Global vendors depend on regional resellers to deliver products and solutions efficiently to customers. With relationships being the core of most businesses in the Middle East, resellers carry a significant responsibility. They are the most important link in the distribution channel. However, it is not an easy role to be in, especially when faced with constant challenges such as low margins, cut-throat competition, dynamic technology trends, changing customer demands and market turbulence. Only the ones who evolve along with the industry can be successful.
The regional IT market features a vast network of reseller partners, some of whom have been operational for more than two decades. However, in this feature, we take a look at only some of the prominent players, based on availability, market experience, value addition, technology partners and product portfolio. Over the next few pages, you will learn about what makes their businesses work year after year and how the future of the industry is expected to shape out.
Back in 1999, Accent Office Supplies started out as a small supplies-only company, with just three members. And over the years, it has grown its brands and customer portfolio. Today it boasts of multiple brands and branches across the UAE and abroad, with a large employee base.
Sachin Gehani, Director, Accent Office Supplies, says, “Our business lines broadly will fall into supplies, printers, laptops, desktops and servers, LED monitors, networking products and accessories. However, this is a broad categorisation, our product portfolio is constantly evolving and we believe that this is the only way we can stay ahead of the competition.”
Accent is not just your run of the mill trading company, says Gehani. “We are a one-stop shop for all your solution requirements. While we do have an advantage in pricing due to our large exports division and volume buying, this box movement is not the only thing we rely on.
“Our focus is heavily on providing accurate solutions to clients, after considering each individual needs and the latest technologies available at our disposal. Of course, this has to be done in a cost effective manner to provide maximum value. Large availability of a range of products, competitive prices, informed sales team and prompt after sales service are our focus areas.”
But the most important factor, which differentiates them is the healthy long-term relationship shared with all clients.
“Almost more than 70 percentage of our clients have been with us for 5 plus years and we never underestimate the value of that relationship. It is only by excelling each time, every order, we can keep ahead of competition.”
As a reseller in the current market, there are a number of challenges the company faces, from uninformed competitors offering substandard products, undercutting by various resellers in order to move volumes, currency fluctuations to maintaining profitability.
However despite these challenges, the company has had a successful run. Gehani says, “I strongly believe that any company is only as strong as its people are. Therefore, we attribute our success to each and every employee who is with, or has been with Accent; everyone from drivers, office boys, sales team, logistics and management.”
Going forward, he believes the regional IT channel will have to evolve, considering the pressure mounting up on the bottom line. “Continually adding value to the clients is the only way to survive, else, it’s going to get tougher.”
Armed with 12 years of market experience, DataCare begun operations as a data storage media specialist and this continues to be the main focus for the company.
Suresh Shetty, MD, DataCare, says, “We continue to hold the pole position within the data storage media segment. The data storage category has grown over the years and we have expanded our product line to include other data storage related products such as network-attached storage, which is becoming popular with both consumer and enterprise users.”
Besides data storage media products, other products include Printronix printer ribbons, Wacom graphics tablets and Ncomputing Zero clients, which the company defines as ‘core products’. Shetty adds, “We have a substantial business out of the core product area too, as we have export customers to whom we supply complete IT range to facilitate comprehensive logistics, but this is not on a regular basis.”
HP, IBM and Printronix forms the company’s top vendors in terms of revenue. “We also have other brands on board such as Wacom, Ncomputing, WD, Qnap and Synology too with which we have had great success. We are constantly looking out for new vendors with innovative products that fit in our portfolio.”
The biggest challenge, says Shetty, is managing credit. “You make the credit control too tight, and you start losing on legitimate business, you go easy a bit and there is the risk of defaults. For us, the credit insurance is too expensive, and defaults, if any, would eat through the bottom line. However, we have managed fairly well thanks to a balanced credit policy and a product line that can’t be converted liquid overnight by defaulters.”
DataCare attributes its success to its ability to quickly adapt to market changes. “We also invest in IT and mobility, for example, system remote access, automatic report generation. This ensures our IT systems are efficient and help us keep an eye on the overall business trend.”
Twenty-one years ago, Dubai-headquartered Experts Computer commenced operations in reselling and trading computer hardware from global brands and has since witnessed the evolution of the market.
Shailendra Rughwani, Managing Director, Experts Computer, says, “IT is one of the most dynamic and vibrant industries and the market trend changes frequently. Mobility is presently the trend in the market. All the mobile devices such as laptops, tablets and smartphones are in demand today. We have also seen an increasing demand for desktop PC and all-in-one PC product lines.”
The reseller says its market differentiation has been its years of experience in the market. “We are one of the oldest and reputed computer company in UAE and most of the customers trust us to deliver. We emphasise on best prices, prompt deliveries and best after-sales service.”
There are several challenges in the computer hardware market and some of this continues to be, “Overstocking, price fluctuations and outdated inventory,” he adds. However, the reseller has managed to expand its business over the years thanks to a “good and dedicated team, who have been with us for many years. This is the key to success,” Rughwani explains.
