Distributors Dealing Direct to End Users

Author: John Honovich, Published on Feb 22, 2011

While the typical role of security distributors is facilitating sales of products between manufacturers and integrators, significant evidence points to a number of distributors dealing direct to end users.

Among industry people, this is a controversial practice. The traditional business structure is for only integrators to sell to end users. Manufacturers, their reps and distributors, help integrators by providing them products and information. Ultimately, the integrator is the direct connection and seller of products to end users.

By contrast, when distributors deal direct to end users, they generally have a crucial advantage. Since distributors usually buy from manufacturers and with very high volume, distributors typically get the best pricing for products. Normally, distributors apply a modest mark up and re-sell those products to integrators. Integrators then mark up the product again, bundle integration services and sell to the end user. When distributors sell direct to end users, they can sell for a significantly lower price (while maintaining their profit margins).

Two opposing schools of thought exist on this practice:

  • Cut Out the Middle Man: The minority view in the industry is that this increases efficiency by cutting out the middleman, aka disintermediation
  • Violate their Duties: The majority view inside the industry is that distributors have an obligation to support their manufacturer and integrator partners. Selling direct to end users violates that obligation and hurts the whole industry.

What Do You Think?

However, debate exists if this practices even exists. To that end, we conducted an investigative study to find evidence of this practice. We found over 30 online citations of bid results and contracts where leading distributors regularly sell direct to end users.

Inside the Pro section, we examine these cases, the activities of ADI, Anixter and NAV and analyze the impact and issues involved.

***** *** ******* **** ** ******** ************ ** ************ ***** of ******** ******* ************* *** ***********, *********** ******** ****** ** a ****** ** ************ ******* ****** ** *** *****.

***** ******** ******, **** ** * ************* ********. *** *********** business ********* ** *** **** *********** ** **** ** *** users. *************, ***** **** *** ************, **** *********** ** ********* them ******** *** ***********. **********, *** ********** ** *** ****** connection *** ****** ** ******** ** *** *****.

** ********, **** ************ **** ****** ** *** *****, **** generally **** * ******* *********. ***** ************ ******* *** **** manufacturers *** **** **** **** ******, ************ ********* *** *** best ******* *** ********. ********, ************ ***** * ****** **** up *** **-**** ***** ******** ** ***********. *********** **** **** up *** ******* *****, ****** *********** ******** *** **** ** the *** ****. **** ************ **** ****** ** *** *****, they *** **** *** * ************* ***** ***** (***** *********** their ****** *******).

*** ******** ******* ** ******* ***** ** **** ********:

  • Cut *** *** ****** ***: The minority view in the industry is that this increases efficiency by cutting out the middleman, aka *****************
  • Violate ***** ******: The majority view inside the industry is that distributors have an obligation to support their manufacturer and integrator partners. Selling direct to end users violates that obligation and hurts the whole industry.

What ** *** *****?

*******, ****** ****** ** **** ********* **** ******. ** **** end, ** ********* ** ************* ***** ** **** ******** ** this ********. ** ***** **** ** ****** ********* ** *** results *** ********* ***** ******* ************ ********* **** ****** ** end *****.

****** *** *** *******, ** ******* ***** *****, *** ********** of ***, ******* *** *** *** ******* *** ****** *** issues ********.

[***************]

Key ********

** ******* * *********** ****** ** ***** *** ***** **** direct ******* ************ *** ******** *** ***** - **** **** many ************* ******* *** ***** ****** * ******** ******** ** deals *******.

**** **** *** ******** ** *** ****** ********, ** **** able ** **** **** ** *** ******* ** ********* ******* various ********* **** ***** **** ** ************. **** ****** ********* represents * ***** ******** ** *** *** ***** ***** **** as *** ******* **** ******* ** **** ** ***** **** from ******'* ******* ** ****** ****** *********. **** ****** **** covers * ***** ****** ** *********** *** ***** ************ ******** that ******* **** **********. *** **** ****** ** ****** ** total ********* ** *****/********* ** ****** **** *** **** *** years.

*********** *** ***** ****** ** ******* ** ***** ***** ** extremely *********. ***** ****** *** ************ ******** *** ******** ***** to *** ******* **** ***** ***********, *** ************ *** *** only **** ** **** *** **** ****** ** ***** ********. From *** ********** **** ******** *************, ***** ********** ***** *** these ********* **** ****** **** ** ********** ******** **** * lost ****.

