The boom that has characterised the South African economy over the past several years is over. Besides a glance at the most obvious and basic economic indicators, you need look no further than the IT industry for confirmation that growth has slowed and things are getting tough.
When IT vendors start appointing additional distributors to handle their products or decide to cancel a relationship with one distributor and then appoint another in its place, it’s a surefire indication that quarter-on-quarter growth in the channel has come to a halt.
Recent changes in distribution arrangements in South Africa have featured several major brands as well as a host of other vendors.
In most cases vendors have tried to explain these changes in terms that are not only vague but, in many instances, are totally confusing and unjustified far as the victimised distributor is concerned.
One of the most frequently used justifications for any vendor to appoint an additional distributor or to change horses, is the need to “increase coverage”. What this really means is that all existing distribution agreements have failed to meet the vendor’s quarter-on-quarter growth targets and something needs to be done to bring regional or corporate budgets back into line.
Ignoring the fact that incumbent distributors may be doing as well as anyone else in a tight or shrinking national economy and that the reseller channel in South Africa is a relatively small and incestuous community, the vendor makes wholesale changes to distribution arrangements in the hope that sales will increase.
As has been pointed out by a number of senior distribution executives during the course of this current agency reshuffle, most changes in distribution arrangements result in little more than carving up the same pie into different slices.
– David Bryant