Channel Consolidation- The Key to WD’s Success

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Sushil Bandi, WD’s Country Manager for the Indian sub-continent, interacts with ITVar News, shedding light on the Company’s channel policies and the roadmap ahead.

ITVar News: What is your current channel strength? Are you planning to augment your channel base?

Sushil Bandi: WD has a base of 3000+ channel partners across India. We have tie-ups with 5 national distributors who help us address the demand from metros and smaller cities through their country-wide partner bases. Global Infonet, Jupiter, Ingram Micro and Redington distribute our entire range, while Neoteric only distributes products from the branded range. WD’s branded range, or external and home entertainment products, is also sold through leading LFRs.

ITVN: What are the criteria followed by your company to select partners?

SB: We try to work with partners that have technical know-how of storage peripherals. But it is not a mandatory criterion. WD passes on additional benefits to partners that display the capability to up-sell and drive volume purchases, through the Select WD loyalty program. Select WD lets us identify such partners and help them move up the value chain through advanced training and better incentives.
 
This approach has worked very well for us in upcountry markets, enabling us to identify and engage with the best performing channel partners.

ITVN: What all are your existing channel policies? Have you implemented any new channel policies for 2012?

SB: 2012 will be a busy year for WD. The flooding in Thailand posed enormous challenges to us and the aftermath of this natural catastrophe will continue to do so during this year. Of course it is our top priority to come back to pre-flood production levels as quickly as possible.
 
To achieve this we will have to work closely with our component suppliers so that the whole supply chain will be completely rebuilt. Our intent is to be as balanced as possible in our approach to satisfying all of our partners’ and customers’ requirements, across geographies and market segments, while we deal with our constraints and those of suppliers.

ITVN: What kind of awareness initiatives do you take in order to keep your channel partners updated which in turn facilitates their profitability?

SB: Channel plays a crucial role in helping us penetrate further into tier II / III cities. They not only are an extension of the company in this market, they are also a part of our brand identity. Hence it is important for the partners to keep themselves updated on the latest technologies and their functionalities. WD invests considerably in training its partners. This not only helps them gain technical expertise but also use that expertise to sell more.

Our regional teams frequently interface with the partners through 15-20 brand building exercises, 10-12 BGB roadshows and 8-10 Master Blaster drives every quarter. These activities serve to provide updates and basic technical knowledge of new products, and engage partners with brand WD by providing marketing collateral, arranging contests and awarding incentives.  
At least 2 partner conferences are organized every year. Channel partners get to interact with our management team and WD’s regional leadership. This is an open forum for WD and its partners to discuss new market trends that directly impact the channel’s business.
   
Online properties like ‘WD Wednesday’ newsletter and WDuniversity.com have been initiated to provide product and technology updates or training to partners in remote parts of the country.

ITVN: How has the channel evolved for your company in the last few years and where do you see it going in the next couple of years?

SB: The channel is well-positioned to reap significant benefits from the evolving go-to-market strategies of leading vendors. There is a clear opportunity for partners to step up and cater to the huge demand with a sensitively-priced basket of storage devices for all needs. Congruently, vendors will prefer to work with fewer national distributors, thereby ensuring that partners push the brand and its extensive portfolio. Predictably, this will result in them operating at lower margins, but will push volumes up significantly. Considering the direction in which the storage peripherals segment is headed, partners will have the opportunity to cater to a much larger consumer base than ever before. Additionally, extended product portfolios will demand that partners try their best to push up volumes by focusing on a consistent vendor, as opposed to best-selling product categories. In these times, partners can differentiate themselves from the competition through such value-addition.
 
ITVN: How do you ensure that your channel delivers the best in terms of both volume and revenue to your company?

SB: During the past year, we have conducted several awareness drives across India to educate resellers on how they can earn better margins by ordering our products directly from our authorized distributors. This will not just bring better margins and bonuses to the resellers, but also eliminate third parties and establish a direct channel with our resellers.
Resellers should also try to grab the social media opportunity by interfacing with customers on social avenues such as technology forums or Facebook pages of brands like ours. The philosophy is to try to help prospective customers on a social platform, so as to generate better recall for themselves.
 
ITVN: How frequently do you go for a revamp in your channel structure?

SB: We consolidated our partner network in a phased manner during 2010-11. Rather than simply expanding our channel base to sell our new range of offerings, we sub segmented our offerings according to the expertise of the national distributor.
 
ITVN: What pointers do you keep in mind when you design your channel strategies?  Do you do periodic reviews whether your strategies have been a success or not?

SB: It is not easy to manage expectations of distributors, partners and customers in a fragmented market like India. The focus of our channel strategy is predominantly on ensuring product availability in upcountry markets and creating incentives for partners that deliver good business. We have a quarterly review wherein we evaluate the latest insights from the channel on pricing, availability, SKUs and critical market factors that may affect the partners’ business.

ITVN: Channel schemes are important in order to keep your channel going. Can you recall any such scheme introduced till date that has been very profitable for you?

SB: Select WD is our most popular program. We reward partners that are helping generate traction for WD’s products in the market through Select WD. It awards loyalty points rather than just monetary benefits.
Depending on their performance history, resellers are categorized under the Silver, Gold or Platinum category. Thereafter they continue to earn benefits on every purchase as per their category.
 
ITVN: What do you have to say on the emergence of modern retail trade? Do you think retail is going to pose a big threat to the traditional channel trade?

SB: LFRs will impact the channel’s business but I don’t see it posing a serious threat. However, resellers should keep in mind that consumption is on the rise and consumers now have the purchasing power to buy their gadgets from LFRs and are willing to buy from online retailers too. Channel partners too can acquire technical know-how and build a social media presence, thereby benefitting from changing consumer behaviour.