Distribution space is the scene of action

The place to be in these days is the distribution space. All the action is
happening here. And the action is not restricted to just one kind, rather all
kinds of action is going on in this space, which constitutes of large national
distributors, regional distributors and local sub distributors.

A look at the just released Dataquest Top 20 shows that the distributor
community is doing quite nicely. The top ten distributors in the country grew at
an average of 31 percent in 2005-06 as compared to the previous financial year.
Interestingly, this is better than the overall domestic growth of 28 percent.
Even more interesting is the fact that some of the smaller distis have grown at
a faster rate than the big ones. While it can very well be argued that smaller
distis have a smaller base, the fact of the matter is that this is more due to
vendors pushing them up.

Asim Raina Editor

For far too long the three biggies - Ingram, Redington and TechPac - had
been ruling the roost in the domestic market. However, after the TechPac
acquisition by Ingram, the whole scenario changed. Vendors became uncomfortable
with keeping all their eggs in one basket. As a result, the second tier of
distis started getting the much-deserved attention, which they were missing all
these years. As a result, you have a player like Rashi growing at 82 percent,
nearly three times the industry average. Even a conservative player like
Neoteric grew by a good 42 percent. And at the same time, Ingram had to rest
content with just about 15 percent-almost half the industry average.

It is not just the smaller national distis who have done well. Even the local
regional distis (RDs) have become far more prominent. This is more due to the
vendors who have been looking at penetrating every nook and corner of the
country. With the help of these RDs, they get a much larger footprint in terms
of number of cities covered and number of dealers catered. The other interesting
part is that these RDs who used to be earlier more of tier-two partners for
vendors, have become very ambitious and now are graduating to be tier-one
partners. One prime example is Kolkata-based Supertron who has over the years
graduated from being a local RD in Bengal to a national player with pan India
presence. Delhi's Micromax is also going the same way. It has already spread
its footprint all over the north from being just a Nehru Place player.

Another piece of action unfolding is that of distis broad basing their
portfolio of products. Already Redington has added LG's consumer set of
products. Ingram is set to follow suit very shortly. However, it remains to be
seen whether the second level of distis follow this trend.