Gearing up to battle Dell Computer's direct sales model, Ingram Micro will host e-commerce sites for 200 of its top resellers, giving them their own branded Web computer stores with "back-office" and commercial services provided by the Santa Ana, California, distributor.
In addition, Ingram will let its resellers incorporate its technology into existing storefronts, letting them add sales to informational catalogs. The program eventually will support multiple languages and currencies so it can be expanded internationally as well, according to David Carlson, Ingram's chief technology officer.
But Ingram insists the hosting program is not directed against Dell, which buys products from other vendors through Ingram for both the DellWare catalog and Web site.
"We think there are many ways that Dell would benefit from moving into the channel. It doesn't have to be all or nothing," said Jeffrey Rodek, Ingram's worldwide president and chief operating officer, using the industry term for selling through distributors and resellers, rather than directly to users. "Dell is a good customer of ours."
Ingram's hosting scheme could provide the means for small and midsized computer retailers and value-added resellers (VARs) to neutralize the advantages of Web-based direct sales employed by Dell, Gateway, and others. Direct vendor Dell claims as much as $5 million a day in online sales.
"If it's made easier for resellers, it will drive more volume through that channel," said Brad Haigis, product manager at Open Market, whose company is licensing its e-commerce software and providing integration services to link the e-commerce sites with Ingram's existing back-office systems.
"It not only provides a valuable service to resellers, but it will provide a tendency for them to be more loyal to Ingram," Haigis said. "Ingram sees it as a highly strategic competitive advantage--to take market share away from their competitors."
For resellers, the PrimeAccess program offers a way to compete with the direct vendors' online ordering. "Dell is going direct to customers, but resellers don't have the infrastructure. Ingram is basically a dealers' friend to set up very sophisticated sites, giving the dealers a basis to compete," said Roy Satterthwaite, an e-commerce analyst at Gartner Group.
"With large [companies like Dell] going direct to customers, smaller businesses don't have the wherewithal to compete," he added. "So they're relying on their trusted, 'old-world' business partners to make them more competitive, to deal with the 'disintermediators.'"
Dell itself professes not be worried.
"Many competitors, both original manufacturers and the resellers, are setting up Internet commerce and Internet sites for their customers," said Dell spokeswoman Neisha Frank. "They are resellers; there is someone else involved in the transaction--the customers, the resellers, and the manufacturers. At Dell, it's the customer and Dell, and that has really been our advantage."
That direct relationship, Frank added, lets Dell know exactly what a specific customer owns so Dell can provide customized Web pages for big customers with relevant information.
"The level of customization is much deeper when you know exactly what the customers are using. We certainly feel that the company that has the direct relationship will have a leg up on the competition," she added.
Ingram's move to host reseller stores--the first ones will go into beta testing this fall--comes under an emerging category called the commerce service provider (CSP). To date, most CSPs have been traditional ISPs or hosting services that expand into handling storefronts too. Ingram appears to be the first distributor in any industry to join the CSP crowd.
But the hosting initiative isn't Ingram's only effort to cozy up to partners. In March, the company began assembling computers for Hewlett-Packard, Compaq Computer, and IBM, a move that also speeds up Ingram's delivery of machines to resellers.
Ingram also runs an extranet auction open only to its resellers, allowing the company to unload excess inventory and dealers to scoop up bargains.
"Ingram can do a double whammy--get rid of inventory and offer Web hosting services," said Varda Lief of Forrester Research. "The larger idea is what companies are doing with their dealers for stronger loyalty. There's not really a downside."
Another Forrester analyst, Bruce Temkin, sees Ingram's hosting effort as consistent with smaller firms outsourcing businesses processes that are critical but don't give them a basis to differentiate themselves from rivals.
"It's outsourcing your back office for electronic commerce," Temkin said. "It's exciting to see electronic commerce service provided at a whole level across smaller businesses. The people who turn to their wholesaler, like Ingram, turn to them for lots of services. Now it's doing the same with e-commerce, providing the scale to smaller resellers who can't afford to do this on their own."
But that effort could not be replicated for other vendors, and the experience led the Ingram executive who oversaw that project, Fadi Chehadé, to launch an organization called RosettaNet to push e-commerce standards.