****** **** **** ********* ** ****** ** **** *** * of *** ********* ******* (***, ******* *** ***) ******* ** provide ******* ******* ** ********** ***** ******* **/***** ******* ** least * ***** **** **** * * **** ******. ** suspect **** ** * ****** ********* **** **** **** ** them ***** **** *** ** ** *********. ** *** ******, If **** ** ****** ** ******* **** **** **, ** will ***** ***** ******** *** *****.

***** **** *********, ** ** **** ** ***** *** ***** number ** ***** **** ****** ** ************ ** *** *****. It **** ** * ******** ********, ********* *** ***** ****** to *** ** *** *** *** ****** *** ******* *********** and ************. *******, *******, ** ** *% ** *% ** 10%, ** ********* ****** ****. **** *****, *********** ******** *** overall ********** ****** ****** **** *** **** ************ ** ******** selling ****** ** *** *****.

The *** **** **********

*** ********** *** *** ***** ** **** ****** **** ************ can **** *********** *****. ********* **** *** *******, *********** ******** bids *** ***** ** - **% ***** **** ***** ******* by ***********. *************, **** ** *** ********** ** ** ********** the ******* ** *** **********'* ****** (****: ********* ** *** competitiveness ** *** **** *** ******* ** ************* ******).

***** *** ***** **** ***** ***** ** ******** **** **** (service, ************, ******, ***.), *** ******** ** ****** ** **** money ** **** **** **** ** ********* ***** **** ********** be **********.

*** **** ****** ** *** ** ********** *** *** ***** to ****** ****, ******** *** *****, ************* ***** *********, ***** consider ********** ** ********* ***** **** ** ************ ** *** them ** *** ******.

The *********** **********

**** ** ************ ** *** ******** ***** ******* ** ***** to *** *****, ** ******* ******, **** ************* ******** ***** chances ** ******* *****, ********** ** **** *** ********* ********* against ***********.

********, *** **** ****** ** ** *** ************ ** **** direct, *** **** ******* *** ***** ****. ************ **** ** pushed ** **** ****** **** ** **** *********** **** ***** peers *** *** ******* ******* ******.

The ************ ********

*** ************ ******** ** *** **** *********** *** *********** ** the ***** *********. ***** *** ************ ******** **** ********* *********** sales, **** ************* **** * *** ** **** ** ********* their ******* / ***********. *** **** *********** *** ***** *** the **** ****** *** ****** *******, *** **** ********* ****** a ************ ***** *** ************ ******* ******.

** *** *****, *** ************ *** **** ************ **** ******* direct ** *** ***** ** ******* *** ************ *** ** this. ** *** *********** *** ** ****** ****** * ************'* products ** ***** *********, *** **** ** ************ ******* ****** is *********** **********.

*******, **** ************* **** **** ********** ** ***** ************. ************ are ***** ***** ********* ** *************. ** * ************ **** off *** *********** *** * *** ***** ** ******* ****** to *** *****, *** ************ ***** ****** **** ***** **** amount ** ***** *******.

** ****, **** ** * ********* ******** ****. ** ****** to * ****** ** ********* *************. ***** *** ************ **** distributors ******* ****** **** **** ** **** *******, **** ********* felt *** ***** **** ********, **** ********* **** ** *********** employees ********* ***** *** **** *** ************ ** ******* **** committed ** ********** ***** *******. ******* ** *** ************* *** right **** **** ** ******** / '*****' **** ******** ** questionable.

*** ***** *********** ******* ***** ************ ******** ** **** **** established ************* **** * ******* ********* ** ******* ************ ******* direct ** *** *****. **** ********* **** ************* ** ****** this ******** ** *** *********** ****** *******. ******* **, ************* have ****** ** **** *** **** ** **** ** *********** distributors (** ****** **-*******) ** **** ****** ** *** **** aggressive ***** ********. *******, *** **** **** ******* (** **** impact) *** ****** ****** ** ************.

The ********** ********

*** ********** ******** ** *** **** ***************. *** ************ ******** of *********** ******* **** ********, **** ******** ******* ** ** the ***** ** ******** ***** ******** **** ************ **** **** reason ** ******* **** ****** ** ***** *****. **** * few *********** ** ***** **** *** *** ********* ** **** behavior *** ***** ********* **** **** ** ****** **** ******** (and ** ********).

