CRN Network, December 12, 2011, 1530 hrs
The first edition of the annual CRN Distribution and Retail Summit 2011 was held at the Leonia Resort in Hyderabad from November 10-12, 2011. The event saw 80 of India’s leading sub-distributors and retailers in attendance. The 3-day summit had a mix of technology presentations, workshops, panel discussions and displays of the latest technologies.
The summit also witnessed the CRN Xcellence Awards—Distribution & Retail 2011 ceremony wherein 17 awards were presented to leading retailers and distributors. There was also a mix of entertainment including a live DJ night, a patriotic dance performance by a renowned troupe, and spa and meditation facilities for delegates.
The conference program was anchored by Rushabh Shah, CEO, Graham Information Systems, who regaled the audience with his one-liners and jokes.
Preparing for the future
Dushyant Mehta, CMD, Mediaman Group, said that the future depends on the steps we take today. He defined FUTURE as an acronym for Finance, U (you), Technology, User, Risk and Ethics.
Mehta advised partners to watch their finances carefully and maintain a healthy cash flow for a secure future. Raising the issue of 30-90 day credit, he gave the example of the telecom channel which makes transactions in cash or with 1-2 days’ credit. “Blocking our money in credit restraints us from expanding our business,” he said.
Explaining the ‘U’ he said that most sub-distributors treat themselves as sellers of third-party brands and do not invest in creating their own brand. “U (you) is very important for future success. You and we all need to work toward creating a strong brand identity for our businesses and not just be known as the distributor of X, Y or Z vendor.”
Mehta said that most of the IT channels that sell technology do not use the same technology for their internal organizations. “All of us propagate the use of technology to achieve growth for our customers, but how many of us use it in our own organizations to create strong and efficient processes? We need to practice what we preach,” he emphasized.
Highlighting the need to focus on user needs, Mehta said that many in the IT channel were focused on vendors rather than customers. “We need to spend more time understanding what customers want, and how their behavior is changing, and shape our business around it. Right now many of us—including myself—focus on stuff like which vendor will offer more margins and better credit terms.”
Mehta stressed the need for the IT channel to be more risk-taking. “Two decades ago when we ventured into technology sales the market was tiny. We all took the risk of venturing into it as we believed in the power of technology. Today we have stopped taking risks, but if there is no risk how can there be any reward?”
Mehta also highlighted the need for ethics. “Look at all the great companies, including Infosys. They were all built on the strong foundation of ethics. Let’s not forget that an ethical business is important for the long-term sustenance of the IT industry that we as channels have helped to build.”
Retail recipe
Yatheesh Govind, Director, SAC InfoSystem, shared his company’s best practices to attain success in the retail business and build a high-performance organization.
“Our first store was inaugurated at Vastrapur, Ahmedabad, only three years back, and now there are 44 retail stores operational across Gujarat, Maharashtra, Rajasthan, Delhi and Karnataka. We have plans to expand to Punjab, UP and TN with another 20 stores. We will open 50 new stores in the next two quarters,” informed Govind.
Govind shared some insights about SAC’s success story. “Most of our retail outlets are in smaller cities. This demonstrates that if you have the right market strategy and create a better consumer experience you can succeed in any market.”
According to Govind, nearly 44 percent of SAC’s Rs 142 crore retail revenue came from accessories. “Do not underestimate the business of accessories. It’s a high-growth, high-margin business; one that compels your customers to come to you again and again. We have dedicated teams and counters at all our stores to focus on accessories. This focus has meant higher revenue per customer, repeat footfalls and higher margins.”
Govind emphasized the need for inventory management. “When you are managing 44 stores and planning 100 products, inventory management becomes a critical factor. Forecasting inventory, managing aging stocks and moving unsold stock from one location to another requires strong systems and processes, and trained manpower to follow those systems religiously.”
He advised partners to build long-term relationships with vendors. “At SAC we do long-term planning with all our vendors, and plot the break-even strategy at the beginning itself. This exercise has helped us in getting full vendor support for making our retail business work.”
Learning from sports
George Thomas, CEO, Aldous Glare, made a passionate presentation about building a high-performance distribution business and shared many of his company’s best practices.
“I am soccer fan, and I have used the soccer analogy to create my organization. Every football team is made up of four types of players—forwards, midfielders, defenders and the goal-keeper. Our sales staff are the forwards, the midfield consists of sales managers, the service and support chaps are the defenders, and the business head is the goal-keeper. My role at Aldous is that of a coach. I don’t play the field game but focus on the strategy, motivation, enablement and empowerment. I play my team as per their individual strengths,” he shared.