He is also positive about the future of the market. According to him, although the market conditions look severe at the moment, it will definitely get better over the next couple of years. “Regional IT channel is expected to grow in the coming years due to the developments taking place in the region. With the upcoming Expo2020, lot of infrastructure investments are expected in UAE, which should benefit IT as well. The future looks good in the next few years for the IT companies based in UAE.”
Founded in 1999, Fourth Dimension Computer’s core operations include distribution, wholesaling, reselling and retailing businesses.
“We began business from a store located at Computer Street, Dubai and have improved our operations over the last several years. Our focus is more on exporting and have a larger business in this segment, although we do have strong operations in the local market as well. The products that we resell include printers, scanners, projectors along with laptops and desktops. And as a reseller, we do good numbers and see the majority of business coming from Canon and Epson products,” says Ghaith AL-Marsoumi, Operations Manager, Fourth Dimension Computer.
The company was one of the four resellers for the German brand, TechniSat in the region. “However seeing our good work and because of the sales we did for them, we were made the exclusive distributor for the brand in the Middle East. We are also distributors for the US brand, Patriot for its memory and flash products and also for the Chinese brand, Tenda for its networking products.”
The company has also launched three of its own brands – both Platinum and Elegant are accessories products while Pilot is a range of mid-market positioned tablets.
“The mid-market positioning of our brands have helped us in our success and growth story. Also we have good channel partners in the Middle East,” says AL-Marsoumi. The common problem that most players face in the market is keeping up with the evolving technology. “It is highly dynamic, but we must equip ourselves to stay ahead of market demands and understand technology to be successful in the market.”
Today the company has its head office located on Bank Street with two showrooms on Computer Street and a logistics division and two warehouses in different parts of Dubai.
Lucky Star Computers was established in 1998 with a focus on four main lines of business – SMB, trading, retail and service – and has since gone to form long-lasting relationships with customers.
One of the major issues in the channel has been the competition from the power retailers. To differentiate itself from the market, KU Shankri, Founder and CEO, Lucky Star Computers, says, “We have segmented ourselves into a niche area, which does not thrive merely on economic rationality but emphasises on value additions in terms of technical expertise dissemination, high-end solutions to the discerning customers who seek such services and are willing to pay little higher than a typical consumer driven by economic considerations.”
With about 70 percent of the business coming from systems and hardware category, the reseller sells products from across brands such as Acer, HP, Dell, Lenovo, Asus and Acer.
Although Shankri has been in the market for the last two decades, she says, every day is a new learning experience. “I do not hesitate to take risks in investment decisions. If an idea excites me, I tend to pursue it till it is implemented or culminates in an appropriate response. I have stopped looking back at failures and tend to look at the positive side.” She believes this thought-process has helped the company thrive in the competitive market space.
Today Lucky Star boasts of seven showrooms, out of which two are located in India.
Shankri says that though the market conditions are favourable for companies to do business in the region, it is necessary to fight the competition from the power retailers. “The threat of the power resellers who have encroached upon the space, which was traditionally led by SMBs, must be dealt with. This is a serious challenge, which needs a concentrated effort from all quarters.”
Having set shop 12 years ago, Maxtouch Computers is an authorised distributor for View Sonic, Liteon, Apacer, Plextor, Tripp Lite, Acer, Microsoft and preferred partners with major brands such as HP, Juniper, Aruba, Cisco, Cyberoam, Symantec, Toshiba, and Dell. The product line with these brands include servers, notebooks, desktops, workstations, projectors, storage systems and security products.
And it also has its own in-house IT accessories brands called Vsonic and JSD.
Ramesh Belani, Managing Director, Maxtouch Computers, says, “As a value-added distributor, we aim to differentiate from our competition. Our flexible mode of operation and access to channels give us an edge over our competition.”
While there are several challenges in the regional channel landscape, one of the major ones for the reseller include political instability in the Middle East countries, which impact numbers. He says, “Vendors’ pressure on volumes on monthly or quarterly intakes is another challenge we face. This pressure results in insecurity on relations between vendor and distributor. Also the increase in cost of operations, largely due to rents, has resulted in higher turnover of employees, as they move from one firm to another seeking better incomes to meet living costs.”
Belani attributes the success of the company to two aspects, “Our experienced and dedicated team and our loyal customers have been the backbone of our success story.”
How will the future shape out for the regional channel players? He says, “Due to increasing cost in operations, which affects margins, the channel environment will eventually lead to eliminating the distributor layer. Because going forward, vendors may deal directly with power retailers, retailers and traders. This has been happening in USA, Europe and some North and South African countries.”
Printek Supplies established business in the region in 2004 with the trading of impact and non-impact printer supplies such as ink cartridges, toners and ribbons, and was also into the trading of backup tapes. The company delivers products from a large portfolio of global brands such as HP, IBM, Canon, Brother, Epson, Samsung and Imation.
According to the company’s Managing Director, Manoj Tiwari, Printek Supplies experienced a substantial growth till 2013. “With shifting market trends, evolving dimensions of reselling business and as new players entered this category, our business was affected over the last two years or so.”
