How do resellers compete with retail?

Robbie Johnson

Unfortunately the reality is that in many cases this is not a viable option. However, this does not mean the reseller is doomed. While they cannot compete with retailers in terms of volume or pricing, the do not have to. Resellers should use their unique skills, expertise and ability to deliver tailored offerings that tap into markets such as the Small to Medium Enterprise (SME) that may require solutions that cannot simply be purchased off the shelf at your local supermarket.

Competing for a share of the market

In today's world, customers can walk into any number of different retailers and pick up many technology solutions off the shelf. In fact, it is more than possible to kit out a home office by visiting the mall and going into a single store, or by simply ordering everything online. In addition, as the world has become more connected, consumers are more educated on technology than ever, which means they have done their research and often know exactly what brands they would like to purchase, and retailers, for the most part, are more than able to meet this need.

For the reseller, however, this level of consumerisation and commoditisation is a significant challenge. In order to compete for market share in the consumer space, resellers have found themselves in a price war that they are battling to win. Mass retailers will always be able to generate more volume, which means they often get preferential pricing, enabling them to offer goods at a price point that would leave no margin for the traditional reseller. What has tended to happen is that everyone - resellers and retailers alike - has focused on offering products that are in high demand, but retailers are able to do it faster, cheaper and at greater volumes.

Resellers should focus on the burgeoning SME sector

For resellers, this is a strategy that is doomed to failure. Instead of trying to compete head on with mass retailers, a new approach is needed. Instead of targeting the same market segment of the individual consumer, resellers should focus their efforts toward the burgeoning SME sector. This market is a significant one and is growing. A 2010 research report by the Small Enterprise Finance Agency highlighted that in South Africa SMEs contribute between 52 and 57 percent to the country's GDP. It also presents an invaluable opportunity for resellers to reposition themselves, not simply as a box dropper who provides products, but as a value-added partner whom SME customers can rely on for expertise, advice and solutions tailored to their unique requirements.

The majority of SMEs do not have the resources to maintain an IT department in-house, and this is a function that could therefore, easily be fulfilled by their reseller, if the reseller is able to develop a relationship as a trusted partner. Consumer solutions sold by mass retailers are often not the best solution for an SME, and while they may be cheaper up front, often end up costing more in the long term. For example, a consumer colour printer purchased off the shelf is inexpensive, but often the replacement consumables are costly, and an SME that needs to print a moderate amount will find replacing the consumables to be an expensive task that may have to be performed frequently.

oneVillage Initiative via Wikimedia Commons

Become a trusted advisor, a valued partner

Instead of just selling the same products and attempting to compete on price and volume, resellers should act as trusted advisor to ensure that the solutions they sell are optimal for their customers' needs. This requires in-depth understanding of customer needs as well as sound understanding of product sets to ensure they are able to present the optimal solution to a customer's needs.

In addition, resellers need to become proactive about marketing themselves and their services to their customer base. Building strong relationships is critical, both with customers and suppliers. Vendors and even distributors will often provide support to resellers to assist them with training, marketing and other aspects, so putting a case forward to these channel partners can be hugely beneficial.

In order to be successful, IT resellers need to step away from competing with retailers and focus on their key strengths and the added value that they are able to deliver. Those resellers who are able to move away from competing with retailers and embrace a new strategy will be well positioned to not only acquire new SME customers, but to deliver the on-going services that are so necessary for this sector.