Thomas said that being a coach you need to trust your team. “That’s what I have done; I empower them completely to execute the conceptualized strategy on the field. I have created a strong team of second-line managers, and empowered them to take all the decisions, including signing cheques. Today, I don’t sign a single cheque at Aldous. That is what I mean by empowerment.”
He advised partners to innovate and differentiate in order to become a peacock in the land of penguins. “Foreseeing a huge opportunity in rural areas we started the exclusive regional partner (ERP) program to engage partners focused on rural areas. The program provided credit to partners in rural locations and this has resulted in increased sales. Today, each ERP is giving us Rs 60 lakh every month as compared to an annual business of Rs 40 lakh a year ago.”
Thomas advised the audience to dream big and stay focused on the line of business. “Don’t be satisfied with just being good. Being good is the biggest enemy of becoming great.”
He gave an example from cricket. “Test cricket gave way to one-day cricket which is now giving way to T20. Similarly, assembled desktops gave way to branded laptops and the next trend is tablets and converged media. MS Dhoni is the only captain in the world who captains his country in all forms of the game. Are you a captain who can manage and adapt to fast changes in the IT biz?”
Digital convergence
In his analyst keynote, Sumanta Mukherjee, General Manager, Research & Consulting, Cyber Media Research, focused on the evolution of PC and mobile phones which is driving convergence in IT. He also spoke about how distributors and retailers must realign and differentiate themselves to utilize market opportunities.
“With the demand for portability and increasing affordability, the notebook market is witnessing 60 percent growth and constituted 38 percent of the total PC sales of about 1 crore units in 2010. Smartphones are also picking up with unit-wise contribution of 4 percent to the total feature phone and smartphone market in 2010. The explosion in personal digital content, mobility-driven productivity tools and anytime banking are some of the factors driving the convergence of PCs, smartphones and now tablets.”
Said Mukherjee, “As customers mature and their confidence grows, online buying is expected to grow manifold as they explore more convenient means of buying. Buying from TV shopping channels and similar media that provide door-delivery and affordable EMI options is growing. These trends will pose challenges to traditional IT distribution and retail.”
Mukherjee said that according to Assocham, the size of the online retail industry is expected to touch Rs 7,000 crore by 2015, up from Rs 2,000 crore now, an annual growth rate of 35 percent.
He advised partners to “invest in Web interfaces including individual Websites, and create a presence on sites like eBay and Amazon as well as on social media. This is to not only advertise but also gain customer feedback.”
Mukherjee recommended that partners develop service capability and transform from hardware selling to concept selling which can act as a differentiator in the utility space. He also advised them to increase their focus on accessories to increase their margins.
According to Mukherjee, distributors and retailers should look at cloud computing as a big opportunity. “Many of the retailers are from tier-3 and tier-4 cities where you also sell to SMBs. Cloud computing is a big opportunity as it makes IT affordable to such customers,” he said.
Mukherjee also told the delegates not to get too worried about the hype around tablets. “While tablets are a fast-emerging product, they will never replace the PC, particularly in the Indian market where millions of people are yet to buy their first PC.”
Panel discussions
Outlook & Strategies for 2012: The panel, which consisted of leading sub-distributors and retailers, debated the unfolding economic scenario, technology trends and changing consumer behavior.
The panelists were optimistic that the global economic uncertainty wouldn’t impact India much and that the IT industry would grow at 20-25 percent in 2012.
“Despite all the bad news including dollar appreciation, falling stock markets and global uncertainty, India’s GDP will continue to grow at 7-9 percent,” forecast Umang Mehta CEO, Roop Technologies. “In fact the global economic conditions will compel many MNCs to invest in India, while Indian companies will make acquisitions globally.”
He was seconded by Divakar Prabhu, CEO, International Marketing Company. “IT is now looked at from the point of view of saving costs and enabling business growth. India’s domestic demand is robust, and this will continue to boost demand for IT products and solutions.”
S Karthikeyan, MD, Bloom Electronics, said that changes in the government and vendor policies were the biggest threat to channels. Regarding the recent scheme of the TN government to offer free laptops to more than six million students he said, “This could disrupt the channel business in a big way because these laptops will kill student demand. In addition, there’s a real risk of these notebooks entering the gray channel and spoiling the MOP of the products, thus creating a negative spiral for the channel.” He also said that frequent changes in the distribution policies of vendors were unsettling the channel business.
