According to incomplete statistics, the scale of China’s distribution market will reach 100 billion yuan in 2020, accounting for more than 40% of the overall security market. With the evolution of intelligent security industry, the era of AI Pratt & Whitney is coming, and the distribution market is expected to rise. However, in recent years, under the influence of flat channels and increasingly fierce market competition, the distribution profits of security products have gradually decreased, and channel distributors are facing the dilemma of transformation, showing a state of panic about the next way out.
Survival status of channel distributors
In the traditional channel mode, after contracting the local agent of a brand, the distributor can purchase and deliver goods to earn the price difference profit of the intermediate channel. The manufacturer can quickly improve the market share and further improve the distribution of customer resources through the channel. The cooperation between the two is mainly based on the manufacturer’s brand and the channel’s industry resources. Long Shoujin, general manager of Shenzhen yunshitong Network Co., Ltd., said that the traditional model is to choose which kind of partners for manufacturers and which products for distributors. Both have their own choices.
With the improvement of the maturity of industry development, on the one hand, the voice of engineering companies and integrators is gradually rising, on the other hand, manufacturers themselves are constantly accumulating industry resources. The role of distributors is weakening year by year. For various purposes, some manufacturers have skipped the distribution channel environment to varying degrees and chose to face the system integrators or end users directly. In China, the business model of security manufacturers is diversified, showing the coexistence of distribution channels, system integration channels and direct sales.
With the decline of the right to speak, in order to cope with the competition and changes in the market, distributors began to meet the new requirements of manufacturers, such as pressing goods to ensure manufacturers’ profits. For distributors, due to the backlog of products of different brands, they can only digest them at low prices, resulting in their own profits decreasing day by day.
In the past, channel distributors not only played the role of local sales, but also played the role of service support. However, with the gradual improvement of product maturity and maturity, many security products no longer need to go to the site to solve problems. Moreover, many technical problems have exceeded the ability of channel distributors, and returning to the factory has become the most direct and effective way to deal with them. Therefore, for distributors, there is no choice but to spell out the price.
Long Shoujin said: “at present, this market playing method has made many distributors uncomfortable. Some vertical industries have begun to take the way of project cooperation. Only in the field of fast sales, the traditional model is still retained.”
Weakening of channel distribution value
Although the value of distribution still exists, it is very limited from the current market situation. From the perspective of long-term development, industry resources can not become a moat for distributors to survive. In order to survive in the cruel market, distributors should get rid of the traditional role of porters and tap their own new value.
Long Shoujin believes that in the past, most of the companies that brought foreign brands for distribution have made profits, but now looking back, these companies are gone. However, during this period, some small companies focused on technology research and development, but now their sales have exceeded 100 million. Therefore, for distributors, it should be clear that making channels is only a transitional stage, Build strong customer relationships for future products.
Many distribution companies often encounter many similar problems: first, how to continue when the resource relationship does not exist; Second, some products have strong market demand during a specific period, but after this stage, how to grasp the opportunity of the next wave of products. Obviously, if distributors only focus on agency and distribution, these new market opportunities will be relatively confused.
From the perspective of the electronic industry market, fewer and fewer enterprises rely on channel providers to expand the market. With the development of the Internet and e-commerce platforms, the advantages of more transparent, standardized and efficient online sales begin to show. In the sales proportion of mobile phones and other electronic products, online and offline sales have begun to be flat, especially among the post-80s and post-90s customers, Online acceptance will be higher. Long Shoujin pointed out that the main problem of security distributors is that they rely too much on their own resource relationship and don’t know how to market their products in the channel, resulting in the weakening of other capabilities.
Opportunities for channel providers in the intelligent Era
In terms of the model of better developed channel providers in the security industry, building their own ecological chain and complete product solution system to provide customers with one-stop services is much more competitive than companies that simply act as agents and distributors. Long Shoujin pointed out that the transformation from selling a single product to selling a scheme is the idea that channel providers need to change. In the past, the era of opening a shop in the store to make life moist has ended. However, from products to schemes, and then to the direction of integration, it is inevitable to form a positive conflict with manufacturers in the end. Therefore, the prospect of distributors is very difficult.
There is another voice in the industry that channel providers cooperate with integrators or ISVs to develop the solution market for specific scenarios. Long Shoujin said that at present, such a model is feasible. At present, 90% of the products in the market are general-purpose products and 10% are differentiated products. The latter needs integration and integration. Although traditional integrators are easy to be understood as “water electricians”, the requirements for integrators in the intelligent era will be higher, and they will focus on application integration, For example, integrating big data into Ping An city management platform. Since these projects involve more than one product, distributors can also find their own value in it, which is another transformation from selling products to selling product solutions.
As the security industry enters the era of intelligence, many giants will also cross into the security industry. In the short term, although these giants can not bring qualitative changes to channel providers, their technical and financial advantages are bound to have an impact on the industry. For confused channel providers, these giants can point out the direction of the industry in the future, Especially in the layout of big data and artificial intelligence, the advantages of giants are very obvious. Many security enterprises may not be able to keep up with them. Therefore, betting on these giants may also be an opportunity for channel providers in the intelligent era.