Mobile Distribution is a fiercely competitive space from an airtime and a hardware perspective. Margins are tight and getting tighter in places so it can take some real innovation to get ahead in this game. David Dungay spoke to some ofthe UK’s top distributors to find out what’s new and how they are helping their partners keep abreast of industry changes.
If you are reading this and thinking ‘nothing has changed in mobile distribution’ you probably need to think a little broader in terms of the market and the customers you serve. We asked several disties what has changed in the last twelve months and we got a mixed response.
Matt Child, Managing Director, Tech Data Mobile UK and Ireland commented, “It has certainly got smaller and remains uber competitive but for insightful businesses this presents some real opportunity, particularly as new categories emerge and the boundaries between IT and mobile become increasingly blurred. The primary requirement for TDM in our phase of evolution is having a granular understanding of our customers’ needs; we also have a responsibility to show them the art of the possible and products and services that they may not be fully cognascent of, subsequently we need to continue to work with best in class vendors and ensure we have multiple good data sources to help plot the future tech path.
Mark Curtis-Wood, Head of Network Services, Nimans added, “Inevitably the landscape has changed over the last 12 months from a kit perspective and also that there are now some new kids on the block in terms of mobile distribution – which has led to a change of guard in the mobile distribution business, creating more choice. Margins on kit are quite thin and transient as technology continues to refresh at a rapid rate. It’s interesting how Apple has strengthened its position as the dominant player in the market last year.”
Julien Parven, Marketing Director at Daisy Distribution said, “Marginally, the landscape itself hasn’t seen a dramatic change, purely because of how well-established the mobile distribution market is. It is extremely competitive and therefore in order to make a huge splash, it needs to be something pretty significant.
What has been prominent over the last year in the market is the number of consolidations and mergers between the partners, resulting in closer alliances with non-mobile resellers. So we have also seen more partners adopting mobile specialism within their offerings. In our partner base alone, we have seen first-hand how partners have strategically acquired a wider portfolio of products and solutions to position themselves as significant players in the market as they unlock revenues in those new product areas.”
Keith Curran, Co Founder of plan.com, claims his company has changed the very nature of distribution by turning the distribution model on its head. He said, “The problem with air time distribution is nothing has really changed. It still remains a classic distribution proposition, i.e. Buy for X, sell for Y and make Z margin. The net result is it’s the same customers being offered the same things. The airtime distributors buy the tariffs from the networks and then sell them on; there isn’t much you can change within that landscape. There is little room to change tariffs and packages and when customers want to do something different it can be a nightmare getting them agreed by the network. plan.com doesn’t have any standard tariffs, you can build the tariff in real time in front of the customer, we have turned the distribution model on its head.“
Keith continued, “We aren’t a distributor, we are a technology company. When we started plan.com we made the decision not to be a distributor because there was no future there. There was no different way of doing things and the net result will be the same key players offering the same products to the same customers in the same way. It never changes.”
Déjà Vu: Challenges
When it comes to challenges distributors and their partners face Simon Woodman, UK Business Development Director at Exertis UK, sees the new wave of smart products entering the market as a hurdle. He says, “There will always be challenges in the distribution sector. With the addition of smart technologies, particularly for the connected home and wearable sector, there are many smaller brands developing and coming through now. Only companies with an intelligent eye will be able to see which of these companies have something great to offer the market and the channel, and the knowledge to be able to develop that, bring it forward into a valuable package, and present it to resellers. Exertis is one of those companies, thanks to our lengthy experience in the wearables sector…”
Parven added, “I think it is the same challenges, but the same opportunities. The beauty of the mobile distribution industry is the way that it is able to continually reinvent itself, embracing technology as it advances. The influence of cloud technology is seeing a natural shift towards convergence and so that is opening up new opportunities.
I think the challenge within this is understanding how we can extend the same experience that early adopters have had over the next 12 months, and extend that across the industry.
We are still seeing a massive influence from the consumer market and the way that demand has become more polarised. You have those consumers who want to buy everything from one single provider, and those that prefer to put up Chinese walls. Within the channel, this is mirrored. Mobile distribution is just a commodity that needs enablement.”
Distributors have long since started adding additional products from other market sectors into their portfolios whether it be fixed-line, VoIP or IoT solutions. But is providing a converged portfolio the only answer for partners on the hunt for the value-add?
