Local Resellers Remain The Key Preferred IT Purchase Channels For India SMEs

Local computer dealers/resellers or VARs (Value Added-Resellers) continue to remain the key preferred channels within Indian SMEs for PC purchases. Over 70 percent of SMEs depend upon local Value Added Resellers (VARs) for PC purchase. Similar trends are also in place for IT products like on-premise software, Networking, Security and Storage. These are a few highlights emerging from the AMI-Partners’ comprehensive study - 2013 India SMB ICT & Cloud Services Tracker Overview.

AMI has analysed the preferred channels for ICT purchase by SMEs as a part of its study. “Research reveals that the preference for VARs is particularly high among SMEs due to their long standing relationship with SME customers,” says Pratik Gupta, Associate, AMI Partners India. “Moreover, VARs provide all-time service and support. This is a vital reason behind SMEs’ preference for this channel. However, this factor is particularly relevant for SMEs with a less managed IT infrastructure,” Gupta continued, “AMI has been tracking the SME channel preference for many years and we find that VARs remain the most preferred channels over the last few years.”

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Considering the ‘Awareness – Consideration – Purchase’ Model of IT purchase among SMEs, these VARs act as a source of information in terms of brand selection and play a vital role in influencing the SME IT purchase process; specially for ‘Consideration’ and ‘Purchase’ phases. VARs often suggest new products, services, solutions and share references of other customers with a similar profile - this puts SMEs at ease.

Direct channels - ‘Direct-Marketers’ and ‘Direct from Manufacturers’ are not used frequently by India SMEs for procuring products such as PCs, networking, storage, etc. However, the dependence on direct channels increases significantly for purchase of Hosted/Online services; over a third of SEs and a quarter of MEs depend on them for Hosted/Online services. They are particularly beneficial to SMEs since the latter can avoid the hassle of deployment, upgrades and maintenance of these services; in fact SMEs obtain the services of an expert hosted services provider in the process which they would not otherwise have access to. This enables SMEs to focus on their core business processes and issues rather than spend time on IT aspects. This significantly saves both time and cost for the SMEs.

Interestingly, Telecom Service Providers as well as Website and Cloud Hosting companies are also important cogs in the “RTM” (Route-To-Market) wheel. “In recent times, role of hosting firms has gained greater importance in terms of assisting SMEs in their cloud migration path; this can be attributed as a direct consequence of the rise in cloud computing among India SMEs”, said Gupta.

Preference for the retail channel is rising among SMEs especially for PCs and printers where the ‘touch and feel’ aspect is important. Presently, close to a third of SEs and nearly a quarter of MEs depend on National Retail Chains such as Croma, EZone and Reliance Digital for their ICT purchase. Local retail chains such as Vijay Sales in the West and Adishwar in the South are also quite popular among SMEs. Availability of multiple brands and models is a key factor behind the dependence on the retail channel. It gives the SMEs a variety of options to choose from. Most of these channels are established names in retail. This contributes to the ‘trust’ factor as well. Interestingly, many of these Retail channels also offer value added services such as installation and support – thus blurring the fine line between Value-Added-Resellers and Retail.

Most vendors would be keen to know the preferred channel mode of SMEs for IT purchases. Two major factors that SMEs consider before deciding on a suitable channel are constant availability for service and support and multiple options of brands and models. Thus, local VARs are the most popular channels preferred by the SMEs. Cloud Computing adoption being on the rise, the importance of service providers (e.g. Telecom Service Providers and Cloud Hosting companies), also cannot be undermined. Hence, IT vendors contemplating the ideal Route-To-Market to target India SMEs should definitely focus on and strengthen these channels.