SMBs are turning to value-added channels to provide them with complex products, such as servers and networking infrastructure.

Channel Partners

October 19, 2012

2 Min Read
SMBs To Tap Channel for 30% of IT Hardware, Study Finds

Small and medium businesses expect to purchase almost one-third of their core IT hardware from channel partners, such as solutions providers, VARs and direct market resellers (DMRs) like CDW over the next year, according to research firm The NPD Group Inc.

SMBs, companies with fewer than 1,000 employees, also are expected to place a similar amount of orders directly from manufacturers, the research firm found.

While direct selling is well established in low-value categories, we are seeing SMBs of all sizes turn to value-added channels to provide them with complex products, such as servers and networking infrastructure,” said Stephen Baker, vice president of industry analysis at The NPD Group. With different purchasing expectations among large and small SMBs and across different categories, purchase expectations show that a multichannel strategy is the right approach for most hardware companies.”

Larger businesses, with between 500-1,000 employees, expect to favor direct purchasing, with some categories, such as PCs seeing almost 50 percent of sales orders going through direct channels. But in network and storage products, these large companies rely just as much on value-added channels as they do manufacturers, with approximately 40 percent of expected purchases going through each of those broad channels.

For smaller firms, those with fewer than 50 employees, the primary purchase channel is expected to be retail and ecommerce, which will account for 44 percent of all orders over the next 12 months. These low-value channels dominate preferences for client devices like tablets, printers and PCs and are expected to account for as much as 64 percent of all orders. Even these very small businesses, however, are beginning to turn to higher value channels as complex products become more important to the management of their business. In the storage, server and networking categories these SMBs expect to place one-third of their orders over the next 12 months with solutions providers, VARs and DMRs.

Smaller SMBs use more channels, and use them more diversely across product categories,” said Baker. These SMBs are looking to the channel and manufacturers to offer a broader brand or product selection, especially as they continue to spend more on complex products.”

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