If you sell directly to the end user, you have to support the end user. Do you have a dedicated tech support team willing and able to hold the hand of someone who may be "good with comouters" but have no experience with surveillance video other than what they see on TV? If so, then selling direct to the end user may be your best option.
Distributors are mostly good for end user support headaches, billing headaches, and logistics headaches- keeping stuff in stock, getting it out fast enough, and turning around returns is tricker than you might think.
Skip distributors sell direct to dealers
Better pricing and protection
NO value add for distributors
IPVMU Certified | 08/13/14 03:22pm
Are payment terms when buying direct the same as when buying through distribution? (ie: net 45/90, etc?)
Distributors can be a key part of cashflow management, especially for small integrators doing big projects. Progress payments lag from the customer, so payments to the distributor are slow. I often have wondered if companies like Avigilon will carry a note like distributors will.
In the current market, the biggest value-add for using distributors is that you (as a small/medium manufacturer) do not need to build up a large shipping department, and you don't have to extend credit to a lot of questionable dealer/integrator businesses.
A lot of small integrators seem to operate with a tight budget. They'll ask for 30 or 60 day terms, but they really won't pay their bill until THEY get paid by the end user. Having guys paying on a 180 day cycle can be a real pain in the ass. If you're selling through disitribution your distributor is going to pay YOU immediately or on 30 day terms pretty reliably.
Storing inventory and packing/shipping lots of orders can take up a fair amount of real estate, plus a couple of employees. Letting a distributor hold your primary stock and fulfill orders is mostly a good thing (there can be some downsides to not having immediate hands-on access to your own inventory). However there are a lot of 3rd party logistics (3PL) companies that will handle that aspect of things with a cost that is frequently cheaper than the margin you give up to having a distributor in the middle of the mix.
Distributors claim to do demand-gen and things like that, but my experience is that this really doesn't just happen by default. They frequently want you to pay additional funds to "sponsor" email blasts, lunch-n-learn sessions, webinars or things like that. This means you're giving up somewhere between 5 and 10 points (typically) plus another $5,000-$30,000+ annually (per distributor) for their marketing services (I use that term loosly).
My advice to a small manufacturer would be to pick 1 or 2 national distributors (not reginals, not buying groups like PSA) and partner with them. Allocate about $6,000 per for marketing, but don't expect too much from it. You'll be primarily responsible for your own marketing and overall product awareness, the distributors are just your order fulfillment and credit department until you get large enough to justify doing that in-house.
Order fulfillment is an important aspect of building a strong brand/image and business in general. I don't advocate essentially outsourcing something that is a key part of your business and can affect customer (integrator) satisfaction in that way. But when you're small it's hard to justify the risk and overhead of doing it in-house.
If Distributors would just stick to Distribution/Logistics, we would not be having this conversation.
Instead, they have a sales force you cannot trust when bringing leads and opportunities to or selling directly to the end users. Many times, they also want to collect the manufacturers discount when they had nothing to do with getting the win. They also try to control everything about projects.
Manufacturers and Integrators are tired of Distribution.
4) Bonus-anything beyond
The lack of "adhered" to "standards" ONVIF, etc..will plague this market....
1) Think of a distributor as an insurance company...risk adverse
a) They are beholden to the manfs.-if they can't ship
b) The size of the manf. correlates with their willingness to stock
c) The # of sku's and run-rate dictates the breadth and depth
Certain distributors carry 1000+ manfs...multiple available sku's...could be 400K+
The ROI takes this and multiple other factors....
The point is anything those are the primary benefits...beyond that it's gravy...
The same could be said about credit....there are limits due to the late pay/deadbeats/poorly
run integrators, etc.
They are not nirvana, but add the body count/investment to carry their piece and more times then
not they provide a value.
Manufacturers who distributors well and are willing to invest in relationships with them may find benefits. For instance, if you smoke cigars with Pat Communale at OTB, you might find working with distributors beneficial.
However, if you just want them to add you as manufacturer 101 to their system, expect very little value.
For the opening poster, if you want someone to help you sell, consider manufacturer reps (e.g., List of Security Manufacturer Representatives and Security Manufacturer Representatives Survey Results).
First of all, great discussion topic.
One of the benefits that is mentioned but rarely investigated and proven is the hidden costs saved by purchasing through one shop. I communicate with dozens of integrators every week, and many of them prefer to buy from their distribution partners. They perceive the costs they save internally as more valuable than the few points they save buying directly from the manufacturer.
Unfortunately, this benefit isn't as transparent as it might have been years ago when a reseller can click a button online - not a lot of obvious paper pushing there. The distributors' sales strategies need to be based more on assessment of their customers' buying patterns and associated costs, and education of the value of the distributor. They don't need to convince their customers how "my company is better than the other distributor"... distribution sales professionals need to win over their clients to continue to buy through distribution with investigation and education; and win them over to buy from them with service and responsiveness.
It's worth noting that my opinion is from the perspective of the integrator, not the distributor.
Not all distributors work the same. This is what differentiates traditional distributors from VAD (Value-added Distributors) who act more than just stock keepers. A famous Belgian Distributor operating in the MEA region for example, acts as a preacher to the products he is carrying and offers a physical local support and pre-sales assistance (site survey, technical consultancy on design, gurus for the carried solutions, etc.).
Given that some security solutions like IP CCTV have more complex requirements compared to traditional systems, this requires accountability of the total best-of-breed offered solution and therefore the need of a specialized and focused distributor is a MUST.