There are many that believe that the UK distribution model is the best in Europe, but is it sustainable in the longer term? AV News surveys the leading players to find out how they see the market, and their businesses, evolving.
Arguably, the UK has the most advanced AV technology distribution model in Europe. Shaun Marklew, sales and marketing director at Sahara says: “Working within Sahara has given me a real insight into other channels around Europe and their mix of distributor, reseller and direct. I feel that the channel in the UK works far better, allowing the manufacturer through to the reseller, with each able to concentrate on their individual roles within the market.”
Despite advances in the ways that business is transacted, the UK distribution model runs on fairly traditional lines: “We still find that most of our customers want to talk to a sales person or technical product manager,” says Marklew. “One of the key areas we are noticing is the level of support that the distributor is required to provide from training, technical support right through to demonstrations and project management. This increasingly puts pressure on margins across our product portfolio as the market is squeezed but the amount of support and resources required has increased”
Mark Nisbet, managing director of Audio Visual Material (AVM) shares the view that the people-focused approach to selling is still the preferred method for his customers: “Whilst AVM offers online purchasing, the majority of our customers still prefer speaking to our staff. AVM will always provide a consultative and supportive approach for our diverse customer base and provide as much online technical support as possible. Many customers, however, still prefer to call us and speak to someone and discuss their customers’ requirements and recommend a solution to suit – and we make a point of encouraging this. We would prefer to see ourselves as the British Airways of AV distribution rather than the Ryan Air.”
AVM specialises in specific areas and chooses distinct brands that have minimal overlap, many of which are exclusive. Nisbet says: “This enables us to promote and support the brand, which we do through free on-site demonstrations and support, repairs and servicing, consultation and exclusive warranties. AVM has a highly trained staff that is able to provide pre and post sales support and choose to go the extra mile for our partners. We assist our dealers to provide the services they require, where necessary working with and offering advice to the end-user – whilst never seeking to take that relationship from the integrator.”
These are the values that resellers have come to expect from AV distributors, and which are not commonly found outside of the AV industry. But, changes to the product set, and particularly the sales of software and services, are presenting challenges to the current distribution business model: “Software and services is something that we have experienced more-and-more over the last twelve months, and it has certain challenges within distribution. How do you distribute something that is not in a box?” asks Marklew.
The trends in AV technology – the rise of virtualisation, the move to software, the cloud, the growth in services – will undoubtedly drive change. Nigel Steljes, chairman of Steljes and someone with a reputation for making successful businesses at the cutting edge of a changing markets, has seen change coming:
“The development of unified communications is changing how we work and its impact is resulting in the convergence of AV into IT. This convergence, I believe, is the single biggest issue facing distribution. Why? Because the traditional AV channel isn’t ready for it.”
“I have always been a champion of AV but I can see that the market place is changing., and changing rapidly. Cloud-based services, new technologies such as Microsoft Lync etc. are all having an impact on customer requirements. The days of customers just wanting a new projector for their meeting room are giving way to demands for a more collaborative way of working that will help companies increase productivity and reduce costs.”
“We live in a connected world – one that is powered by very sophisticated technology. Traditional AV resellers need to adapt to this new world or face a dim future. They need to either up-skill their workforce, employ people with the necessary skills and experience or partner with an IT integrator in order to capitalise on the tremendous potential that this market place offers.”
Darren Lewitt, AV director and joint owner of Midwich, shares the view that flexibility, evolution and adapting to market changes are important, but attributes success in distribution to offering a continuously expanding range of products to offer to reseller partners. “You need to have several trump cards to keep ahead of the game,” says Lewitt. “In 1995, you could order a choice of two types of projector technology from Midwich. Today, Midwich can help you with an extended range of technologies including LED, Ultra Short throw, Interactive, UXGA, as well as the technical and accessory solutions, from brackets, mounts, switchgear, connectivity, and audio.”
He believes offering a comprehensive range of products within a specialist niche gives resellers an advantage as the market develops. “By bringing companies such as RW Salt and True Colours into the Midwich Group, we can offer an even more specialist solution-led model to our customers, covering the full AV spectrum. This, in turn, opens up further revenue streams for our resellers to the benefit of all concerned.”
Lewitt believes that the key to the successful evolution for distribution is simple – it’s identifying the needs of both your reseller partner and vendor and ensuring you have a business model that fulfils, and exceeds, their expectations. The rest, he argues, is down to market forces: “BECTA used to hold great sway on the specification of kit in schools, but now buying trends in the classroom are dictated by common market factors, such as the technology itself, price, Total Cost of Ownership and green credentials.
Pace of change
Jon Sidwick, director of TD Maverick for EMEA, believes that the transition to new distribution models is happening far more rapidly than we think, driven by the growth and breadth of the AV sector: “We are entering a period of unprecedented growth where visual communication, in particular, is at the centre of all aspects of life. This is driving volume bit also commoditisation and is dramatically widening the market touch. The need for AV equipment is growing rapidly and touching all areas where the need for higher quality, quicker and more collaborative communication is a major driver – this is felt almost everywhere.”
Sidwick believes that the opportunity we have as a channel is unprecedented, with AV being expected rather than requested, but he cautions: “Trying to enjoy a share of the opportunity means a careful balance of specialist focus and customer reach overlaid with delivering services where required and valued. Also now that domestic products are blending into commercial environments we have to compete with a different channel dynamic.”
In this world of almost ubiquitous AV, an increasing proportion of the technology requirement is satisfied by consumer products. “This is seen most notably in the LFD market where the connectivity and pricing of domestic products often make them an easy choice for simple meeting room and communication solutions.
“This is also felt with simple cloud based communication systems where Skype, for example, has become the communication tool of choice for small businesses communicating by video, particularly with cross national situations. This challenges the channel into ensuring the additional benefits, and therefore additional costs, are understood, appreciated and valued.”
Those who want to play in the consumer-to-business (C2B) arena, Sidwick argues, will need to be able to transact business electronically. In addition to commodity products, e-commerce will be used to supply services, including concierge services, to resellers to sell through as white label applications. “Currently, the industry is scratching the surface on how this will be delivered in the future. The volume sectors – standard presentation meeting rooms and simple collaboration – we will see growing demand for web based selling and support,” he adds.
The challenge for distribution is to understand how to find the most effective routes to market and how to present coherent and easy-to-use solutions. With software and cloud-based solutions on standard industry hardware rapidly gaining ground on specialist, dedicated platforms in areas as diverse as video communication, control systems and digital signage, finding the right routes to market and the right channel partners is right at the top of the distributors’ agendas.
“Managing what was previously locally delivered functionality will increase dramatically as we now see it being an accepted way of accessing many services to the business environment. As a channel we have to be aware that, where once there was full control of a solution, many aspects are already being subcontracted to more efficient (and often better) cloud based solutions. It’s happening most noticeably in video conferencing and digital signage. “
Much the same is true of Software-as-a-Service, where the potential for renewable subscription revenues is huge, but the commercial model is far from fully resolved in the AV channel. Sidwick has seen SaaS grow appreciably in TechData’s IT activities: “This has to be a growth area. As a specialist AV business with a large software sister division, we are leveraging the already robust software delivery systems available in the market, such as simple activation code delivery, to white label, multi-vendor software solutions, enabling resellers to sell software using our engine.”
Read the whole story in the AV News June 2013 issue http://free.yudu.com/item/embedded_reader/957195/AV-News-June-2013