Small makers of innovative technology and boutique software developers typically find when they are ready to expand into two-tier distribution that no one will carry their product.
That's because distributors tend to think big. They require volume commitments that scrappy little companies can't fulfill and marketing dollars they do not have.
It becomes a Catch-22 in which a small company must have a distributor to achieve a certain volume, but can't get a distributor interested if it hasn't already reached that volume.
Distributors, of course, don't want to take ownership of merchandise that often is too new and market-untested even if it has potential, or, in some cases, too complex or expensive, even if carries the promise of higher margins.
Setting up new vendors requires an investment by the distributor that may never be recovered if the product doesn't move fast enough or ever.
Al Mann and Mike Terrell are intimately familiar with this situation, having both worked in purchasing at the world's largest IT distributor, Santa Ana, Calif.-based Ingram Micro Inc.
And they think they've hit on the solution to give small, low-volume vendors a shot at getting their products distributed through Ingram Micro's mammoth logistics infrastructure.
Mann and Terrell joined forces last fall to form AccessChannel, a logistics outsourcing company in San Jose, Calif., that will act as an intermediary between Ingram Micro and the vendors.
"This will be the way emerging technologies actually get their shot in the marketplace," Mann told Ziff Davis Internet.
"This is an opportunity to change the way technology manufacturers reach the market, but it's fundamentally the same channel."
Mann, who spent 12 years at Ingram Micro, is AccessChannel's CEO, and Terrell, who was at the distributor 10 years, is chief operating officer.
They decided to get together after hearing that they each, unbeknownst to the other, had been working on identical logistics models.
The distribution veterans decided to collaborate and approach Ingram Micro with the idea.
The distributor liked what it heard and signed a contract with AccessChannel.
"Ingram Micro saw the light very quickly," Mann recalls.
Next Page: Why didn't we think of that earlier?
The logistics outsourcing model, he said, lowers the cost and risk for Ingram Micro of picking up and managing emerging technology manufacturers while giving the distributor the ability to respond swiftly to customer requests to add lines.
"It's one of those 'Why didn't we think of that earlier' type of things," said Justin Crotty, vice president of channel marketing at Ingram Micro. "They came up with a pretty creative and very efficient solution."
Here's how it works: A small vendor looking for a distribution partner signs a contract with AccessChannel, which handles product storage and shipping.
AccessChannel charges the vendor a setup fee and takes a commission for each transaction.
Through a third-party provider, AccessChannel also offers fee-based accounting for vendors that need it.
Simultaneously, the vendor gains direct contact with Ingram Micro, whose involvement focuses on VAR, integrator and retail customers, not providers.
The arrangement gives little-known vendors with few resources gains the potential to reach 50,000 resellers.
AccessChannel is using space at Ingram Micro's Chicago-area warehouse for the pick-pack-and-ship part of the arrangement.
The distributor takes ownership of product only once an order is placed, which minimizes Ingram Micro's inventory risk.
The distributor also benefits by expanding its catalog, Mann said.
"For a distributor to grow there's really one way, and that's selling more stuff to more people."
Lisa MacKenzie, founder and president of technology marketing services company LD/MacKenzie, said AccessChannel solves a vexing problem for small vendors with great products.
"Without distribution they could not achieve revenue and without revenue they could not get distribution," she said.
Crotty said that although a vendor seeking market penetration could sign a deal with a smaller distributor, the appeal of doing so is limited.
"They're interested in Ingram Micro because of our market reach and our market breadth," he said.
Click here to read more about Ingram Micro's ISV program for VARs.
Mann said AccessChannel has already signed one manufacturer, Ultimate Ears LLC, of Las Vegas, a maker of in-ear audio monitors trying to corner the market of portable music players such as the popular iPod.
Other vendors in the AccessChannel pipeline include wireless and notebook accessories companies and peer-to-peer software makers, he said.
"I expect to have another three manufacturers closed an in the Ingram system by the end of this month."
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