While the recession had little impact on the company’s turnover, today however printing has taken a backseat in organisations as they adopt environmental friendly policies. But observing that the market is saturating, Tiwari says, “We want to grow by expanding into markets, which has in-country consumptions rather than re-exporting. With this in mind, we opened a showroom in Saudi Arabia in 2011, which is doing well today. This year, plans are underway to expand to few other countries within the GCC region.
“With almost 70 percent of business coming in from HP products today, we hope to shift this to other brands such as Epson, Canon and Xerox, in order to help increase our margins.”
The reseller sees the growth largely coming from verticals such as banking, healthcare, hospitality and government.
In 2015, we will see the reseller focusing more on increasing Saudi sales. “This will help us have a better bottom line. We have a three-member team present on ground. Also this year, we are focusing more on end-user sales rather than resellers. We are also trying to expand more into corporate businesses,” says Tiwari.
Q-Line Electronics started out as a small store on Bank Street in Dubai in 1993, with its main line of business in IT and electronics. Today the family-owned business has branched out to four stores and deals with products such as printers and supplies, laptops and tablets.
Sunil Lalwani, Managing Director, Q-Line Electronics, says, “The channel business has grown more challenging with each passing year. The political scenarios in the Middle East countries and currency fluctuations affect business in a big way. Also, this has led to the closure of many markets and entering new markets has its own set of challenges. Earlier we had never targeted markets such as the Far East, Europe or Americas. For many years, we were depending on the African and the Middle East markets, however now we believe it will be more lucrative to explore into newer markets and this will be our focus this year.”
Besides market conditions, product lines have also changed, says Manish Doolani, Sales Director, Q-Line Electronics. “When we had started our business, desktops were the most preferred product lines. Today, we see growth in the sales of tablets and laptops as well. Although desktops are still selling, the percentage of business has declined comparatively.”
In such dynamic market environment, it is necessary to be vigilant and take up new growth opportunities. “The good thing about this industry is that when one product line declines or disappears, another one comes along,” adds Lalwani. And for this, one must be adequate with the emerging technologies. According to the MD, as a reseller, Q-Line takes trainings and certifications seriously. “This helps our staff to be well-versed with market conditions and new products.”
The key word for 2015, according to the reseller, is ‘patience’. “This year, we need to be patient and wait for political scenarios to resolve. We expect 2015 to be the most challenging year till date. All major markets that buy from Dubai is at a standstill. We must have a slow and steady approach towards business. We are hoping the market becomes better in Q2 and Q3.”
Scantrans Computers is a Dubai-based reseller for networking products operational since 2004.
Anil Beriya, Director, Scantrans Computers, says, “Our main line of products include networking active products from TP-Link, Cisco, Linksys, D-Link, Netgear and HP. At the same time we are doing networking passive products from 3M, Kuwes, D-Link and Linkcomn.
“We believe our strength lies in availability and cost effective products for the smooth running of an organisation’s networks. As we have been focusing in this category, we know networking products require commitment on service and availability. We have our customer base who trust us for our commitment on availability with competitive price.”
According to Beriya, the networking business is undergoing a tough period as there are many new entrants in this field. “A major problem area is the price range between different brands. Many new entrants try to establish and garner a piece of the market share with low pricing, at the cost of services. This is affecting business for established brands where a quality of service is offered with products.”
While players are diversifying business and looking to venture into other avenues for growth, Scantrans’ dedicated focus on networking products has enabled it to grow and sustain the business over the years.
Beriya says, “Focused vision on networking products, committed service to clients including availability of products, and maintaining reasonable margin have helped us in our growth journey.”
He further believes technological advancements will keep the future of the regional IT channel market active. “However, price competition, low margins and shrinking market share due to e-commerce will make a big impact on the future of an IT reseller.”
Established in 1982, the Jordan-based reseller, Winning Deal Computers, began its UAE operations in 1995 and is celebrating its thirty-third year in business, says its President, Maher Abu Amarah.
“Winning Deal Computers, Dubai, was founded to meet the needs of the rapidly growing infrastructure in the region. Today, we supply our channel partners with the latest desktops, printers, laptops, tablets, network products, CPUs, memory, hard drives and accessories products.”
The company has large retail outlets in Khalid Bin Al Waleed Street, Bur Dubai, and a showroom located in Computer Street for wholesale business.
With declining hardware margins and stiff competition in the market, it is not an easy task to sustain operations and be profitable. Amarah says, “There are several challenges in the market for players like us. Constant and rapid changes in technology, deteriorating PC sales and the market shift to mobility have compelled us to try and be a step ahead.”
According to Amarah, the company’s dedicated and qualified sales, technical support, accounts and logistics team have enabled it to be successful in the region. “Also, we make it a point to always update our product lines with the latest technology and offer it to our customers at competitive prices. This also has helped us to grow and reach where we are today.
“The key elements of our growth are low margin, key account management, reliable logistics structure, and attention to customer feedback,” he adds.
As far as the future of the regional IT channel is concerned, he says, it is not possible to predict, however, “The MEA market is a rapidly growing region, especially for mobility and security.”