Ingram Micro: Time for consolidating strengths

After two years of scorching growth during which Ingram Micro India entered the top three distributors club with astounding growth rates of 217 percent and 92 percent, it is now time for the country’s fastest growing distributor to do a rethink. Last year, Ingram Micro focused on a slew of initiatives to counter the slowdown. Right from looking closely at B & C class cities to marketing innovations like tying up with Chennai-based Solutions Centre to launch ecMobile, a Palm handheld for insurance agents, besides aggressively increasing the range of products, Ingram Micro pulled out all stops to beat the slowdown. As P G Kamath, vice president, marketing, Ingram Micro says, “While we’re looking at 2002 with an optimistic outlook, cautious optimism perhaps conveys it better as the last quarter of 2001 has not really been up to expectations.”

Ingram Micro will continue the same strategy it had followed last year of advising and educating channel partners. By encouraging channel partners to seek knowledge and sell solutions, the company plans to change the mindset of channel players into ‘solution providers’ as opposed to ‘box pushers’. This year will see Ingram Micro go out more aggressively in organising focused roadshows and hard-nosed retail initiatives to create the much needed excitement in the eyes of the consumer. Ingram Micro is also encouraging its channel partners to cross-sell products and offer products of different vendors as a bundle without compromising on price. The aggressive drive in B & C class cities will continue and the company plans to consolidate its operations in the cities which it has already entered into.

Explaining the strategy to counter the effects of the slowdown, Kamath says, “We will focus on enhancing margins on existing product lines and preventing margin leaks through efficient inventory management.”

On the product front, Ingram Micro is cautiously eyeing the opportunities in the VoIP space, which is supposed to be deregulated from April 2002. The same year, Ingram Micro also added Lexmark to its range of products. A recent addition is an AGP card and a WAN management product from NetReality. Ingram Micro has also made available warranty on the Web, which enables resellers to look up his warranty details and also look at the entire list of the products he has brought from Ingram. Also, the Ingram Micro’s Magix brand of PCs will be pushed more aggressively to retailers in an effort to make it more broad based. If last year, China was the focus area for Ingram Micro Inc, the parent company, this year it is going to be India. Resources will also be invested in the Six Sigma initiative this year.

Rashi Peripherals: Innovating for growth

‘Expansion is the best way to tackle a slowdown’ is a mantra that Mumbai-based Rashi Peripherals has always believed in. In fiscal 2002, the company will continue to expand into new territories and bring new products to the marketplace to broaden its reach. Says Suresh Pansari, managing director, Rashi Peripherals, “This year we will continue to expand our customer base, focus on retail markets and continue our expansion into B&C class cities.”

The government sector, which was a huge contributor last year is expected to contribute to growth this year too. Rashi like other resellers has realised the immense potential in selling value added products and hence the move to sell premium products from companies like Sony Electronics. The addition of the new product line is expected to add significantly to the company’s revenues. Seeing a huge growth opportunity, the company has already formulated a separate strategy to help Sony to expand its market for storage devices. Industry analysts believe that this is the key strength of Rashi, which looks out for good products and makes them brand leaders. The case of Logitech is a prime example.

Adds Pansari, “Our ability to go beyond the role of a traditional distributor and focus on building brands is one of the main reasons we have been successful.” Analysts believe that the ability of Rashi to combine its strengths of being a national distributor in reach and act like a regional distributor in pushing brands has played a pivotal role in tackling the effects of the slowdown.

Rashi has now made regional heads responsible for business in their respective regions. The regional centres will be run like independent centres with their heads deciding on which strategy to follow in their respective regions. This decentralisation of the structure could make Rashi more competitive in the long run.

Pansari believes that the next big boom for channel players would come from the consumer segment. Accordingly, the company is making aggressive forays into the consumer segment with a host of innovative products, the most recent one being the ClickSmart 510 which includes support for creating videos and has a built in flash and microphone. This year, Rashi will also increase its existing base of around 3,500 resellers to around 4,200, an increase of approximately 20 percent over the last year.

Tech Pacific: Waiting for boom time

Being the number one in the distribution game is surely a tough call as Tech Pacific India gears up to address the market in FY 2002 in the wake of a disappointing 2001. Tech Pacific India hopes to grow aggressively by continuing to aggressively add channel partners, increasing its focus on B & C class cities and driving growth by focusing on verticals. Says K Jaishankar, CEO, Tech Pacific India, “Last year all of us faced significant challenges in maintaining our growth rate. Instead of waiting for the market to pick up, we decided to move aggressively and expand into newer territories. Instead of cutting costs by slashing our workforce we have cut costs with the aid of technology. As we enter this fiscal, we are cautiously optimistic that the market would pick up around July 2002. And once that happens, we will be in an advantageous position due to our first mover advantage in new territories.”

In the past few months, many distributors have been complaining that the volumes in B & C class cities don’t justify the investments involved. But if the experience of Tech Pacific is taken into consideration, then channel players may need to do a rethink. Jaishankar says that the company has already made considerable return on the investments it has made in these cities. This year the focus will be on consolidating the branches opened in these cities.

As part of its strategy to drive growth, Tech Pacific has decided to continue its policy of focusing on verticals. The government sector will continue to remain a stable contributor to Tech Pacific India’s pie. Also expected to contribute in a big way are verticals like banking and finance. Tech Pacific is also bullish on the insurance sector, which is currently attracting a lot of private investments. On the VoIP front, the company prefers to keep a wait and watch attitude till policies become clearer.

As a strategy, the company will continue to focus on value-added products which can act as a cushion for the fall in volumes. Tech Pacific India also has a core team in place today for addressing the enterprise segment. This year, the company expects value-added products to contribute 15 percent to overall revenue, up from 10 percent last year. In line with its objective of streamlining the market and keeping out speculators, Tech Pacific has announced a reduction in credit limits from 30 days to 12 days. On the consumer segment, which is believed to be the next big boom area for channel players, Tech Pacific is adopting a cautious attitude. Explains Jaishankar, “We are still evaluating the consumer segment. Currently, there is a bit of a slowdown and we will look at the months from April and May to finally decide on our foray.” In terms of revenues the PC category is expected to remain the largest one, followed by peripherals and software. In the wake of anti-piracy measures taken by companies like Microsoft, Jaishankar expects packaged software sales to pick up and expects a major growth from this segment. After witnessing high growth rates of over 50 percent year-to-year for the last three years, Tech Pacific is cautious this year and expects growth to be around 25 percent.