The state of distribution is changing. Integrators and dealers are going to the Web to peruse products, often purchasing them online if they are familiar with the specifications. Other times, they’ll visit the distribution center to purchase products, but even more so, for the value-add distributors now provide. They also regularly pick up the phone for direct assistance. And they aren’t disappointed, no matter what route they take. From training to specification to design services, distributors have all the right moves to help dealers and systems integrators become more successful on the job. We’ve interviewed three major distributors and their principals to get their take on what’s happening, how the Internet is changing the supply chain and what we can expect to see in the future. Here’s what they had to say:
Q. What are some of the challenges and opportunities faced by distributors?
A. Michael Flink, president ADI Americas, Melville, N.Y.:
“One of the challenges faced by security distributors today is the faster rate in which new products and technologies are being introduced from more manufacturers. At ADI, we recognized this challenge and made a multimillion dollar investment to create ADI University to train our staff and ensure they are up-to-date on the latest technologies. We’ve hired an experienced director of training to lead the initiative, and have set aside dedicated time each week to train our sales staff. We have already received positive feedback from the sales team, along with numerous requests from customers to provide them with access to the ADI University. As for opportunities, we are seeing increased growth opportunities in the IP and video surveillance market, as well as across all product categories. For the integrator community, there is more opportunity in network infrastructure with the increasing adoption of the connected home. The latest intrusion panels are also driving more opportunity with Z-Wave and ZigBee products for locks, thermostats, lights and more.”
A. Tony Sorrentino, president, ScanSource Security, Greenville, S.C.:
“A challenge many dealers in our industry are facing is margin pressure. Because of that, it’s up to the distributor to continue to evolve and offer new products and services that can help dealers be successful and add value to their end-user customers. For us, we want to ensure our dealer partners are aware of the services we offer, including training, certification, configuration and technical support, while also sharing the benefits they can reap by allowing us to carry their inventory, such as enhanced efficiency and cost savings. This allows us to help make their projects more profitable, while enabling them to fulfill new opportunities for their end-user customers. We are continuing to educate vendors and dealers on the importance of centralized distribution versus the branch model. Our expansive inventory is ready to ship same-day for orders placed before 8 p.m. est. We also constantly review the services we offer to ensure they are providing value to the dealer and are relevant to their business.”
A. Pat Comunale, president and chief executive officer, Tri-Ed/Northern Video Distribution, Woodbury, N.Y.: “We have found the security products distribution space to be growing. The independent seems to be doing better in 2012 than 2010 and 2011. There are also many more manufacturers of products and they are starting to see the benefit of using the distributor more. More and more products are getting put through the distribution channel. It’s a benefit to these manufacturers in a number of ways. The distributor takes on more of the credit risk and the manufacturer doesn’t have to have as much inventory on hand. In addition, we’ve brought on several new vendors to round out the IP space of the market. We want to be a significant presence to our vendors, and we don’t carry every product line. We are growing and have made some acquisitions to our locations (Sea Breeze Security Distributors was the most recent, and Tri-Ed/Northern Video also announced a partnership with ComCables). We will open new locations in Detroit and Raleigh, N.C. and continue to actively look for strategic acquisitions. The IP part of the business is definitely growing, as well as residential lifestyle.”
Q. How are you facing the Internet head on—are more people buying products online or are they still going into brick and mortars?
A. Michael Flink: “When purchasing online dealers are looking for two things— first is the ease of searching for products and information and second is pricing. ADI has made a large investment over the past two years to upgrade its Website to world class standards and make online shopping at ADI much easier. The feedback we have been receiving from our dealers is that our site is one of the strongest in the industry. We are constantly reaching out to our customers for feedback on our site, and have an ecommerce team and programmers making improvements every day. In terms of price, ADI has always been competitive and does not face challenges meeting legitimate online prices.