** * ****** ******* *** ****** ***** ******* *********** *** distributors, *********** *** ***** ** **** *** ************ ******** ** times. ** *** ****** **** *******, *********** *** ****** ***** their ****** ** ****** ** ******* ************* **** ***** ***** products ** ** **** ******* ************ ***** ******.

Distributor ******

** **** ***** *******, ** ******* ** ******** ** **** of *** * ********* *** ***** ** **********. ***** * companies *** *** **** ***** ***** ************ **** ** ** discussions **** *********** ** **** ** *** *** ******* *** contracts ** ********. *** ***** ** ******** ********* ** ******** people ** *** ******* ********** ** ** **********. *******, ***** evidence ****** ** **** ****** *** **** ** * *********** but * **** ********** *** ** ****.

*** ******

*** (****** ************, ***.) ** * *********** ** *** ******* *** ******** ********* including *****, **, ********** ******* *** ************ ******** **** **** 400 *************.  ******** ** ********* (*** ****** **** ******* *** ******** ***************) ** ***** ****, *** ******** **** *** ********* ****** in *** *.*. ******* ********* ***** ** ****** ***** ***** and ************ ***********.

***** *** ******** ****-** ***** *** ****** ********* ******* (****** Anixter ** ***), ** '******* *******' ***** ****** ****** ** to **** ******** **** ** ******** *****/******** ***********.  *************, **** we *********** ******** *********** *** **** ******, ** ******* **** those *** ******** *** *** ** ***** ******* *********** ***** this ****** ******* ****** - ***** ***** **** ***'* *** them *** ****** *********** ***** *** ********** **** ****** **** decent ****** *** *** **** ********.

** *** ********, ** ***** ******* ********* ** **** ****** company ********* ******* ******** ** **** (********* ***** ******** ********* Division ** ** *** ********* ************* ** **) *******, *** also ******* ** ** ******** *** ***********/********** **** ** ******* directly **********.

********:

******* ******

******* ** * ********* *** ******-***** ********** ******* *** ******** into ******** ********* ************. ****** ***, ******* **** *** ******* retail ****** *** ******* ************.

** ******** ***** **** ** * *******, ****, ********* *** other *****, ***-****** ********** ***********, ******* ******* *** ******** ****** ** ****.  *** *********** ********* **** **** **** **** *********** ****** houses ** ******* *** ******** ***** **** ** ***** ****** supply ***** *** ******** ********** ************.  **** ********* *** ***** presence ** *** ****** ****** ** *********, *******'* ******* ** move ***** *** *********** **** ****** **** ******* ************ ******** products.  *** ***** '*********' **** *** *** *****. 

******* **** ******* ** **-***** ****** ******** **** (***** ****) to ************ ****** *********** ************* ******** **** *** ***** ** the ****** ****, *********, ********** *** ******* *** *********.  ***** verticals ******** *** '********* ****' *********** ********* ******* ** ******* suppliers ***** *********** ** ***** (*********).  ** ******* *** ***** a *********** ****** ** ************ ********* **** ******** ************* (********* at ******** ***** *** ** ***** ***** ************ *********), **** were **** **** ** *** ***** ***** ***** ** *** exclusive ****** ****** (********* *****-****) *** ******** ************* ********. 

********:

***** ******** ***** ******

***** ******** ***** (***) ** * ******** ********** ******* *** providing ********* ** *** ****** *** ***** ****** ******* *******.  However, *** **** ********** **** **** * ***********, ******* ********* only ** ********* ****** ***** *******. ******, ** *** *****, NAV *** *** **** **** ***** ** ******** ****** ** being ** ********** ********** ** ******* ********* **** ** **** low ******.

***** ******** ***** (********* ********* ***** ***'******* ********'****) *** *** ** (*** ***) ******** '*********-****' **** **** state *** ***** **********, *********, *** *** *********** ******** ** much *** **** *** **** ******** ****** ************ ************* ******* (no ***********).  ** ********** ***** ******* ********** **** **** ************* based ** ****** ********* **** ***** ****** ********, *** *** been **** ** **** *********** ******* **** *** ******** ************ space.

