Print.IT Reseller - issue 57

01732 759725 HOT TOPIC 44 ...continued Re-write the rebate rule book “Let’s face it, the rebate model has been around for many years and few vendors have come up with different ways to offer resellers added margin based on spend and unit sales,” said Mark Smyth, Chief Operating Officer, Vision. “In such a fiercely competitive market, it’s dangerous to over stock to hit targets for those extra points. Whilst we all carry some stock, it’s not the reseller business model of today. “The stark reality is, vendors need to keep production lines flowing and only when specific output levels are achieved, does it become efficient and cost-effective,” he said, adding: “This absolutely has a connection to the price point and rebate model that drives unit sales and there’s also a connection to consumables sales based on units placed. Until this changes, and it seems unlikely, I believe it will be a brave vendor to re write the rebate rule book!” Still a way to go In contrast, Mark Bamford, General Manager, Hollis Office Solutions says that whilst there has been talk about disappearing margins on hardware for many years, there is still a way to go before print hardware becomes fully commoditised. “It has often been said that if your business model depends on the profit from hardware sales, then your organisation will not survive the next few years. With minimal margins and end-users not showing the same levels of brand loyalty, rebates may be the only thing that OEMs have to tempt resellers to utilise their hardware,” he argued. “Either way, sales of hardware (without support services) has become almost irrelevant. In our experience, you have to use everything in your arsenal to distinguish yourselves from the competition, and that means better hardware as well as better support,” he added. The OEM perspective Commoditisation and shrinking margins are not a new challenge, according to James Pittick, Director of B2B Indirect Sales at Canon UK. “By working closely with our partners to deliver solutions and consultation, we seek to build value and differentiation in customer relationships. That said, we are always thinking about how we reward our partners and are continuing to evaluate our rebate model.” Dave Weston, Head of Channel for OKI UK & Ireland also believes that the traditional rebate model does need to change, as this will maintain price integrity of products in the market place amidst perpetual product promotions across the print industry. Weston argues that a commercial agreement should work for both parties pushing the right products and services that a) the market demands and b) generates maximum profit for all. “It’s about increasing margins for the reseller to deliver the right solution for the end-user not just selling boxes on promotion but putting the right solution for the right application that fits the requirements for the end-user,” he said. Responding to the question whether rewards should still be based on unit There’s an increasing demand for managed print services contracts to expand into areas such as cloud printing and biometric authentication PRODUCTS ON PROMOTION A THING OF THE PAST “Products that are perpetually on promotion to drive market share gains for vendors is becoming a thing of the past as both the channel and vendor community ultimately need to secure profit. “At OKI we have seen the biggest increase in ASP, particularly in colour A4 and A3 devices in the UK which by proxi will drive margin into both our reseller and distribution partners as well as maintaining a sustainable and profitable business for ourselves allowing us to grow in the correct manner. “In short, whilst providing the right rebate structure is vital to delivering KPIs for the vendor and the right rebate structure can achieve this, it's also about trying to create a mutually beneficial environment where the products are sold profitably. The balance of these two determining factors equals sustainable growth.” Dave Weston, Head of Channel, OKI UK & Ireland STRUCTURED THE PROGRAMME TO BE MORE FLEXIBLE “We still have a targeted rebate based partner programme, but we have structured the programme to be more flexible, offering gated stretch rebates, additional promotions and support for larger opportunities. “Alongside this, we’ve added a more strategised go to market product portfolio to protect value- added reseller (VAR) partners from online sales and created additional opportunities to earn rebate on other activities.” Moya Kelleher, Head of Channel Sales, Kyocera Document Solutions UK Clive Hamilton