What are the changes you’ve seen in the distribution business?
We’ve been in the distribution business for over fifteen years, and we’ve seen many changes. For example, we’ve seen a really big change in channels to market. Where once we dealt exclusively with AV companies, we now find we’re selling to IT companies and security companies too. Our customer horizon has expanded so much.
The way we do business has changed a lot, largely as a result of the Internet. We get many customers asking questions or asking for support via email, but the lack of personal interaction means that we very often don’t get the details that make so much difference to helping us to solve the problem. I really miss that direct interaction with customers. When you’re trying to understand exactly what the requirement is in order to propose the best solution, personal communication is so much better than email.
We all suffer from this illusion that the Internet is allowing us to do more in less time. What’s really happening is that the quality of service we’re able to offer is impacted. I want to say to our customers “Please talk to us”. We’d like to know more about where our products are going and how they’re being used so that we can help our customers come up with a properly designed solution. We need a deeper interaction with our partners.
Margins have unquestionably shrunk. Again, that’s partially a function of the Internet – there’s so much information out there that the end user can easily get clues about margin structures, and haggle for a better price.
How can you protect your margins?
The secret to preserving and improving margins is in the value we can add to the relationship with our customers, the quality of service we can offer them. We’ve had customers go away from us to buy on price – but mostly, they come back. We also ensure that we offer a range of solutions. At one end, we have solutions that are based on low price for customers to whom that’s most important – but we also offer solutions that are based on value: they cost more, but they do more – they’re better solutions. At the end of the day, though, we always need to bear in mind that we have full responsibility for everything we sell.
The whole chain needs to recognise the value it brings. Sure, we’ve seen some companies going direct to end users, diluting their commitment to the channel. We think it’s a real strength for Prase that both of the company’s owners come from a contracting background – we’ve been where our customers are. We’re not a box mover.
It’s all about support. We offer a pre-sales support service where we’ll help our customers understand the requirement, design the solution and specify the right products. We can offer onsite support for complex systems, but the integrator is always the one facing the customer – we’re there to look over his shoulder and advise him. We also offer product support, which we see as a very different thing from project support. And, of course, we have a service department.
What do resellers look for from a distributor – and what do manufacturers look for?
I think both are looking for a partnership. Resellers want to feel secure with us, want us to help them with complexity. They’re looking for flexibility – and for massive amounts of support.
Manufacturers are looking for a company that will respect and protect their brand, their image, their reputation. They’re looking for a company that is well established, reliable and financially solid.
How do you decide which products to carry?
We’re one of very few distributors that I’m aware of that has its own internal R&D department. Our team looks at what’s going on in the market, evaluates technologies, products and solutions, assesses the quality of products and their suitability for the Italian market. We look for manufacturers who are financially stable, who will be around to supply and support us in the long term. Quality is perhaps most important, though: far too many times, we come across what looks like an excellent product, but the quality just isn’t there.
An increasingly common phenomenon we’re seeing is products coming to market before they’re ready. It happens just as often in the consumer market, with manufacturers having to release firmware updates to fix problems that should have been identified and fixed before a product started shipping. Manufacturers are under so much pressure to compete, to hit the window of opportunity, they are becoming increasingly tempted to shortcut the cycle.