********:

Login to read this IPVM report.
Why do I need to log in?
IPVM conducts unique testing and research funded by member's payments enabling us to offer the most independent, accurate and in-depth information.

Related Reports

Most Respected Manufacturer Competitors on May 25, 2017
Manufacturers told IPVM what competitor they most respected. In terms of total revenue, Hikvision, Dahua and Axis are certainly tops but would...
How Integrators Use IPVM on May 24, 2017
150 integrators explained how they use IPVM and how it helps them stay informed and improve their business.  The 4 main uses integrators cited for...
Avigilon New COO James Henderson Profile on May 23, 2017
It has been nearly 2 years since the infamous Bryan Schmode 'resigned' as Avigilon COO. Now, Avigilon once again has a COO, promoting James...
Remote Video Monitoring Providers Directory on May 22, 2017
Remote video monitoring can help integrators generate RMR plus end users lower their security costs and/or improve response to critical...
Forget The Backdoor, "ALL HIKVISION PRODUCTS" On Sale on May 18, 2017
Less than 2 weeks after the Hikvision Backdoor was confirmed, Hikvision has launched a sale "ON ALL HIKVISION PRODUCTS". In this note, we examine...
ShotSpotter To IPO, Facing Low Revenue and Losses on May 17, 2017
A rare event for North American security manufacturers is upcoming. ShotSpotter is planning to IPO on the NASDAQ, aiming to raise $34.5...
FLIR Is Giving Away $3,000 Demo Kits on May 17, 2017
Everybody likes free stuff, and FLIR is using that concept to attract dealers by giving them $3,000 worth of demo gear for attending a...
ADI's 'Elves' Selling Direct on Amazon on May 15, 2017
Buy from Amazon, get delivery from ADI. What? Recently, we bought a part from Amazon and the shipment came from ADI. We dug into the...
Selling and Valuing Security Integrators on May 12, 2017
This ia a tutorial in how to (1) determine your security integrator's value and (2) to sell your security integrator. If you own an integrator,...
Panoramic Camera Usage Rising 2017 on May 08, 2017
Panoramic camera usage (including fisheye and multi-imagers) continue to rise rapidly. However, the race to the bottom is hindering even stronger...

Most Recent Industry Reports

Anti-Hack Access Card Shields Tested on May 26, 2017
Keeping your access control card information secure is becoming a big priority, especially since cheaper copiers can hack details easily. Multiple...
H.265 / HEVC Codec Tutorial 2017 on May 25, 2017
Since 2013, video surveillance professionals have talked about the potential for H.265. Now, in 2017, H.265 is starting to gain mainstream...
Camera Course Summer 2017 on May 25, 2017
Learn video surveillance and get certified. IPVM provides live online classes, recorded videos, personal help, cutting edge education and...
Most Respected Manufacturer Competitors on May 25, 2017
Manufacturers told IPVM what competitor they most respected. In terms of total revenue, Hikvision, Dahua and Axis are certainly tops but would...
CyPhy 'Unlimited' Flight Time Security Drone Examined on May 25, 2017
Drones face several issues as commercial security platforms - legal restrictions (e.g., in the US, the FAA), costs, and limited flight durations...
Milestone Entry Level Mobile Password Vulnerability Disclosed on May 24, 2017
While many manufacturers have only addressed cybersecurity vulnerabilities after public disclosures were made (or threatened), Milestone has...
How Integrators Use IPVM on May 24, 2017
150 integrators explained how they use IPVM and how it helps them stay informed and improve their business.  The 4 main uses integrators cited for...
Alarm Supervision Guide on May 24, 2017
Burglar alarms can constantly monitor the health of attached circuits, sensors, and devices to ensure that they remain operational. This is known...
Arlo Go Cellular Cloud Camera Tested on May 23, 2017
Totally wireless surveillance cameras are growing but almost all typically depend on a hub and local Internet access. However, many outdoor...
Avigilon New COO James Henderson Profile on May 23, 2017
It has been nearly 2 years since the infamous Bryan Schmode 'resigned' as Avigilon COO. Now, Avigilon once again has a COO, promoting James...

The world's leading video surveillance information source, IPVM provides the best reporting, testing and training for 10,000+ members globally. Dedicated to independent and objective information, we uniquely refuse any and all advertisements, sponsorship and consulting from manufacturers.

About | FAQ | Contact