How the channel suffers
“It is not only that the leftover stock that has to be taken care, but our relation with customers too get affected. If it is a big company then we can forward our plea but with small ones the scenario changes as there is no official person to approach,” opined Singla.

However, Dhiraj Tody, CEO of Gazhiabaad-based Parity Computers and sub distributor of Solus brand of UPS in Uttar Pradesh and parts of the northern region clarified, “In Panipat, Solus did have a presence and the company was present through us for at least one and a half years. However, since the demand was not as high as in the other regions, they resolved to discontinue selling the brand in the region.”

A dealer from the north pointed out that many times he has bought stocks from a particular company only to have it lying with him for months, because the brand is not known. Under such circumstances if a company ceases to exist, then handling the stock and warranty becomes a tough task.

Chennai-based Navin Sethia, CEO, Delta Peripherals who deals in peripherals such as motherboard, speakers, cabinets and accessories among others stated that even the southern India market is not untouched by such unpopular brands. “Every year about 14-15 such brands enter the market. Out of these only five or six are able to sustain in the market, the rest vanish from the market or wind up operations and it is the dealer who ends up incurring losses,” he said.

He further indicated that the way these brands make their way into the market is by offering lucrative schemes and low price points to the dealers. Traders, who want to make fast money and do not have the financial muscle to keep larger stocks of branded items, fall prey to such companies.

Another problem arises when these companies change their distribution chain. “They change their distribution chain and the person who had purchased stock from him is left in lurch. In such cases even if they provide warranties to them it becomes difficult to trace the source from which the product was originally bought,” Sethia added.

He also indicated that it is not only in peripherals that one can come across such brands. Even in the PCs (desktop), southern region has seen brands that at one point in time entered the market and are now nowhere to be found.

Singla suggested, “The only solution to get rid of this problem is to get the companies enlisted with the associations so that in case company disappears, the association can peep into the situation and take stern action against them.”

Ashish Jain, President, Bhopal IT Association mentioned, “Since these brands vanish from the market, warranties become the headache of the resellers and the dealers who end up either landing in financial trouble or hampering relations with their customers. Again since the members of the association and other dealers do not take interest in this actively eventually they face problems.”

These measures might not prevent unknown companies from entering India and promising partners a lot of goodies for sales. Ultimately, partners have to use their prudence to decide if they want to stick the volumes and low margin game or focus on offering good solutions and build a strong clientele instead.

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