-Adimurugan Venugopalan
It is a high time that the vendors relooked into their distribution chain as they are still following a process that has been set long time ago and there has been no change.
When IT was emerging, they had to rely on a sales chain set-up that had a number of steps. To move their product to resellers they brought a three-tier system. This was because the National Distributors would have their offices and warehouses in Tier 1 cities only. So, vendors had to appoint Regional Distributors in Tier2 Cities and Dealers along with vendor representatives in Tier 3 Towns.
Now there has been a lot of change and most of the NDs have their offices and godowns in Tier 2 Cities itself. Along with this a Tier 3 Town dealer is situated within 150 Kms of the godown. Vendors have tight relationships with the Tier 3 partners through their own representatives and most of them act as RD’s representatives.
The biggest disadvantage of the three tier system is that the vendors do not know the consumer and end-user’s feedback about their brand image and product quality. NDs and RDs only push the white box and because the Tier 3 partner is the only person in contact with the end-user he is the right person to judge the brand and quality of the product.
Along with this, most of the RD or RD representatives are irresponsive for the dealers’ complaints. There are occasions when a dealer has stopped doing business with that brand and would warn a customer about that brand’s bad support.
On most of the instances the main cause of the problems between the vendor and tier 3 partners is RD and their representatives. The vendors totally rely on RDs and the backend, offers and other special schemes mostly do not reach the Tier 3 partners.
Most of the Indian companies have changed their sales chain system and are directly tied with Tier 3 partners to improve sales. For example Asian Paints, had been struggling to improve even 1% of market share. But when they installed paint machines in dealers premises itself, within an year, its market share increased by 1%.
Since there is no barrier between vendor and Tier 3 partner, it gets the customer experience instantly. Based on that data, it can improve its quality, give direct training to customer and Tier3 partners and now it has strong market share. The big problem of vendors in IT industry is they hesitate to get down to earth.
The problem has increased between the vendors and channels due to the online sales. The vendors bill the products with the same price, but in traditional channel it has to pass through three stages and eventually increasing the end-user’s price, which is not the case in online channel. To solve the price problem, vendors should cut RD concept and deal with Tier 3 partners directly.
Dear vendors, Come down to us and you will get a good market share. Now or never.
(The author is the CEO of AVM computers, Tiruvannamalai and is also a professional tech blogger. The views expressed in this article are those of the author and do not represent the views of Channel Times or any of the websites managed or operated by Trivone Digital Services)