IT channel dealer group Synaxon believes OP dealers can benefit from its pricing and services to develop their EOS business.
Synaxon may not be a name familiar to everyone in the OP industry, but that may be about to change if things go according to plan for its UK Managing Director, Derek Jones.
Jones, himself, has considerable experience of the UK office products channel, having founded the Computer Office Group Marketing (COG) group that he sold to leading dealer group Integra in 1998, and then staying on as Integra’s IT Channel Director for a further 10 years.
Last year Jones abruptly announced that he was leaving Integra to take on another role in the IT channel. That turned out to be the head of the UK start-up operations of German IT reseller group Synaxon.
The group certainly has a strong pedigree in its home country. It boasts around 250 distributor partners and almost 3,000 member companies representing €3.1 billion ($4.6 billion) in annual spend, equating to approximately 15 percent of the German IT marketplace.
Synaxon UK, which is based in Cheshire, began an initial trading period from September to December 2008. The time was spent recruiting reseller members and establishing long-term IT channel trading agreements with key distributors, while the German project team worked to adapt Synaxon’s stock and procurement platform for the UK market.
This IT platform, known as EGIS (Enterprise Global Information System) is the cornerstone of Synaxon’s offering. In Germany, Synaxon has spent over €3 million developing the system which now holds 575,000 SKUs and handles around 100,000 transactions per day.
"EGIS in its basic form gives independents access to exclusive Synaxon distributor pricing and stock availability within the UK as well as giving them the ability to place their purchase requirements directly onto our partner distributors systems without the need to log out and visit each individual distributor’s website," Jones explained to opi.net.
The idea was certainly well received by the IT channel in the UK. When EGIS UK was officially launched in January 2009, nine IT distribution/supplier partners had been contracted and 300 UK-based independent reseller members had been recruited.
This number has grown rapidly in the intervening months. By the end of November 2009, 25 long-term distribution agreements were in place – including Ingram Micro, Simms and Black Dog – and reseller member numbers had grown to 565.
Part of the attraction of Synaxon is that it offers free entry level membership.
Free members – known as Technology Partners – pay nothing to join and have no membership fees. They receive free use of EGIS (subject to trading with three Synaxon partner distributors) and a publication called iTrends – a 6-page mailer that is published every two months.
The second tier of reseller membership is called Technology Premier Partner which, according to Jones, is aimed at larger proactive resellers who have a serious desire to grow their business. Again, there is no joining fee, but members pay just under £1,200 ($1,950) per year in return for an enhanced service that includes further improvement to partner distributor trading terms, additional discounts on all Synaxon value-add services and a rebate structure on their IT channel spend.
Add-on services include a new EGIS WebStore e-commerce solution and EBC (EGIS Business Connector) which facilitates full integration and manipulation of all data once imported into a reseller’s own back-office solution.
Jones says that he is looking for £1 billion of sales – or roughly 10 percent of the UK’s IT market – to be going through Synaxon in the next three years.
"Our 2012 vision is 1,500 member partners, 30 participating distributors and 50 supporting vendors with direct vendor contracts."
That may sound ambitious, but membership is more or less halfway there, only 5 more distributor partners are needed, and Jones has just hired a new Channel Manager to drive vendor contracts.
What does Jones think that Synaxon can offer to OP dealers?
"There are tremendous opportunities for office products dealers to drive growth with IT products," he argues.
"I can remember the time when you couldn’t get an office stationer to sell a laser or toner cartridge. ‘That’s technology,’ they said. ‘You have to go to an IT company for that.’ And now EOS is around 40 percent of their sales.
"Similarly, I was in the sector when both Kingfield and Spicers were moving into the FM space and dealers were jumping on the bandwagon. And now that’s just an everyday product for them. It’s just part of their portfolio and I think that commodity technology has got to go the same way."
Where Synaxon fits in, according to Jones, is by enabling independent office products dealers to benefit from better pricing and an improved product range, allowing them to compete with, on the one side, big online consumer electronics resellers such as eBuyer and dabs.com and, on the other side, the OP power channel players like Viking, Staples and Lyreco.
"This is where the small independent loses out," he states. "These big superplayers have it all sorted out in terms of how they sell technology products and the smaller guy – even the £10 million office products dealer – doesn’t necessarily have a strong technology offering in his portfolio."
Jones says that he does not mean that OP dealers should be looking to sell specialised products like routers or Blade technology.
"They should be looking at selling more everyday products such as software, digital cameras and laptops," he argues. "If a dealer already has an account with an SMB, he is missing an opportunity if he walks away from this kind of business."
Obviously, the arrival of a new group like Synaxon raises questions about dealers’ traditional relationships with their own buying groups (if they belong to one) and their primary wholesaler.
On the first point, Jones is at pains to point out that he views the Synaxon offering as a complementary one – and not as competition – to the OP dealer groups.
In fact, he revealed that his initial plan was to form a strategic alliance with a dealer group to develop what he calls a "hybrid model", offering the best from both the IT and OP worlds for a single membership fee.
"Unfortunately, that plan did not work out," he admits.
But he is adamant that Synaxon will not encourage dealers to leave their existing OP group.
"I personally believe that professional OP dealer groups come in all shapes and sizes and in the main they all offer their own exceptional services to office products dealers," he states.
"I have no desire to even try to compete in their sector. Synaxon is very much a complementary service that helps OP dealers through the minefield of the IT channel. We are a commercial proposition – dealers are buying into the technology and not a dealer group concept."
A number of dealers who are already members of OP dealer groups are understood to have signed up with Synaxon as well.
"Some dealer groups are very precious about their membership," says Jones. "To us it makes absolutely no difference whatsoever."
Jones also points out that existing agreements that dealers and groups may have with technology distributors will not be affected by using EGIS.
With regards to wholesalers, Synaxon is currently negotiating with both major wholesalers in the UK – Spicers and VOW – with a view to one of them signing up as a supplier partner, able to offer both EOS and own-brand office products to Synaxon resellers through EGIS.
"At the end of the day, the lines between the traditional stationery/office products sector and the commodity IT/EOS sector have merged into one," concludes Jones.
"This is especially true at the reseller end. Traditional OP resellers must embrace and sell from both sectors to survive and prosper over the next decade. It is highly unlikely that any of the office products dealer groups will ever have the in-house knowledge or trading relationships to successfully deliver a true IT channel service to their members, in the same way that it is highly unlikely that Synaxon UK will ever be in a position to offer a true stationery offering to professional OP dealers."