Price Concerns Drive Exclusive Distribution Deals

One of the trends running under the channel radar these days is an increased tendency vendors are showing toward signing exclusive deals with distributors.

Case in point is Ingram Micro’s alliance with Acronis, a provider of data protection software. Under the deal, Ingram Micro will gain exclusive distribution rights to Acronis products and services.

The purpose of this alliance is to reward Ingram Micro for investing in all the back-end services required to bring Acronis products running in and out of the cloud to market by protecting margins for both the vendor and the distributor, said Jason Bystrak, executive director for Ingram Micro Cloud for the Americas. By making Ingram Micro the exclusive distributor for Acronis, solution providers that opt to resell those products and services will not be able to shop multiple distributors to get a better price on a particular product.

At first blush, many solution providers might view those relationships as an inhibitor to competition. But Bystrak notes that inconsistent pricing from vendors winds up driving down margins—not only for vendors and distributors, but also solution providers that have to match their rivals’ pricing.

In this day and age, solution providers should be generating more of their profits from consulting and services, as opposed to trying to drive a couple of points of margin off the actual sale of the product, Bystrak said. A lot of time is lost in closing a deal when solution providers have to request special discount pricing to win a deal, he said.

This does much more harm to the channel as a whole than it benefits the solution provider or the end customer they may have passed some of those savings on to in order to win a particular deal, Bystrak said.

Of course, vendors have enough trouble competing with each other, so the degree to which exclusive deals with distributors can hold the line on prices is debatable. At the very least, more vendors seem willing to make commitments to avoid being their own worst enemies when it comes to pricing.

Michael Vizard has been covering IT issues in the enterprise for more than 25 years as an editor and columnist for publications such as InfoWorld, eWEEK, Baseline, CRN, ComputerWorld and Digital Review.