Security systems in the channel: What will tomorrow’s distribution model resemble?

Traditional delivery model has evolved from box shifting to a more sophisticated value-add service

While these trends appear to be most prevalent in the developed markets of Europe and North America, similar trends are now being seen in Asia, in both the video and now the access control markets. Getting IP network products to market is going to be a challenge for distributors and one they will have to meet because it will eventually take 100 percent of the business.This evolution is not so startling when taken over a six-year period, but the consequences of it is now being felt with the recent exposure of a weakened distributor chain and the demise of European distribution giant Norbain.

Distributors that have become more IP savvy as evidenced by such progressive global distributors the AES Group and Digitalcom in Thailand and Tri-Ed in the U.S. These companies have been able to maintain their share by taking on more system integrator duties - especially with regard to system and network design work. Some distributors, however, have taken up the challenge and have opted to beef up their eCommerce operations, which may well work provided they can achieve scale on this low margin business.

There is a place for the distributor but not in the traditional role, at least not for long. Knowledge is paramount, especially in a market increasingly connected through integrated building and security environments. Bringing together packages that meet these needs and the IT services that they require is now necessary across the distribution network.

Alliance and partnership is playing a major role in winning market share in the security business as manufacturers extend the range and depth of these relationships with other motivated manufacturers and system integrators. More formal arrangements of data sharing within the distribution chain has resulted in many new solutions for the end users that go well beyond improving security. In the last 12 months, we have identified more alliance arrangements between manufacturer’s distributors and system integrators who are working together to provide a solution for a particular vertical market, while sharing the development and promotion costs.

Some 2012 IFSEC exhibitors showed a number of case studies demonstrating how business intelligence can be gained through IP video surveillance systems and their technology partners. Axis and Panasonic had displays showing how, in particular vertical markets, they had used video streams to provide business intelligence. In both case the concept was instigated by the camera manufacturer as a means to increase sales.

These particular video vendors also worked with other suppliers of surveillance products and access control systems to produce a seamless solution that fitted the needs of the end user. In addition, they have worked with system installers and distributors not only to orchestrate the marketing sales strategies, but to also identify new applications where they can add value for the end user. The trends show that alliances have progressed from simple technology partnerships among vendor to aligning the needs of the user among all the involved solution providers. The results benefit the end user allowing him to realize real benefits over and above improving the security performance.

So if you want to compete with the top camera manufacturers, you not only need to match their performance, but also drive innovation by providing solutions that deliver more value add and a quicker return on the investment for the buyer. The distribution network has a vital role in making this happen.

The shape of the security market is changing. Security systems specified for new projects are increasingly delivered as fully integrated systems, whereas in the past they were supplied as separate and discreet systems. This has changed the balance within the routes to market with more business going through resellers, system integrators and solution providers.

We believe that as the physical security manufacturing business further consolidates the distribution network will be forced to follow suit. We predict that over the next five years we shall see fewer but larger distributors playing an enhanced role. The market share of the resellers, system integrators and solution providers will increase as systems become more sophisticated and integrate with the business enterprise. Good products sell well but they sell better when distributed through the right channel.