A distributor, in its simplest form, is a middleman organization.
However, these organizations do much more than just pick, pack and ship digital signage products.
"A full-service distributor's main functions are to fulfill availability at any time, offer a credit line and technical service and support," said Mike Zmuda, Director of Business Development for Itasca, Ill.-based NEC Display Solutions of America Inc. "A lot of key distributors are seriously looking at digital signage and gearing up for it. It's good to see all of them getting excited about the industry, because it's one of our key targets. We look at distributors to have products available for the reseller community. That means making sure the mainstream products are always in stock. Second, we want to make sure they can provide the proper credit line to help resellers and integrators finance digital signage solutions."
At the beginning of the distribution chain are the manufacturers, known as vendors to the distribution channel. These are companies and OEMs such as LG, Samsung and NEC.
The biggest problem that vendors have, industry experts say, is that they are selling displays or mounts or software products, and it might not be easy for them to have access to all of the components required to provide a full solution. With a distributor, such as global technology distributor Ingram Micro Inc., they have not only the displays, but all of the complementary products required for a full solution. Distribution takes the responsibility from the vendor to piece together total solutions for resellers or end users.
Distributors keep all of their products in warehouses, usually spread out across the geographic service area, so shipments can be fast and all come from one place.
A fair picture
Keven Yue, senior business development manager for Ingram Micro, doesn't think the marketplace has a fair picture of the digital signage distribution channel.
"The services side is more than pure product procurement," Yue said. "So they could be offering credit and sales expertise for what products work in a specific solution. Services also include providing managed services and access to vertical markets. When an end user engages a reseller, he usually sees the IT guys that do networking and storage. But behind each reseller are one or two or three partnerships that they leverage that really sell this arsenal.
"In a sense, it gives them access to the full solution, which they can then pass on to the customer."
The distribution process
The distribution chain for digital signage is very similar to that of other IT products. A vendor sells its product through a distributor, who sells those products to its reseller base. The resellers then sell the complete solutions to their end users, which could be restaurant chains, airports, schools or other types of businesses.
Digital signage distributors can help make the deployment process seamless between vendors, resellers and end users. Samsung Electronics America Inc.'s Richard Hutton, senior channel marketing manager for the Ridgefield Park, N.J.-based company, explains the digital signage distribution channel from the eyes of a major screen vendor:
First, professional large-format displays come from South Korea or Mexico. The machines are stored in a warehouse before being sent to the distributor.
"One of the key things in this space is working with our distribution partners on forecasting," he said. "So, if you get a piece of 72-inch, die-cut glass, we want to make sure we sell that through. Nobody wants it sitting in the manufacturer's or distributor's warehouse for a long amount of time."
Because material can be stored at the distributor's warehouse, Samsung does not have to have warehouses across the country. Instead, the company relies on partnerships to ensure distribution of material across the United States.
"Sales and purchasing work very hard to make sure we don't have too much inventory in Illinois when we need it in Los Angeles," Hutton said. "On occasion, if a deal is large enough, we may ship it directly from the factory to the reseller site or end-user site. The ability to do that is all through the distributor and reseller. For deployments that require preconfigured aspects, like outdoor deployments, the distributors can often configure those things at their sites. Larger rollouts are usually done onsite to cut out the logistics piece. But the distributor manages that process."
From the distributor to the resellers
In the next step of the channel process, a distributor markets products to its reseller base on behalf of the vendor. The company also does a fair amount of marketing for itself on its value-added benefits. These could be financing, logistics, customer service and installation, to name a few.
Working under a distributor like Ingram Micro is a network of thousands of resellers, who are the ones who actually market and provide digital signage solutions to end users. These groups are responsible for designing and planning solutions that best fit the needs of the end user.
Resellers then go back to the distributor with the solution requirements.
"The goal is for the distribution channel to be seamless for the reseller and end user," said Robert Nishida, president of Woodland Hills, Calif.-based HDDS Design, a value-added reseller for Ingram Micro. "End users call a reseller and they have a number of items to be ordered and maybe even a preconfigured idea of what they want, and then it ends up on their doorstep and everything's done."
Resellers have consulting responsibilities on both ends of the equation. First, they listen to end-user requirements and walk end users through possible solutions. Then, they consult their distributors to see if the solution is a reality and how they can work together to provide it.
"End users call me and then we get into a pretty detailed discussion on what we're trying to accomplish," Nishida said. "A lot of times the clients want to do something, but it's not practical, or it doesn't make sense. They don't realize the cost of technology. A lot of people are under the impression that they can buy a home HDTV and put it in their retail environment and play it for 12 to 18 hours a day and it's good to go. But they don't realize that they may want these displays in a portrait orientation, or have content over three displays, and that there is technology behind altering the content for that. It's not as simple as hanging displays and going with it."
And the process doesn't end with product procurement. Nishida and HDDS usually develop a pilot or prototype version of the solution. If all is well after the results come in, the total solution is rolled out to all end-user locations.
"We like to run through a prototype phase where we send out products to end users and test what they want to do, make sure the content looks how they want it to and make sure they can run the content from their home offices," Nishida said. "Then comes the actual distribution of the displays to their locations. Or we can do a project management piece where we schedule the install and send someone to the site, or they can go to one of my service partners, who can deliver, hang the displays, test, train them and then they're out of there."
(Excerpted and adapted from the recently re-published DigitalSignageToday.com guide, "Digital Signage Distribution." To read more, download the free publication.)
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