Although more than 70% of IT Hardware is sold through Channel Partners, the balance 30% that is sold through online retailers like Amazon, Flipkart, etc creates enough turbulence to completely disrupt and destroy the market. Lately, there has been lots of hue and cry over the unethical and discriminatory practices being followed by online stores and Companies themselves.
Of all the feedbacks and opinions that I received, there was one which goes like “East India Company killed Indian Industries, These online retailers, will once again kill Indian Traders and small businesses”. While it may sound very fanatic in today’s world of globalisation, but it is a hard fact, which we have to face.
Will online Sales Kill IT Business?
Let us look into the history little bit. First, there was a threat from Large Form Retail players (LFR). Before System Integrators could think of any solution of fighting that reality, there came a bigger threat from the Online Players like Amazon, Flipkart, TataCliq, eBay etc.
We will have to accept that the world is changing very fast and technology is the key element which is fueling that change. The only problem this time is that this change is affecting the IT industry itself.
Two ultimate truths will prevail.
- Customers Benefit will prevail.
- The fittest will survive.
Let us examine these two factors in detail and then try to figure out what would be the solution or outcome of this tug-of-war
Why Customers prefer to buy online
- Ease and convenience of buying.
- Home Delivery
- EMI Facility
- Exchange or Cancellation Facility
- No need for driving to the mall and searching for parking.
- Lots of Choice as regarding the brands, models and sellers available at a click.
- Comparision is possible, easy and transparent.
- Reviews of other Buyers can also help. If the customer is not satisfied, he/she can give a bad review.
- Lower Pricing & Attractive Deals
- There are lots of offers on various Credit cards and buying options.
- Over and above that the Customer feels to have an assurance that they are getting the best price.
Strengths of Online Model & their strategy.
- Capital. These online companies have access to huge and cheap capital. Most of the Online stores don’t make profits for initial 10/12 years. Also, since it is just a market place, they don’t have to do investment in stocks and inventory.
- Reach. An online store Deeper and Wider Reach. Online stores can reach up to small towns, villages of a vast country like India. Also, they offer a huge variety of products, which cannot be possible for a regular retailer.
- Technology. A huge investment in Technology and Processes. They have world-class systems, processes and best practices deployed, which make them one of the best-run organisations. Also, these online stores are essentially Giant Technology companies. Online retailers deploy technology to analyse the market responses and then alter their offerings in realtime accordingly.
- Data. Customer Data is the most important differentiator. Online retail players know much more about their customers and their behaviour.
- Intelligence. Data is being used intelligently to do cross-selling and up-selling. A lot of Machine Learning and Artificial Intelligence goes into this activity.
Where we as IT Dealers (or System Integrators) are lacking?
- Lack of flexibility, adaptability, Generally IT dealers represent one or two brands, not like online counterpart, where all the brands are available.
- Lacking value additions.
- Lacking the new age customer experience.
- Some IT dealers sell online at a low price. So, it is like IT Dealers are killing IT Dealers.
How did this happen?
- Losing Relevance
- Most of IT partners started a business, maybe because they were excited about the technology.
- But over a period of time, they transformed into glorified clerks who manage deliveries, invoices and payments. The Role of Research & Development and learning new technologies was either ignored or left out to Jr Engineers.
- Outdated thinking and working Process
- A very large No of IT Dealers doesn’t even have a proper Website.
- Many even today use hotmail.com or gmail.com email IDs.
- Most of management process and philosophy are still 20/30 years old.
- We sell IT to the world and tell them that IT will help you grow the business. But we don’t use it.
- We don’t give proper training or tools for our employees.
- Losing Contact with Customers
- Initially, when the concept of service stations and toll-free numbers came, IT dealers seemed to very happy to get lured into the same. Now, instead of providing service, they started to give toll numbers.
- So they just remained as payment collectors and delivery persons. No technical expertise was offered.
- Lowest Price became USP
- Lack of Innovation, technology adoption and value addition, leaves us with only one strategy; being cheapest. Being Cheapest is not a good longterm strategy.
- Also, since we don’t have a steady flow of enquiries and a process to manage enquiries, we try to cling to whatever deal we have in hand.
- Large companies want to eliminate Middleman.
- Everybody wants to maximise Sales, Market share and profitability. It is very natural for large companies to device strategies to eliminate Middlemen i.e. IT Dealers.
Why do IT Dealers forget their strength
I agree that the IT business will finally change and the Online players are here to stay. But, did we ever realise that our weaknesses can be converted to our strengths? Before you go ahead and read, I want you to watch this video on improbable winners – The unheard story of David and Goliath | Malcolm Gladwell.
- Our small size gives us Agility.
- Our Technical Expertise can make us the best Buying Guide.
- Our contact with the end customer can be our chance to provide the best Customer Experience.
- Since we are connecting to Customers directly, we can get immediate and direct feedback.
I don’t think, we should be expecting, any undue concessions from the Government. Because ultimately it is a Free Market economy. Middleman will always vanish if there is no value addition.
What can be the solution?
The technology already disrupted the ecosystem. The world is on the verge of transformation. Customer pattern and behaviour is changed. Faster we adapt longer we will survive. It is simple but difficult to adapt.
There is a lot of agitation, action and fight going on at Associations levels. Many local, state and national level IT Association representing IT Dealers and System Integrators are doing their best. But is it enough?
