Dell’s appointment of Sharptext as its distributor for Ireland can be seen as a sign that the formerly direct-only manufacturer is moving fully into the channel. It’s one thing to announce a channel strategy and to recruit resellers, as Dell did in December 2007, but it’s something else to start putting an intermediary in place to start to address the stockholding, credit and delivery issues that signal a significant expansion beyond a tightly managed one tier channel model.
I use the word “intermediary” in this case because it’s really not that long since Dell was busy attacking channel-friendly vendors for adding layers of cost, waste and bureaucracy to their sales model by employing distributors. But that was back in the good old days when the direct model was held up by Dell and its Wall Street cheerleaders as the exemplar of efficiency and economy.
Somewhere along the line Michael Dell had a Damascene conversion which led him to abandon more than 20 years of anti-channel invective in favour of a more conciliatory approach to resellers as a valid channel to market for his company. Even so, Dell did not exactly go in with all guns blazing. To a certain extent, the 2007 announcement could be seen as legitimising a situation which had existed in the shadows for many years, by giving a measure of public endorsement to VARs which had been already selling Dell kit.
But distribution was always interesting because, even as Dell was setting up a VAR channel, it was in no rush to appoint distributors. Dell Americas channel group general manager Greg Davis said it would “sell directly to VARs as much as possible”, claiming the vendor was uniquely positioned to “manage many thousands of relationships” directly with VARs.
At the European launch two months later, Dell boasted of the benefits of its build-to-order custom configuration and custom factory configuration. The implication was that Dell was perfectly capable of servicing a VAR channel, thank you very much, and it did not need distributors to get involved.
But it did not take long for Dell to find out that resellers were not the same as it traditional customers. A year later, Davis (now global head of channels) was accepting that Dell needed to make changes to its logistics capability because resellers were accustomed to next-day delivery rather than the typical three to seven days provided by the vendor’s build-to-order model.
The delivery issue was also a cause of concern for Irish resellers, according to Dell Ireland channel director Paul McCord, who admitted it had been reflected in feedback from Dell’s partner advisory council (PAC). Talking to Irish Computer in February 2010, McCord said PAC members had told Dell its lead times were “getting more and more inconsistent” and the Irish subsidiary decided to appoint a distributor to help address the issue.
“This is one of the key things it will help us address,” McCord said. “If a customer wants a box in a day or two days, that option is there. It also helps us to accentuate and extend our reach.” McCord went on to reveal that Dell was in negotiations with a couple of partners that it could potentially bring on board “in the near future”.
Apparently Dell had its own definition of “near future”, since the Sharptext appointment was not announced until a year later, in February 2011.
According to McCord, the appointment of Sharptext goes beyond the delivery issue, although he accepts it will help resellers to hit faster delivery SLAs with customers. He expects it will also help Dell to broaden its reseller base in Ireland because Sharptext has a historically wide base. It will also open the door to those that may be unwilling to deal direct with Dell but are more relaxed about sourcing product from a distributor.
The broadness of Sharptext’s base probably has some of its roots in the distributor’s longstanding relationship with HP, which ended in 2009 when the Irish company’s place was taken by Westcoast and Computer 2000. Bringing Sharptext on board should make it easier for Dell to get its products in front of HP resellers.
To begin with, Sharptext will handle Dell’s laptops and desktop PCs but there is an option to move on to its server and storage products in the future. Dell’s channel strategy is beginning to get interesting.
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