At the IT Supply Chain Conference in New York on Tuesday, major IT distributors Tech Data Corp. and Ingram Micro touched on strategies ranging from internationalization to product area expansion as ways of growing their companies while staying true to their "core businesses" of providing services through VAR partners.
Ingram Micro really "took it on the nose" during the economic downturn of a few years ago, said Gregory Spierkel, CEO, speaking to investors at the show in Manhattan.
Revenues plummeted from $35 million in the year 2000 to $22 million in 2002, according to Spierkel. Since then, though, sales have been on the upswing.
The distributor now sells 200,000 to 250,000 different product SKUs from 1400 vendors.
But there are "certain vendors we're focused on, [because of] greater margin potential," said the CEO, who later mentioned Cisco Systems as one of Ingram's key customers.
Ingram's main businesses of systems, software, networking and peripherals have each grown about 16 percent over the past year, although systems and peripherals have performed a few fractions of a percentage point better.
Also over the past year, Ingram rolled out Choice Advantage, an offering designed to let solutions providers choose the business model that best suits their requirements.
The distributor is now moving into niche product areas that include POS and AIDC, according to Spierkel.
Read more here about Ingram Micro's efforts to cut costs.
Sales in these areas are not particularly complicated, and Ingram "never walks away" from a technology just because it entails a difficult learning curve, he said during a Q&A.
Likewise, Tech Data has added "specialized business units" in areas such as POS, data capture and document imaging.
These constitute the fastest growing areas of the company, said Steven A. Raymund, the distributor's CEO, during a separate presentation at the show.
The specialized business model works for Tech Data, because successful resellers need to be specialized these days, anyway, according to Raymund.
The "pick, pack and ship" business model of five years ago has completely gone away, the CEO said.
Tech Data does work with fewer VARs today, he acknowledged.
But those who remain are "tough and tenacious players" who understand how to make money doing business.
To help meet their needs, the distributor focuses on quick access to products, providing next-day delivery to resellers via FedEx and other freight carriers, Raymund said.
Spierkel told the investors that with the rising demand for services, Ingram is now offering a few services of its own.
It hasn't been easy for a tier-two player to go into direct services, according to the Ingram executive.
"But as a service provider, we support our customers," he said.
In some international geographic markets, for instance, Ingram supplies direct logistics services to end customers.
In fact, Spierkel pointed to internationalization as the key to much of Ingram's growth.
Due to Ingram's recent acquisition of Tech Pacific, for example, Ingram's sales in the Asia Pacific climbed 116 percent over the past year, he said.
Ingram is active on other continents, too, including Australia.
Tech Data, on the other hand, is the biggest distributor in the EMEA region, with a large presence in North America, too, according to Raymund.
But over the past year, Tech Data's North American business has actually grown by 13 percent, while the EMEA side has dropped by 2 percent, Raymund said.
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