'Value addition will be the mantra for distributors'

Ingram is one of the three corner stones in the IT distribution network in
India and worldwide. On a recent visit to India, Ingram Micro president and COO
Michael J Grainger discussed with Shweta Khanna of CyberMedia News Service the
company’s outlook on the distribution market and its strategy to strengthen
the market share and its range of products. Grainger has been deciding Ingram
Micro’s global strategies and driving best practices throughout the company.
According to him, distribution is quintessential for IT and distributors will
have an integral place in the IT business. Excerpts:

What are the global trends in the channel business? How different is it in
India?

Globally, we have seen a leaner model of channel partner, but this region is
a high-growth and high-risk market. With a growth rate of 20%, we foresee a
similar growth rate. Incidentally, credit situations are very good in a
developing country like India.

Given
the margin squeeze and Dell syndrome, vendors are looking at going direct. What
will be the impact on Ingram and the distribution industry in general?

A distributor is essential for any vendor and replicating Dell everywhere is
not practical for every vendor, especially with the recent drive of tapping
smaller cities. It is not practical geographically. Distributors will definitely
move up the value chain. They will transit from being mere box pushers to
value-added resellers morphing into a sales and marketing company, which will
value add to the total distribution model for any particular vendor. For
products to be successful, making them reach every nook and corner will be
important. The distributor’s role is to effectively get that product at the
right time at the right place. Thus, I don’t think that distributors have
anything to fear, though they might have to move up the value chain.

What kind of value addition do you see for Ingram Micro in future?

Value-added service should contribute around 10% as per our new strategy. We
are looking at various verticals such as education, healthcare, and BFSI. We
plan to create a back-office service infrastructure that can cater to every kind
of service requirement by forwarding the requests to our reseller network. This
will negate high investments and give a very loyal customer base.

How well are your own brands doing globally and in India?

We are present in very specific markets and do not conflict with any other
product of our vendors. Our own brands are not a major thrust for us in the
market and they are present in very small number of markets. They contribute not
more than 1-2% to our turnover and we do not want to build them further. It is
just that we want to fill some product exits and give our customers
build-to-order products that we have been supplying the OEM segment for a long
time. Besides, it’s a great brand building exercise.

What do you think of retail in India?

No, India is not as matured a market to support a retail business model. IT
products are still not impulse buys for the masses. We might try some digital
entertainment centers, but threshold numbers are yet to come.

With the convergence of IT products and intelligent consumer durables,
will you look at distributing non-IT products?

Definitely consumer-driven markets like India and China will drive the
market. The intelligent products will need to move through IT distributors as
they know how to handle technical products and we will definitely try to start a
relationship at the right time.

SHWETA KHANNA in New Delhi