Resellers look on the bright side

It may be tough out there, but the IT industry is in good shape, says a recent survey.

How are South African resellers holding up in this challenging political and economic environment, and how do they compare to their international counterparts? Pretty well, it appears, according to a recent international survey.

The report, prepared annually by the UKbased CONTEXT ChannelWatch, maintains that globally, resellers are more optimistic about the coming 12 months than they were a year ago.

It says a ‘huge’ proportion of local resellers (84%) expect their business to perform better this year than last, even though only 28% were positive about the previous 12 months.

“They appear to be extremely hopeful about the future, and this is likely to be primarily due to the change of president and expectations of better monetary control,” it says.

The resellers say they’re most worried about economic and political instability, as well as the moribund economic growth and government funding, especially for education.

Asked what would spur growth, some of the local respondents mention the Azure datacentre, which will be joined by the AWS region later this year. While there has been some focus on improving reseller skills and training staff to be able to better support customers, there are still requests for more training.

The latest report reflects the views of 6 582 resellers in the United Kingdom, Ireland, France, Germany, Spain, Portugal, Poland, Czech Republic, Baltics, Russia, Turkey, and, for the first time, South Africa. Two hundred and fifty eight local resellers responded to the survey.

What are the broad trends? Just over a third of resellers globally (38%) say they have no concerns regarding financing, compared to 27% last year. It says this figure may well have been higher, were it not for the concerns of South African resellers, as well as those in Turkey and Russia, where exchange rate fluctuations have caused damage in the recent past.

All resellers are also sticking with traditional product lines, such as PCs and printers. There is some movement, however, in hyperconverged infrastructure, as well as products for the smart home. The Windows 10 upgrade also contributed to growth in the PC market in 2019.

Hyperconverged, which underpins the growth of datacentres, presents a ‘massive opportunity’ for the channel, it says.

How good is your distributor?

All respondents were asked to rate their distributors, and name one thing their distributor could do to improve the service they offer resellers.

On-time delivery, the quality of the customer portal, and multi-vendor integration are the three criteria that gain the highest scores in this year’s survey. Last year, customer portal came first, having been placed seventh in the previous year. But the ease of doing business still remains paramount and distributors are now being benchmarked against other online service providers, such as etailers. There is also a general concern about product availability, which shows there is plenty of room for improvement, according to the report.

South African resellers have clear messages for their distributors, it says, with many requests for speedy delivery and adequate stock. Resellers consider these two services as the most important for their businesses, but say their distributors are performing poorly in these areas.

Most South African distributors have good infrastructure, so delivery issues arise from limited supplies. The volatile rand/dollar exchange rate over the last few years has also been a key factor that has prevented distributors from keeping higher stock levels. This is, therefore, an ongoing problem and one that distributors are already aware of, says the report.

Resellers also want more information when new products are pushed out by distributors, coupled with a request not to discriminate on the size of the customer when setting prices. Smaller resellers are appealing for financial support such as overdrafts to help them deal with delayed payments from their customers, says the report.

Some South African resellers also call for more interaction and partnership with their distributors, and one person comments that a breakdown in communication with the distributor would be the one negative factor that would hamper growth.

Many South African respondents also request more training and marketing support, in particular with regard to cloud.

B2B investment by resellers for the next 12 months

The report reveals that investment areas are more or less consistent across countries, with the exception of Russia, where there is less interest in the provision of cloud products and services. Resellers in Russia and the Baltics also indicate that they’re comparatively less interested in cyber security. Cloud infrastructure, which requires Channel survey BUSINESS strong cyber protection, is underdeveloped in these markets, says the report, and backing up data is considered more important than protecting it. There is also a lack of cyber security knowledge, education and training and skills.

South African resellers are planning on spending more on datacentre solutions than any other country surveyed. It’s also rated third after the UK and Ireland and Portugal in terms of proposed investment in cloud. Azure is already in the country, and AWS is expected to open its region in the first half of 2020. SA also ranks third in planned networking spend after Turkey and Italy. It comes in second in AI after the Baltics.

B2B investment by resellers in the next 12 months B2B investment by resellers in the next 12 months

B2C investment by resellers

Here, South Africa is the exception in that 76% of B2C resellers say they will invest in software, placing it in top spot instead of second place as in most other countries.

This is explained by relatively higher margins in the country. SA also rates first in printer investments.

B2C investment by resellers in the next 12 months B2C investment by resellers in the next 12 months



According to the report, financial concerns, at least for some, have seen a decrease. Resellers in Turkey, Russia and South Africa, however, have concerns, particularly around exchange rate fluctuations.

Financing issues for resellers Financing issues for resellers

Which cloud services have you sold in the past six months?

Over the next 12 months, B2B resellers, save Russia, intend to invest primarily in the provision of cloud products and services, followed by networking, cyber security and workplace optimisation. With cloud, the resellers are focussing on selling backup, storage and security.

Which cloud services have you sold in the past 6 months? Which cloud services have you sold in the past 6 months?

Many distributors are already investing large sums into building one-stop marketplaces for the provisioning, management and billing across vendors as well as offering online marketing tools and the option to white label some services, the report says. As such distributor marketplaces mature, reseller investment in the area will become less necessary and, it’s suspected, that, in future years, the number of survey respondents active in this area will decline. While the graph shows the maturity of the cloud market in the United Kingdom and Ireland in the backup, storage and security spheres, South Africa is not far behind. It is second in the storage market, and the leader in the infrastructure market. 

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