The panelists said that the IT channel needs to be prepared for many transformations taking place in the market including the shift happening in client computing and the impending goods and service tax.
“The dynamics of retail are changing as consumer behaviors change due to the proliferation of online retail and LFRs,” noted Bimal Kumar Singh, CEO, Geonet IT Mall. “IT retailers have to recognize these changes while formulating their future plans. Creating avenues for convenience buying, advertising smartly and providing consumers with exemplary buying experiences are the key areas we all need to focus on.”
Sundeep Tambi, Director, Business Development, NCS Computech, argued that tier-1 markets are increasingly getting saturated and that the competition from alternate channels is also rising. “For sub-distributors the focus should be smaller cities and towns, but for upcountry penetration it is imperative that they take a very different approach by handholding the resellers,” he said.
Vendors’ Outlook for 2012: The panel debated the major changes that have taken place in the user space since the recession of 2008. Most panelists agreed that the recession had some good effects in terms of financial discipline, judicious spending on infrastructure, growth of new technologies and availability of good talent. “The biggest learning we had was that a recession can also have some good impact. On the end-users front, recession increased the maturity level of customers and made them more demanding. It enabled the easy availability of good talent and motivated organizations to rethink their spending on infrastructure,” said Mohit Anand, MD, Indian Subcontinent, Belkin.
“The recession developed a sense of financial discipline in organizations. New technologies like virtualization found their way as organizations were looking for economical infrastructure options,” said Mukherjee of Cyber Media.
Most panelists agreed that partners must focus on value additions in their offerings and rethink their portfolio to include services and technologies such as cloud services. Commented Anand, “Partners must not focus only on fast-selling products. Greater margins lie in niche markets or paths less traveled.”
“Most partners spend 90 percent of their time in operations and purchasing though they must be more focused on sales and customers, and include accessories and after-sales service in their offerings,” observed Chandrahas Panigrahi, Country Manager, Consumer Business, AMD India. He added that retailers must focus on skills improvement and how to increase footfalls in their stores.
According to Jagannath Patnaik, Director, Channel Sales, South Asia, Kaspersky, partners must add value to their offerings by including emerging technologies like cloud services. “Partners must transform themselves from being box-pushers to becoming value-addition solution providers. Retailers must provide a great experience to their customers.”
The two panel discussions were moderated by Dhaval Valia, Associate Publisher and Executive Editor, CRN.
Workshop
Plan well to execute well: G Srinivasan, Life & Executive Coach, Use Time India, conducted a workshop sharing various techniques and tools that CEOs can employ to make themselves and their organizations more productive.
He highlighted the common and unproductive practices that even CEOs of large companies can’t give up. “For all activities we use tools—for writing we have a pen, for brushing teeth we have a toothbrush—but how many of us use effective tools for planning and organizing ourselves?” he asked.
Srinivasan shared basic tools that can improve individual efficiency. He taught a practice called JAM (Just a Minute) used to record all the requests and promises made and received. “During the day most of us make mental notes of things like meeting timings, phone numbers, customer names and so on. We clutter our minds with the same and hamper its capacity to do more productive work. By using simple tools like JAM you create the practice of noting everything down, thus saving you the mind space to do more productive works.”
He also shared data from several studies to drive home the point that not enough time is spent planning a project. “We don’t plan well and as a result most of our execution time is spent in iteration. We also don’t break down the project into comprehensible and doable tasks, and as a result complicate the execution process.”
He explained how to use Pareto’s Law. “According to Pareto’s Law, 80 percent of our efforts generate 20 percent of the results while 80 percent of the results are generated by 20 percent of our efforts. CEOs must identify and focus on the 20 percent efforts which generate 80 percent of the results—and delegate the remaining tasks.”
Srinivasan also demonstrated various tools and techniques for setting goals, planning and executing. He said that “smart goals have to be measurable, actionable, challenging and time-bound.”
Technology tracks
140 billion pages: Mohamed Nasir, Senior Manager, Marketing, CSP, Canon India, spoke about the growth drivers for the printing industry and Canon’s growth strategy. He pointed out that we have not yet reached the stage of having paperless offices, hence print-outs are a necessity.
“10 percent Indians have access to the Internet, and about 121 million net users are expected till December 2011,” explained Nasir. “This will generate a higher need for print-outs. Driven by these factors, Canon India expects to grow its revenue from Rs 1,250 crore in FY2010-11 to Rs 1,650 crore in FY2011-12. Further, the print industry expects high growth with an estimated requirement of 140 billion pages by 2014. This gives Canon India the vision to become a $1 billion company by 2015.”