Matt Child commented, “I think there are common building blocks that we need to provide to our resellers, including but not limited to a broad portfolio of product, great pricing and availability, proactive solution generation and responsive people. There are some tactical services that we are developing such as airtime, warranty and finance propositions to ensure our resellers aren’t losing a margin opportunity to another part of the industry – it’s dangerous making assumptions about our base though which is why we are so laser focussed on direct, framed discussions to ensure we’re creating the right propositions to help drive their businesses forward. Of course it’s our job to make ourselves really easy to buy from too and that means we’ve got to make sophisticated solutions look simple and in turn help our customers to be really easy to buy from too, so it’s really very symbiotic.”
Woodman continued, “Exertis are unique as we are not just a mobile distributor; we are a true value added solutions partner for our resellers. This allows our reseller partners to take new products and new technologies into their portfolios with the minimum of ‘pain’. The mobile and Unified Communications channels are a great example of this, especially if you look at a vendor such as Samsung. We are taking traditional mobile resellers into the UC channel as the demand for mobile working, flexible working hours and with the mobile handset often the device of choice over a deskphone, allows a mobile reseller to sell a full Unified Communications solution. This often comprises telephone system, handsets, mobile devices, call recording and CRM integration, delivered by Exertis white labelled engineering services.”
Parven says “For us, it is all about the ways that we can add value to our resellers. Whether that be through education, sales support or financial support. This is clear in how we are now positioning ourselves. We are now offering our resellers access to the wider Daisy portfolio, so they can take full advantage of convergence. It is important to engage with partners across those products, making sure that you understand their individual levels of skill and resource, in order to provide them with the support they need so that they can retain control of their customers.
Five years ago, adding value was all about paying resellers early, however, all that has changed. Now, it is about becoming an extension of their organisation and adding the right type of value.”
Keith Curran thinks more is needed than just a broad portfolio. He said “In fairness, many of them have broadened their portfolios to include fixed-line, VoIP, IoT etc… but that isn’t what it is about. Just putting the products in their portfolio doesn’t mean they are going to sell. The key is how you deliver those other products to the mobile channel. Mobile resellers don’t magically wake up one day and know all about VoIP, fixed-line, IoT etc. These services need to be delivered in a format that someone who hasn’t sold them before can still look like an expert. Currently the biggest uptake we have seen from our mobile resellers is in VoIP, we have enabled them to be the experts needed to sell into their customer base, and it’s all made possible via our portal.”
The Apple Effect
There is no getting away from the fact that Apple products, namely the iPhone, are making serious waves in the business market. Their popularity in the consumer world has gone a long way to seeing that people want them in their work lives too. The only problem is Apple products are expensive and come with inherently low margins which can take the shine out of deal.
Parven commented “The Apple devices are great products and that isn’t something that will change anytime soon, but I don’t feel that this year’s launches were as impactful as previous years. We haven’t witnessed the same supply chain challenges and I think that is more to do with the other manufacturers in the market.
If you take Samsung as an example, they have become a significant player not just in devices, but in infrastructure and environment too. So for those businesses that have a mobile strategy in place, there are strong propositions available from the likes of Samsung and Microsoft, as well as Apple. And that’s healthy, providing choice to our customers.”
Curran continued, “Resellers often moan how expensive Apple phones are and that the margins are low… change the industry then, stop giving away kit for free. The customer perception is that phones are free and that is driving the pressure on margins. The only winner is Apple themselves because they don’t reduce their prices because the customer wants it for free, they will just say isn’t it about time you stop giving away products and services for free and sell them for what they are worth?
Resellers are meant to be consultative suppliers… so be a consultative supplier and stop giving in when someone says they want an Apple product. The reseller should know what suits the customer best, not the customer themselves. Just because they think they want an Apple product doesn’t mean it’s the most suitable product for them….who’s the expert here? If the customer knew best, why do they need to engage with a reseller?”
Ed Says… Some great comments this month! Adding value for partners remains key in the mobile distribution market and it’s great to see mobile dealers getting having success in areas outside mobile. Convergence is still happening and resellers need to shift their mindset from the products they currently sell to the what the customer needs across all aspects of their business.