Let us examine the solution at Collective level and Individual level.
Collectively, what we can do?
- Of course, Associations can create relevance for its members in the minds of Govt and decision Makers.
- Associations can also pressurise the vendors to some extent and keep them in a check.
- With collective strength and visibility, Associations can also help in creating awareness in the market and in the minds of the general public.
- But, I think Associations also need to put a great emphasis on self-improvement of its members. I have observed a few associations in India who take great effort for Member improvement and skill development. One Example is Mumbai based association of System Integrators and Retail Traders – www.asirt.in Another example was initiated by Gujarat based Federation of Association – www.fitag.in, where they have appointed a Consultant for training and coaching members and their staff. Last but not the least FAAITA at the national level has been doing a lot of work for awareness.
Individually, what we can do?
I think, what we can do Individually, is much more important and significant than we can do collectively. We cant solve the new problem with old solutions. We need to think out of the box.
Instead of selling boxes, we should become a partner in the success and growth of clients business and leverage the strength of a trusted partner to upsell/cross-sell to maximise output from the established relationship and achieve stickiness with the client.
- Customer Data is Valuable. Data of our customers (and their behaviour) is our biggest asset and not the office building and furniture. Use any kind of tool (Even Google Contact is OK), but organise your Customers data, so that it can be re-used for generating more business. Here is a free tool to Manage Google Contacts.
- Keep in touch with Customers. We all think that all our Customers know what we offer. Unfortunately, it is not true. It is the best idea, to keep communicating with Customers and keep them informed as to what you are doing and what is new. For Emailing you may use free tools like MailChimp. You can also use Free Bulk WhatsApp tool to communicate with your customers.
- Relationship with Customers. Our biggest strength is our close and personal relationship with our Customers. So, instead of becoming sellers, play the role of consultants. Become a partner in Customer’s Success.
One of the flaws in the approach that I have seen is to provide material/service as per requirement, instead of asking proper questions to understand the real problem. This approach needs to go.
- Cross-Sell and Upsell. This happens to be the most ignored strength by all IT Dealers and System integrators. Cross-Selling can increase your revenue considerably and profits significantly. Cross-selling is a simple idea, but difficult to implement, because there are no proper tools and process. Here is a simple free Cross-Selling tool, which helps you plan and manage
- Develop a Winning Team. For big players, there are many winning factors, but for a small player, the team is the most important winning factor. Invest in technical, skill-based and culture-based training of your team members. Eg: Sharing your experience in Customer service on a regular (and case to case basis). Regularly sharing Sales Closing and qualification tips for your new Sales Team members.
- Sell Product and Service Separately. This is my personal experience. Most of the time, people are reluctant to pay for the service, because they are not sure, what exactly do they get in “service”. Make a service catalogue and charge services separately and also explain what do you exactly provide and do in that service part. Service catalogue explains details about what you do in that particular Service. Click here to know more about Service Catalogue.
- Invest in technology and processes. I have seen many IT dealers, who are for 20 years into the field but still don’t have even a basic website. They still don’t use the latest technology to manage their customers, teams and processes. Better use of Technology and Processes can only bring organisational efficiency, which is needed
- Get the customers you like. Set up a proper customer qualification process, don’t be afraid of saying NO. Why do you want to have customers who will always keep you unhappy? You can do this only when you have a steady flow of enquiries.
- Create a steady flow of Leads. When we don’t a proper lead generation mechanism, we will have to be content with whatever comes to our share. Also, this makes us very vulnerable, where we feel that the deal in hand is the last one and the customer is also the last one.
- Develop a Specialisation. IT field has evolved greatly in the last 3 decades. The pace of the change is only increasing. Don’t be a Jack of all, the market demands masters of specialisation.
- Collaborate and not Compete. We have to learn and understand from Apple and Samsung. We all know that Apple and Samsung are strong competitors in the Mobile Market. But very few of us know that the Apple iPhone has a large portion of parts coming in from Samsung. When these big companies can collaborate, why can’t we?.
We need to evolve and accept one can’t do everything and we need to partner to achieve greater success. Isn’t that what all we practise in life otherwise?
- Monitor IT Spending Trends. Now companies are not just spending on IT Hardware, Infrastructure and security, but very heavily on the Business Software applications also. The landscape of IT spending is changing very fast, and there is a huge opportunity there.
Contributors & Disclaimer:
I had asked for some opinions and feedback from my Industry friends. Following people were kind enough to take time and share their ideas on this topic. However, the ideas presented in this article, are solely my interpretation of the current situation. With limited knowledge and experience that I have, I may be wrong. But this is what I felt.
- Alok Ghelani, Surat, Computer Care Center (member www.fitag.in)
- Bhavin Trivedi, Mumbai, Trainer and Consultant, BTP Technologies Pte Ltd – (Member www.asirt.in)
- Saket Kapoor, Delhi, Green Vision (P) Ltd., Delhi (Member www.isoda.in)
- Nilesh Desai, Mumbai Accutech Power Solutions Pvt Ltd. (member – www.asirt.in)
- Vijay Vakharia, Ahmedabad, Planet Infoworld, (member – www.acma.in)
- Samir Chokshi, Ahmedabad, Sapphire Infocom Pvt. Ltd (member – www.acma.in)
- Vipul Dutta, Mumbai, Futuresoft Solutions Pvt Ltd. (Member – www.isoda.in)