In the last year or so, several suppliers have been either overtly or covertly shutting down their wholesale partner divisions. Overtly by disbanding their wholesale sales teams or covertly by refusing to take on new partners and encouraging direct sales staff to compete with their channel partners.
Why are some companies dipping in and out of the channel?
New ownership
When a company is taken over or receives significant new investment, new management find it hard to see passed the headline numbers. The comment, “If I can make three times the margin direct, why would I sell wholesale?” is common and a knee-jerk reaction is to pull out of channel. Often when sales don’t increase and their true cost-of-sale is calculated, the company will try to re-engage with resellers.
Wrong approach
Selling through partners requires a particular set of skills and the proper alignment of the organisation. Suppliers that are not channel-only have to work particularly hard to build trust and differentiate themselves. A common error is to view the reseller as the customer, forgetting they have to sell and support the products and services with hundreds or thousands of end user businesses. Resellers need reliable infrastructure and a consistent and timely flow of information. Suppliers need to make themselves easy-to-do-business-with by developing self-service ordering, provisioning and management portals.
Pricing
Many wholesale products are commodities but some suppliers still try and price them nearer to their retail offering. They justify this by down-playing the importance of price and emphasising other value-adds like portals, reliability and customer service. What they often forget is that the reseller has to win the business first, in a highly competitive market, before even being able to make a judgement about their other benefits. Also, what the supplier considers to be ‘value-adds’ are often ‘givens’ in the eyes of the reseller.
For reasons of complexity in support, messaging and billing, resellers and dealers prefer to deal with only a few suppliers.
If you are looking for a channel-only supplier of internet connectivity, hosted voice and mobile solutions, consider Jola.
