Price Is Still Right

Distributors spend a lot of time marketing their different service offerings and financing options, but the biggest reason solution providers select a sourcing supplier is still price and availability, according to this year's CMP Channel Sourcing Study.

Solution providers buying from broadline distributors, specialty suppliers and alternative sources were in agreement: Pricing and availability is more influential than ease of doing business, product knowledge, breadth of product line and even relationships with sales reps, according to the study.

Interestingly, price and availability was chosen as the top reason why respondents did business with many specific companies, but in several cases it was also chosen for why they did less business with the same companies.

The survey results weren't news to many distribution executives who earn their living trying to differentiate themselves on things other than price and availability.

Slide Show: How Solution Providers Are Sourcing Products Today

"I'd have been surprised if [price and availability] wasn't No. 1. It tells us that this is, has been, and always will be a competitive market to be in," said Bob O'Malley, senior vice president of marketing at Tech Data. The distributor's surveys also reveal that price is the top consideration for its own customers, said O'Malley, who was named CEO of vendor InFocus last week (see page 12).

Price and availability was chosen as the most important reason for selecting a broadline distributor by 40.5 percent of survey respondents. Ease of doing business was a distant second with 12.6 percent of the vote. For specialty distributor customers, price and availability was chosen by 26.2 percent of respondents, more than twice as many that chose ease of doing business (12.6 percent). Price and availability was chosen by 57.3 percent of those buying from alternative sources.

Taking a closer look at pricing and availability, several VARs said each concept would earn a lot of votes on their own. After all, a low price doesn't matter if you can't get the product.

"When a client buys something from us, we usually need a quick turnaround, or we've quoted out a specific product and we want to make sure it's available," said Brent Morris, director of sales at Success Computer Consulting, a Golden Valley, Minn.-based solution provider.

Audrey Levi, president of Altek Computer Group, a Miami-based solution provider, also said availability is more important to her company than pricing. "If I order it and it's in stock, I expect it to go out the same day. That tends to play more into our model than pricing does. We're scheduling our resources around that and that's why it becomes critical," she said.

Most of Altek's customers are small businesses, for whom availability is particularly important, Levi said. "Once they've made the decision to buy, they need it three days ago."

Next: Price And Availability