Although purchasing online has become more popular, much of our sales still come from our 99 branch locations across North America. Dealers depend on our extensive inventory and continue to rely on our experienced staff to help them meet the challenges of their end users. Our branch locations are important to our business, and ADI has opened two new branch locations this year as part of our overall four year expansion plan. We strive to provide an excellent shopping experience to customers, and always look to them for feedback to improve our service. Our customers tell us that we have the broadest range of in-stock products, and our large branch locations add more value over smaller local distributors or mail orders.”
A. Tony Sorrentino: “We work with our dealers to help them differentiate themselves through end-user marketing assistance, education and training, as well as helping them better understand how to sell their value and not just price. It’s our job to provide products to our dealers in the way they want to buy them—online or by contacting our sales reps. We can either ship to them for free, have it at their doorstep the next day, or they can place the order themselves 24/7 through our FastCatalog tool, where they also have access to real-time inventory. We want to make it easy for our dealers to do business.”
A. Pat Comunale: “We have a robust Internet site as well, so our customers can buy online. The personal touch and the knowledgeable sales people drive people to use our branch locations, especially with more video and intrusion products in the space, and to make sure they get the right product for the job. As a company we spend more money training and getting dealers and integrators certified than others in the industry. So we have the most knowledgeable personnel in the industry. With our IP EZ program, we can pre-program IP cameras with their Internet addresses for existing customers at a nominal price. We feel we can deliver what the competitive space needs, especially as we grow into the data communications space with the exciting partnership we announced recently with ComCables.”
Q. What are some of the ways you are attracting folks to your Website or distribution centers?
A. Michael Flink: “We have taken a multiphase marketing approach to attract dealers to ADI starting with our new ecommerce Website, where dealers can purchase products for pick up or ship. We have also been expanding and relocating some of our branches to make customer access easier and driving to our locations more convenient. We offer 50 ADI Expo Training Series events per year across North America, and we also have an industry leading advertising campaign that provides increased value to our customers and prospects. Our advertising initiatives include monthly promotions that feature 16 pages of sale items, and our quarterly catalog that offers 750+ pages of product information, and has been recognized as the industry’s premier source of information. “
A. Tony Sorrentino: “We offer the industry’s leading education and training workshops and events on the benefits of selling IP and the technology in general, much of which is accessible online through our IP Center, online training courses and web seminars. We provide tours of our state-of-the-art distribution center on a regular basis and upon request. ScanSource has a centralized distribution model so that we can be as efficient as possible and provide the best pricing to customers, as well as a high level of support. The hub of our distribution strategy is our distribution center, which is located in Southaven, MS. Our dealers are always very interested in our distribution center, which features a Custom Configuration Center where we configure and test the complete solution, so that it is ready to ship to the dealer or even drop-shipped to their end-user customer on behalf of the dealer. Services include setting IP addresses, labeling, custom reporting, and hardware and software integration, among many others.”
A. Pat Comunale: “We have, numerous blast emails and other marketing campaigns for our customers. We also have an online system where customers can check product availability and pricing. Most customers are still calling in their orders or visiting our locations, about 50 in the U.S. and Canada.”
Q. How about training, road shows, product preview events—how important are those to the integration community as far as getting the installer's attention and keeping it?
A. Michael Flink: “ADI is proud to conduct over 1,500 training events throughout the year. In addition, ADI hosts thousands of vendor counter days per year at our branch locations, and our Expo Training Series have been reworked to offer more training and product information. We believe it is extremely important for the integration community to keep up with the latest technology, and we provide as many training opportunities as we can. With large training facilities at most of our 99 branches across North America, we are able to provide real valuable training opportunities to our dealers.”
A. Tony Sorrentino: “It’s important for us to provide the support our dealers need so that they can focus on sales and customer service, and in many cases, that means delivering product training, technology education, network assessments, and demo equipment. Our sales teams go through hundreds of hours of product training a year, enabling them to provide the pre- and post-sale support our dealer partners need. Having a strong relationship with our partners is very important to us.”
A. Pat Comunale: “I think if you look at the partnerships with have with manufacturers we excel at training. Integrators and manufacturers are excited about the opportunity for training and education. We will continue to deliver the technical training to the dealer base. An example is our ongoing IP Road Shows. Every class is packed from morning to the afternoon. Dealers are yearning for the education. Technology is at a point where’s it’s changing pretty quickly and the customers are trying to stay current and up to speed.”
