The True Value of a Value Added Distributor

By Gayle Magee

business-partner-service2Today, all kinds of companies with all kinds of products use channels to sell their products and services. We do this at Digium, using resellers and distributors to help provide the best possible experience and support to our customers, worldwide. Much like paint-by-numbers, channel management is an art form – with a checklist.  And when it comes time for resellers to select the right distributors to work with, several things need to be considered. We’re fortunate to have many outstanding resellers and distributors in our channel program, but finding the right partnerships for your business is easier if you know what to look for. And as Director of Worldwide Distribution Sales for Digium, with over 20 years of experience working with various technology partners, I have some insight into how to identify distributors who will not only be an advocate for you, the reseller, but for the products you sell, and will work to help expand your business.

First, it’s important to note the difference between limited service distributors and Value Added Distributors (VADs). Limited service distributors consist of order takers, and generally lack real product knowledge. On the other hand, there are VADs, which provide a broad range of products, stock inventory, operate their own warehouse(s), supply credit to resellers, and have dedicated sales teams trained in understanding your products. If you are searching for a long-term relationship with a distributor that will truly be an advocate for your company and product line, VADs are the way to go. Here are the main benefits to using a VAD:

  • Sales Team: VADs provide a sales team that knows the products, can make recommendations, and will assist you with maneuvering through the system.
  • Market & Product Specialists: The right VAD knows the market in and out. They can give you advice, data, feedback, and overall insight into the market that you may not have otherwise. They are also fully trained to understand your product, how it works, and whom it benefits.
  • Inventory: VADs keep at least 45 days of inventory on hand and will quickly turn around your order to ship same day, if needed.
  • Credit line: VADs provide multiple credit options from credit lines to leasing options for your customers.

Now that you understand the benefits of a VAD versus a limited distributor, here are some things you need to consider when selecting a VAD:

  • Location: Take into account the VAD’s warehouse location and note the areas they serve. If you find a great VAD in California, but you are located in New York, you’ll need to consider the cost of product transportation across country before signing any contracts. Make sure you ask about their shipping rates, too. Several VADs offer free ground freight based on the size of the order.
  • Inventory: Be weary of “Just-In-Time” shipment of inventory, which is the process of shipping inventory as soon as it is received. If a product is expected to be delivered to the VAD and shipped out the same day to the reseller, any weather event that prevents it can cause a chain reaction of late deliveries and unhappy customers. Make sure the VAD takes this very seriously, and provides tools for you to monitor their inventory in real-time.
  • Credit: What do they require for a credit line? What are their credit terms? You want to choose a VAD that allows your business to expand. Another approach to expanding your credit is implementing a secondary distributor, which doesn’t affect your credit with your primary distributor at all, and can help in unexpected stock out situations that may prevent you from making on-time installations.

Once you have found a VAD that seems to be a good fit for your business, create a strong relationship with them – from the sales representatives to the company executives. A strong partnership between reseller and VAD can make a world of difference in customer service and bottom line sales. A great example of this occurred several months ago when one of Digium’s VADs had an urgent order from a reseller needing several Digium IP phones for a next-day installation. The call was placed too late in the day, after the delivery trucks had already left the warehouse; but the VAD’s salesperson was determined to help. The sales rep gathered the phones himself, put them in his car, and drove them directly to the reseller, three hours away. That level of service happens when a partnership is mutually respected and highly prioritized.

Similar to the old Italian saying, “You can’t make good wine with bad grapes,” you can’t maximize market share with bad channels. As a reseller, your approach to evaluating and selecting the right distributors is a strategic process, but it can make all the difference in the success of your business.

 

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About the Author

Gayle Magee

Gayle Magee is the Director of Worldwide Distribution Sales at Digium, Inc. She joined the firm in 2007 from ADTRAN, Inc. as the Director of Distribution. Prior to ADTRAN, Gayle was the Director of Sales for Inter-tel and Executone Information Systems, Inc. Gayle has her B.A. in Computer Science and Management from Alverno College, Milwaukee, WI. She and her husband Gary live in Pinehurst, NC and they travel extensively.

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