Kathy Gibson is at Context Channel Connect SA – The IT distribution industry performed well during the pandemic.

Adam Simon, global MD of Context, adds that the small and medium business (SMB) market has come into its own as the key go-to-market differentiator for distributors.

And, importantly, reseller remain upbeat despite headwinds coming up in the next 12 months.

“We think the opportunities for growth are still positive for the rest of the year,” Simon says. “And the outlook for next few years are also positive.”

In 2021, growth in the EMEA region was 5,3% (excluding telecoms), building on 7,8% growth in 2020.

In South Africa, the daily dollar rate growth was 15,7%, or 4,7% in a fixed dollar rate, which is a more realistic measure of business conducted.

EMEA is expecting a 2,5% year on year growth in 2022, although this could be negatively impacted by lower commercial demand, with a break-even year as the most pessimistic outcome.

“This isn’t a bad thing,” Simon says, pointing to the rapid growth over the last two years.

Software is now the highest growth sector, increasing by 9% to 10% every year to rapidly become the most important part of distribution, according to Context research.

In South Africa, personal systems grew a massive 49,6% in 2021 but is now tracking at -9%. Software is showing solid 10% growth not, just behind infrastructure at 15%. Peripherals have dropped this year to 2% growth.

Locally, the business channels are about three-times the size of consumer channels, but have seen negative growth of -5%, while consumer channels have grown 75% over the last year..

Despite the slowdown in the commercial channel, SMB sales are still positive, Simon points out.

Reseller healthcheck

As at March 2022, compared to March 2021, the number of resellers have remained remarkably stable, at 3 480 compared to 3 539 last year.

In South Africa, there were an average of 517 new resellers per month in the first quarter of 2022. “There is a real opportunity for distributors here.”

Interestingly, South Africa is 5,4% of the new resellers created in EMEA, but only 1,6% of the revenue.

Preliminary results for the 2022 EMEA survey show that most resellers expect business to get better in future (80%), compared to 16% who expect no change and 4% expecting things to get worse.

In South Africa, the optimism is even better: with 90% of resellers expecting business to improve.

“There is still so much more that needs to be done, and the opportunity is coming from SMBs,” Simon says.

Resellers plan to invest in networking, particularly wireless networking, device as a service (DaaS) and managed print services.

Challenges and opportunities in 2022 lie in the areas supply chain, demand, hybrid office/home working, public sector stimulus, digital transformation and software.

Cybersecurity is a big growth opportunity, Simon adds, with SMBs still underrepresented in this area so plenty of growth available.

In South Africa SMB resellers lead the sale of security software through distribution, with 77% growth.

Areas where distributors can engage with SMB resellers include identifying and growing new entrants; the integration of digital marketplaces and platforms; mass data personalisation; and the development of influencer marketing.