To help realize this ambition, Canon has opened 32 Canon Image Square stores which act as a one-stop-shop for all capturing and printing needs.
Nasir sees government projects as a huge opportunity, and encouraged partners to actively participate in these projects. “We expect Rs 300 crore from government projects in 2011. We are already participating in various projects including UID, Sarva Shiksha Abhiyan, and the Pehchan project from ESIC,” he informed.
mydlink and more: Madhukar Swayambhu, AVP, Enterprise Business, India & Saarc, D-Link India, highlighted the key elements of the company’s product and market strategy. “The concerns and needs of business entities are the reasons why D-Link proposed its 5S business solutions—Switch, Structured cabling, Storage, Surveillance and Software. D-Link’s 5S solutions help businesses to integrate network operations and monitor processes.”
The company is also focusing on consumer lifestyle products including Boxee, which allows one to access the Internet on TV. Another focus area for the company is 3G portable devices including the Le Petit USB Wi-Fi router that offers Internet on the go.
Swayambhu spoke about the miiiCasa home cloud, a private cloud designed for the family which enables them to store and share content among friends.
He also showcased D-Link’s new product—mydlink—which allows parents to keep an eye on their homes and children from their office or while on the go. “mydlink is a product which allows users to survey their homes by simply logging on to a Website. They can do the same from their mobile phones. This product has manifold uses even for SOHO and SMB customers,” Swayambhu said.
A return to notebooks: Arun Jain, Pre-sales Manager, Business Solutions, LG India, took the audience on an audio-visual journey of LG IT products. LG has re-entered the notebook market after nearly three years by launching its E series at the entry-level, S series in the mid-range, and P and A series at the premium level. “For LG notebooks we offer 1-year onsite warranty with accidental damage and theft insurance across 85 cities and our network of 147 service centers,” said Jain.
“We have introduced several innovative technologies including notebooks with 3D display and Blu-Ray players,” Jain said. “These features are today not available with any other PC.”
He also highlighted the sales performance of LG monitors globally. “Worldwide, the LG monitor business is the fastest-growing in the monitor market. We have been witnessing a consistent 12 percent growth since 2008. In 2010 we sold about 20 million monitors with 16 percent of them being LED monitors. We plan to sell 22 million monitors worldwide in 2011 and expect a share of 50 percent from LED monitors. As the shift to LED monitors continues in the market, LG has achieved the No 1 position in the segment.”
Looking for the like-minded: Anil Gupta, AVP, India Sales, eScan India, introduced eScan 11, the company’s new comprehensive antivirus and content security solution. The security suite offers features such as redesigned dock, animated GUI, enhanced self-protection, gaming mode, battery mode, user-based parental control, Web-phishing filter, virtual keyboard and user-defined file blocking.
Gupta encouraged partners to enter into a more comprehensive relationship with eScan by highlighting the company’s new partner program which is designed to offer sales, marketing and technical support to partners. “The program structure offers several advantages such as sales and technical training, lead generation and pre-sales support to assist you in securing new business opportunities.”
Gupta also informed the delegates about eScan’s newly-introduced partner support toll-free number—1800 102 3276—for technical support. “eScan has major expansion plans, and we seek exponential growth over the next few years. In this journey we want to partner with channel organizations which share the same beliefs we do,” said Gupta.
Changing value system: Anand of Belkin said that the social values inculcated in us force us to lead a lifestyle far simpler than what we can afford. “The value system conditions us to save today for a rainy tomorrow. Social forces control our level of inspiration and condition us to manage with less.”
Nevertheless, Anand insisted that our value systems are now changing. Rising income levels and exposure to international media are inculcating consumerism and individualism in society. “Life has become a product that can be enhanced and not a condition to live through. With growing consumerism, people are now buying expensive luxuries on EMIs; transactions are readily becoming credit-driven.”
Anand added that consumers are now far more aware than before. “Buyers have become more demanding, and expect a quality product at reasonable prices. With buyers getting quality-conscious, low prices do not guarantee the success of a product. People also want to experience a product before buying, and have started accepting online retail.” He considered growing consumerism to be a big opportunity for partners, but also cited the need to innovate.
Anand advised partners to accessorize their offerings to create healthy margins and stay competitive.
