Whether they like it or not, computer resellers are being pushed to deliver products and services through new distribution programs. Channel assembly, for example, requires resellers to incorporate various manufacturers’ components to customize computers for end users.
The trend comes in response to competitive retailers providing customized product lines and manufacturers enticing resellers by offering to ship innovative products to them first. Some resellers even go a step further by creating their own “private label” products that include and identify brand name components.
IBM spearheaded channel assembly; other firms, such as Hewlett-Packard and Compaq, followed with similar distribution programs. These manufacturers tout channel assembly as a means to achieve higher profits by offering customers a wider range of services.
Small computer resellers seem to embrace channel assembly less enthusiastically than large resellers, which are shifting from building their own businesses to expanding through adoption of these manufacturer-controlled assembly programs, according to a poll conducted by Computer Reseller News. Resellers also are becoming more service oriented by making consulting, training, financing and outsourcing available.
The main sources of names for targeting resellers are controlled circulation publications or selects from computer magazines. Troy Smith, circulation director at Computer Technology Review, says that although the entrepreneurial nature of resellers makes them difficult to effectively target, it’s best to focus on particular segments based on the hardware, software and related services that resellers specialize in.
Smith says resellers-known in the computer industry as VARs (value-added resellers)-do essentially the same kind of work as systems integrators. The distinction in job title is based mainly on monetary compensation and the fact that VARs try to market to small, low-end clients. Systems integrators typically sell to large end users.
* Computer industry sales are booming in excess of $100 billion annually and computer resellers are being rewarded with double-digit salary increases. Median compensation for computer resellers in 1997 rose to $65,000 for college graduates, $44,500 for those with some college and $38,000 for those with only a high school education.
* Chief executives received median compensation of $107,500 last year, up from $90,000 in 1996. Senior support technicians earned a $55,000 median salary in 1997, up from $50,000 the previous year. Senior sales reps saw their median salaries soar to $77,500 last year, up from $59,000 in 1996.
* The computer reseller market boasts 10 billionaires. Microsoft chairman Bill Gates’ wealth in stock options alone is approaching the $50billion mark. Altogether, the 500 highest-paid computer reseller executives took home paychecks totaling $350 million in 1997.
* Marketing managers earned smaller salary increases compared with other types of managers in the computer reseller sector. The median pay raise for marketing managers in 1997 was $16,000, up from $11,000 in 1996. But marketing managers do typically receive bigger bonuses compared with other managers. Their median bonus last year was $8,500, up from $6,000 in 1996.
* The long-standing wage gender gap affects women marketing managers the most. Women typically are paid 19% less than men holding the same positions. Overall, men earn a median income of $64,000 vs. $38,000 for women.
* Only 25% of marketing managers receive sales commissions, but those who do smiled as their median commissions jumped to $23,000 in 1997, up from $15,000 in 1996.
(Source: Computer Reseller News, 1998 Reseller Compensation Survey)
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