By Ramdas S, CRN, September 7, 2009 1200 hrs
One of the biggest banes of the IT distribution business is the last-week target pressure. Most vendors compel their distributors to sell aggressively in the last week of every month to meet monthly sales target. This often leads to over distribution and price undercutting, leading to business loss for everyone in the channel.
However, Acer claims that it has evolved a sell-in system that has reduced the last-week target pressure on its partners.
“Most vendors offer special prices in the last week of the month to meet targets. Sub-distributors wait for such deals to purchase their stocks and hence the monthly sales cycle gets concentrated in the final week. This chokes cash flows, creates inventory pileups and discounting. We have reduced our last-week sales, which accounted for almost 85 percent of our monthly targets, to 30 percent,” claimed S Rajendran, Chief Marketing Officer, Acer India.
According to Rajendran, the new system was introduced last year. “We introduced higher incentives for purchases made in the first week of the month, and subsequently reducing the rebate offered over each week.”
“We soon realized that it wasn’t just the channel mindset we had to change, but also that of our own sales team,” added Rajendran. As a result, last quarter, Acer modified the incentive system for its own team where a sales executive who sells evenly during all four weeks is better incentivized.
Commenting on the new system, Faizal A, Director, Aldous Glare, Acer’s authorized sub-distributor, said, “Initially we had reservations about it as our entire downstream channel was accustomed to last-week purchases. But, Acer pursued us consistently and also made changes in its sales policies to make the system more acceptable to partners. Overall, the system has meant faster rotation of products, less stock pileups and evened out our weekly sales.” |