Resellers need to stop handling product inventory and concentrate on sales and services if they are to survive in the new millennium, according to C2000 managing director Graeme Watt.
However, research from Romtec has shown that 68 per cent of UK resellers make less than 29 per cent of their revenues through service provision.
The traditional reseller that 'owns' stock is dying, said Watt who believes that the only way for the channel to cope with the increased pressure from direct PC vendors is to forget about inventory completely.
Romtec's research into the proportion of total revenue accounted for by services has revealed that the UK channel has recognised the need for services but has been slow to change over to a service-led business model.
Just 14 per cent of UK resellers, according to Romtec, have service revenue that accounts for more than 50 per cent of its business.
"The future for us is drop shipping to end users direct," said Watt. "Resellers need to move away from logistics and holding inventory. This should then take some of the cost out of the channel and leave them to concentrate on offering more services."
Watt's main concern is that if resellers don't start changing and distributors don't start looking at alternative ways to ship product to end users, the distribution trade could implode.
"The future of the channel could be very healthy but only if the right changes are put in place by both distributors and their resellers," added Watt.
C2000 will put plans in place over the next few months to ship more stock on behalf of its resellers including putting the resellers' own labels and logos on the boxes. It is also working on an ecommerce front end for its resellers which connects directly to C2000's own stock management system.
Datrontech sales director Tony Wand agrees that there needs to be a greater shift to services and away from product handling. "There's plenty of life on the channel but it has to grow up," he said. "We have to exploit the technology such as the Web to get product to market smoother. The future is about jointly deciding on the best routes to market."
"There's no place for anyone in the channel unless they are providing a service," said James Wickes, former head at Ideal Hardware and now managing director at InterX. "The main value is in getting the right information to the right people on pricing, product availability and so on. The best way to deliver that is through the Web and anything a reseller can add will be in a vertical market situation."
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