and bundling together the right offering Invest in channel development There is a need to invest in channels – enabling the channels with tools and aids to help SMBs with making the right purchase decisions and therefore perform their role of galvanizing sales – this applies to all channels – direct and indirect
  12. 12. Thank you for your time!I look forward to hearing from you! All I seek is an opportunity “Give me a place to stand and I will move the earth” For more information, please contact: Pavan V Vyas +1 – 647-857-0639 <pavanvvyas@gmail.com>

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