Vendor Exclusivity: Pros and Cons

PICKING BEST-OF-BREED PRODUCTS IS THE KEY
BRIAN DEELEY IS MANAGER OF GRAYMAR BUSINESS SOLUTIONS, A TIMONIUM, MD.-BASED SOLUTION PROVIDER. GRAYMAR, WHICH WAS FOUNDED IN 1989, HAS ANNUAL REVENUE OF $7 MILLION. KEY VENDOR LINES FOR THE COMPANY INCLUDE IBM, INTEL, RICOH AND PHILIPS. DEELEY RECENTLY SPOKE WITH EDITOR/NEWS STEVEN BURKE.

CRN: What do you think about the increasing move by a number of vendors demanding exclusivity and loyalty from solution providers?

DEELEY: I think it is disingenuous. That same vendor demanding loyalty is not going to come into a region and give me exclusivity as their point person to represent them in a local or regional market.

CRN: Does the fact you are not exclusive to a single vendor in a particular segment mean you are not loyal to your vendors?

DEELEY: Not being exclusive with a vendor does not mean there isn’t loyalty to that vendor. I believe that the relationships we have with the vendors that we have are based on a mutual business transaction. They are totally about loyalty. I am loyal to the vendors that we use. But one vendor does not provide a total solution for all the needs of the customer.

CRN: Talk about why it’s important to carry multiple product lines.

DEELEY: We do a fair amount of government and educational business. We constantly respond to Requests For Proposals and Requests For Quotes. And very often from those types of customers you get a very specific request for product that allows for no substitution. If my customer, which might be the state of Maryland, requests Toshiba laptops and HP wants exclusivity with me, does that mean I should not bid that product? Even though HP has a strong product line on the laptop side, I am not going to turn away business by not having a relationship with Toshiba, for example. That does not mean I am not loyal to HP. Very often there are many times when I will lead with HP.

CRN: Talk about how your relationship with your customers plays into this demand for loyalty.

DEELEY: For me, what it all comes down to is that although I have relationships with vendors, still the most important relationship I have is with my customer. And if that requires multiple vendors to put together a solution that best meets my customer’s needs, that is what I have to do first and foremost.

CRN: Does being vendor-agnostic give you a competitive advantage?

DEELEY: I think it does. I think that it allows you to pick best-of-breed products. It allows you to offer competitive solutions whether it’s based on price or value. ADAVANTAGE GOES TO EXCLUSIVE PARTNERS
DON RICHIE IS CEO OF SEQUEL DATA SYSTEMS, BASED IN AUSTIN, TEXAS. THE SOLUTION PROVIDER WAS FOUNDED IN 1986 AND GENERATES $30 MILLION IN REVENUE A YEAR. SEQUEL DATA SYSTEMS FOCUSES EXCLUSIVELY ON THE HEWLETT-PACKARD PRODUCT LINE. RICHIE RECENTLY HAD A CHAT WITH CRN EDITOR/NEWS STEVEN BURKE.

CRN: What do you think about more vendors demanding exclusivity and loyalty from solution providers?

RITCHIE: In my opinion, it is something that is long overdue. What they are doing by demanding this is it in turn will end up rewarding those who are indeed exclusive to HP. What typically happens is you end up with some partners using HP or whoever their main line is as their focal point and then they’ll end up bastardizing that by putting in other vendors’ memory, drives and other products that end up not being of real benefit to the customers. The people it ends up benefiting is the partner because all they are doing is increasing their gross profit on the sale rather than putting a full and correct product in for the customer.

CRN: What do you do if a customer demands another product?

RITCHIE: If a customer demands another product, it is up to us to explain or show them the error of their ways. I don’t just say this just to say it. I am absolutely convinced that the HP product set is the right solution; now it is up to me and my people to do the job and make sure the customer understands why I have such a strong belief in HP. If I can’t do that, I didn’t do a very good job and that means they will end up buying the product from someone else. But they will not be buying it from me. I will not jeopardize my relationship and my commitment of loyalty for the sake of a sale.

CRN: Does being vendor-exclusive give you a competitive advantage?

RITCHIE: It’s a huge competitive advantage. I believe so strongly that what I am doing is the right thing that I can go into a customer and know in my heart that I am giving that customer the absolute best value that customer could expect.

I have been HP-exclusive since 1986. Tell me how many companies who sell across the product set have come and gone in that time frame. There are very few of us that have survived through extremely tough economic conditions, extremely tough competitive situations and a very hostile environment throughout the different years. I credit my exclusivity as one of the things that brought us through these periods.