Some in the industry have been expecting Amazon to disrupt distributors' business. But Global Technology Distribution Council CEO Tim Curran said that isn't going to happen.
"Amazon is a threat that everyone worries about ... given that you would expect that distribution sales would be disrupted and people would be leveraging Amazon and other outlets rather than coming to a channel, a reseller or the traditional distributor channel," Curran said in a keynote at the 2017 GTDC Summit in San Francisco Wednesday.
"That is, in fact, what is not happening," he said.
The numbers show that distribution is continuing to grow, said Curran in his keynote. In the 13 weeks ending Jan. 17, he said GTDC members, which include 18 top distributors, saw growth of 1.1 percent year over year, he said. For the 13 weeks ending March 26, distributors saw growth of 4.4 percent year over year to $796 million, and for the 13 weeks ending June 17, sales were up 2.4 percent year over year to $918 million. Finally, as of Aug. 13, sales were up 15.6 percent year over year, with the 13-week trend expected to be growth of 7.2 percent year over year, according to Curran.
"Distribution is not declining. Distribution is actually accelerating in this era of disruption," Curran said.
The general disruption in technology causing more vendors to turn to distribution, not away from it, he said. Vendors are looking for the stability distribution brings, as well as its ability to reduce overhead costs and provide better customer service to partners, Curran said. Year-to-date sales are up $1 billion over last year, with most of that revenue growth coming from small VAR customers, he said.
Allen Falcon, CEO of Westborough, Mass.-based Cumulus Global, said he also sees distribution gaining traction and leverage with the channel. As technology becomes more complex, distributors can offer services, resources and staffing to help solution providers build capabilities around new areas, he said. Solution providers are key in helping customers transform their business with new services and capabilities, and distribution plays a role supporting them to help make those technology and services leaps, according to Falcon.
"Business transformation requires a knowledge of the business. Channel partners will always be closer to customers than vendors. Distribution is needed to build and support the channel infrastructure and partners," Falcon said.
However, as technology is changing, Falcon said he also sees the distribution landscape evolving as well. The cloud, for example, is leading to new distribution entrants like Pax8, which focus on cloud-specific expertise and services without physical technology overhead costs.
Distribution also has "broken the mold" when it comes to legacy perceptions, according to GTDC's Curran. Distribution services are "taking off," he said, naming life-cycle renewal and disposition, deployment and post-sales services, financing and channel management, solution offerings and education, and vendor planning and marketing as key services.
"Distribution in 2017 is no longer about pick, pack and ship. That is part of what we do, but it does not define distribution. It is now about services," Curran said.
From a product perspective, Curran said the largest growth category was notebooks, which saw incremental growth of $276 million this year. Other large growth areas were hyper-converged systems with incremental growth of $153 million and general security software with incremental growth of $80 million.