Q. Competition is fierce up and down the channel, from distribution to installation, etc. How do you differentiate yourselves in the marketplace?
A. Michael Flink: “Based on the feedback we hear from our customers, ADI has differentiated itself in the market by offering the industry’s largest primary in-stock inventory, a broad product selection from 550-plus suppliers, our strong financial backing and our broad range of credit options that help support the cash flow of our customers.”
A. Tony Sorrentino: “Our model of centralized distribution ensures our dealers receive the products they need the next day, if requested. Or, we can drop ship to the end user on behalf of the dealer. We never sell to end users, and we never bid on any end-user projects. And for dealers, this is one of largest benefits they get from doing business with us, because they know we will never compete with them. What’s more, our sales and technical support teams are extremely knowledgeable, delivering the pre- and post-sale support our dealers need. ScanSource Security is also the only dedicated security distributor that provides the full line of Cisco networking products. Networking continues to play a bigger role in the security space. In addition, we provide marketing support, including direct mail, e-mail and telemarketing campaigns, public relations, brand development and event and trade show planning. Dealers also see great value in our custom configuration and professional services, which allow them to deliver an enhanced level of service to their end-user customers.”
A. Pat Comunale: “There is a lot more competition in the distribution space, but overall it doesn’t concern us. What really separates us apart from others is our team. Our average tenure among our branch managers is about 10 years and that’s quite impressive. We are really an employee-friendly company and we try to give our employees the tools they need to be successful, just as we deliver the same to our integrators and dealer customers.”
Q. What do you think systems integrators want from their distribution partners today?
A. Michael Flink: “Systems integrators want service, support, credit and great relationships they know they can trust to help them in the good times and bad. They want to be able to get the products they need quickly, efficiently and on time. Also, today in a tighter economy we have been getting a lot of requests for additional payment options and we have responded to this with a variety of flexible payment options, including the ADI Credit Card. At ADI, we consistently survey and talk to our customers to find out what they need most and what we can do to help them grow.”
A. Tony Sorrentino: “We have heard from our dealers that the fact that we do not sell to end users is a key differentiator for them. They want to know that they are working with a partner, not a competitor. That, in addition to the knowledgeable sales and technical support staff and value-added services we provide that enable dealers to focus on growing their business.”
A. Pat Comunale: “The complete line card is important to the systems integrators and these customers want to have that one-stop shop. With that in mind, we are more than a security distributor; we will branch out of security to data communications more and more. We also carry the high end and other products systems integrators need for full solutions contracting. We have the complete IP video solution, for example. For more traditional security dealers, we also have the level of products they need. We called it a hybrid approach when we first merged. But that hybrid model as become high-end video and general video distribution.”
Q. With 2013 nearly upon us, what are your plans for the future?
A. Michael Flink: “In 2013, we will continue to invest in the expertise of our employees and will be adding an additional 50 new training courses to ADI University to educate our staff on the latest technologies. We will continue to invest in new branch locations, and we are extremely excited about the new ADI Credit Card and the opportunities it provides our dealers to improve their cash flow. While earlier in ADI’s history we completed a number of acquisitions, we believe with our current business model organic growth is the best option to grow. With ADI’s strong cash position, we will continue to expand our market presence.”
A. Tony Sorrentino: “We continue to focus on educating dealers on the benefits of moving to IP. And with that, how the dynamics of the sale is changing. End users want one company to supply them with all of their systems—access control, voice, video surveillance, data... As they move to IP, they want to control how many people are accessing that network. Now, more than ever, dealers need to be trusted advisors in numerous categories. Our goal is to help educate them on these needs and, through our other sales units, provide the products they need to complete the solution.”
A. Pat Comunale: “As far as acquisitions, the purchase of Sea Breeze helped us with a needed location in Orlando and to expand out base more in Florida, as we have a current location in Miami. We would like to fill in the rest of the Midwest and will continue to look for more strategic acquisitions.”
