UNBUNDLING BUNDLED OFFERS

Why resellers are forced to

unbundle...

The downfall of hardware sales and shrinking margins has resulted in several channel partners looking at special offers and bundled schemes to boost their bottom line. Distributors and bigger channel partners are also eyeing the peripheral market for revenue growth.



But factors like declining margins, increasing overheads and a steep fall in hardware sales have resulted in several channel partners exploring short-cuts for faster revenue growth.

Selling both products at discount...



One such method is unbundling bundled offers. What generally happens is that bundled schemes are unbundled and sold as two different products with a heavy discount tag on each of these products. Buyers are lured to pick these unbundled products due to the discount tag. The result is that the reseller has his cash register ringing.

Prices have become unbalanced...



As a result of unbundling, prices of products have become unbalanced and offer a new challenge for vendors and channel partners.


More and more channel partners are falling prey to these unhealthy practices due to thin margins prevalent in the business. Though vendors want healthy margins for their partners, very few really act upon this.

How margins influence

unbundling...



The margins on hardware and peripherals are very low and therefore it is a major influencer for unhealthy practices. Also factors like stiff competition with the entrance of newer channel partners, lead to price wars and downfall of sales, which bring along their own baggage of problems for resellers.

Overstocking has its problems...



Typically, what happens is resellers stock up products and with the introduction of newer models, these become a dead investment. Also the new models are expensive than the older ones.


So to liquidate stocks, resellers get into a discounting spree and to balance the revenue flow they unbundle schemes.

Instead of unbundling offer value-added services...

The temptation to unbundle is strong in the light of decline in sales. But it might be a good idea to offer value-added services to customers than resort to unbundling. Indulging in unhealthy practices to increase cash flow is not the right thing to do and this does not augur healthy growth for any reseller organization. Discounts can complement a sale but cannot become the main avenue for earnings for partners.

Vendors need to roll out special schemes...



It is a fact that some channel partners fall prey to these unhealthy practices. But vendors keep rolling out special schemes which help in controlling unbundled sales.


In the case of APC, we tie-up with PC vendors for bundled packages and this is offered to resellers as a package. We qualify the bundled scheme only if the reseller produces a bill for both the products. We also offer incentive schemes on bundled products, which help resellers to earn
parallely.

Partners should streamline internal policies...



To avoid dead investments caused by over-stocking of products, resellers need to streamline their internal policies. They should target at improving the offerings that they give customers.

Maintaining stability in prices...



We recently tied-up with Tech Pacific India, a leading distributor of IT products as our sole national distributor for the UPS range. This tie-up will help us build a strong exclusive reseller channel of about 5000. Through this exclusive reseller community, we plan to bring stability in price and provide a healthy margin, which will be fairly higher than the current earnings. Other vendors can do something similar to make sure that partners earn better margins.

Steps taken to improve margins...



APC launched the reliability provider program (RPP) in India, a countrywide network of authorized Back-UPS dealers who will function as exclusive sales outlets for the entire Back-UPS range. They can avoid investment on stocks.