Cut down on credit: Recalled K Ravi Lakshman, CEO, Sakri IT Solutions, “When I came back to India in 2009 after leaving a job at an MNC many people laughed at my decision to
start a business here. Sakri is however now the national distributor for Kaspersky retail products; an Airtel systems integrator for ILP, MPLS and NLD for Maharashtra; and a Cisco-certified Select Partner focusing on SMBs.”
He informed that Sakri has already established Sakri Peripherals and Electronics, and is also floating Sakri International in Malaysia. “The objective behind starting Sakri Peripherals is to leverage on the high margins that the peripherals business offers. We also intend to open offices in all the major cities within a year. We have plans to introduce several products by March 2012. In the next three years we expect revenue of $120
million-150 million.”
Lakshman questioned the practice of offering a best-selling product in a place where numerous other competitors are already offering it. “Why not look for a place less penetrated which may have a great market and offer higher margins
as well?”
“We must also cut down on the policy of credit of up to 40-90 days,” Lakshman said. “By offering huge credits, we are allowing others to run their business on our money.”
Doubling market share: Chandrahas Panigrahi of AMD India, while reaffirming the company’s retail direction, commitment and engagement model, recounted a Mark Twain witticism, “It’s not the size of the dog in the fight, it’s the size of the fight in the dog.”
He highlighted AMD’s distribution and retail objective to achieve a market share of 16 percent in the consumer notebook segment.
Emphasizing on the company’s presence in more than 1,200 retail stores supported by a 25-member team, Panigrahi spoke of their communication with retailers that includes joint road-shows, demo zones, classroom trainings, competitive videos and retailer meets. “We have created a Smart Retail program focused on helping retailers sell AMD-based notebooks. This includes helping them with range planning, assortment, in-store merchandizing and consumer promotions. We have appointed dedicated retail managers to work with these partners.”
“We have also created a separate distribution program called Warlords wherein we have enrolled 20 regional/sub distributors who work with their respective OEMs to bring AMD notebooks to the market. We have empowered these distributors with resources to stock the OEM products, conduct training for retailers, and do local marketing.”
He informed that due to these efforts AMD is seeing an OEM and channel build-up that augurs well for its ambition to double its market share in the consumer notebook market over the next 12 months.
“Our plan is to expand our retail coverage to 4,000 stores and expand the Warlord program over the next 12-18 months,” Panigrahi concluded.
Robust service support: Anant Chaturvedi, Deputy General Manager, Sales, Digilite, recounted the achievements of Digilite after its launch in July 2011. “Since its introduction four months back, Digilite has achieved the milestone of selling one lakh motherboards. We were able to achieve the milestone through our brand equity, strong regional distribution, and quality and coverage of direct post-sales support.”
According to Chaturvedi, the strength of the Digilite brand comes from their extensive experience of motherboard manufacturing and their robust service support. “In the motherboard market, post-sales support is the key, and through Digicare we have direct support in about 64 cities. Our entire RMA process is managed locally, hence we can achieve faster turnaround. Also, Smartlink has good experience in the motherboard segment through its earlier joint venture with Gigabyte.”
Digilite was the presenting partner for the CRN Xcellence Awards 2011 for Distribution & Retail. During the summit Digilite also conducted a lucky draw for partners and distributed ‘Map My India GPS’ as the first prize, Digilite motherboard H61 as the second prize, and Digilite motherboard G41 as the third prize. The first prize was won by Rushabh Shah of Graham.
Maintain a balance: Rajesh Goenka, VP, Sales & Marketing, Rashi Peripherals, spoke about his company’s growth plans and strategies. “Rashi is today regarded as a strong value-added distributor. This is because we engage and work closely with the IT channel and provide them a profitable growth path,” he said.
He emphasized that Rashi is the only distributor that takes full ownership of the brands it distributes. “What sets us apart is that we manage the marketing, sales and support for all the brands we distribute. We are currently conducting India’s largest channel event, CBF VII, which this year will cover 60+ cities and train and engage with more than 6,000 partners. Importantly, all these cities are tier-2 to tier-4 cities. Our goal is to have an active channel base in all 600 districts of the country.”
He highlighted that Rashi as a value added distributor has more 50 percent share in the distribution of the brands it handles. “This presence in distribution has been supported by our financial discipline, large infrastructure, and an extensive network of 62 branches and 64 service centers.”
Goenka urged partners to be cautious as the IT industry is going through a lean phase due to the slow festival season, dollar appreciation and floods in Thailand. “There is a need to maintain a balance between topline and bottomline growth. Maintaining this balance, we have grown consistently at about 29 percent CAGR for the last 16 years,” he stated. |