Prakash Krishnamurthy, a cybersecurity and distribution expert from the Middle East, presents a strategic approach to help vendors overcome challenges in finding the right distribution partners by effectively identifying and evaluating potential distributors.
Over the past decade, numerous technology companies in the cybersecurity sector have expressed strong interest in entering the Middle East market. The region is often seen as both elite and lucrative, drawing vendors who are eager to tap into its affluent customer base. There’s also a perception that technology adoption in the Middle East is more progressive, leading to the belief that high-margin deals with shorter sales cycles are more achievable here.
With this foundational understanding, many innovative and ambitious companies from the USA, UK, Europe, India, and beyond embark on their journey to establish a presence in the Middle East.
They typically face fundamental questions: Should they start in the UAE or Saudi Arabia? Is it necessary to set up a local office, or can they manage operations remotely?
After thorough discussions and investigations, many vendors opt to begin their business in Dubai (UAE), while remaining keen to explore opportunities in Saudi Arabia, which is recognized as a significant market.
However, as they proceed, vendors often encounter challenges in selecting the right distributor. Meetings frequently yield similar responses from distributors, who use common terms like “value addition,” “commitment,” and “growth,” making it difficult for vendors to make a decision.
Key challenges include:
- Large Distributors: Risk of the product remaining unsold.
- Medium Distributors: Potential payment issues.
- Small Distributors: Concerns about market reach and available sales resources.
It becomes evident that distributors are more likely to invest in dedicated sales and technical resources if they anticipate an annual potential of at least $3-5 million.
This article aims to provide guidance to vendors in identifying the right distributor. Here’s an analytical approach to selecting a distributor:
There are approximately 55 active distribution companies in the Middle East’s cybersecurity and network security space. This figure may vary, but extensive research has led to this estimate.
These distributors range from large to small, with some small ones also operating as system integrators opportunistically. Among the 55 distributors, 18-20 are prominent due to their size or rapid revenue growth, while others are either nascent or struggling to scale. Over the past decade, these 55 distributors have represented around 500 or more vendors. Many vendors partner with multiple distributors, expecting them to handle brand awareness, marketing events, opportunity generation, technical training, and timely payments. On average, each distributor might manage 30-40 technologies, depending on their operation’s size and focus.
Despite managing numerous technologies, most distributors generate 70-80% of their revenue from just 4 or 5 vendors, leaving the rest of the portfolio underutilized. This trend indicates that many distributors fail to adequately promote niche or emerging technologies.
Vendors often face the challenge of appointing, terminating, and re-appointing distributors in their quest for effective representation, wasting valuable time and resources.
How to Choose the Right Distributor:
- Reseller Community Feedback: List large, medium, and small resellers (10-15) across key countries (UAE, KSA, Qatar, Kuwait, Oman, Bahrain). – Identify 2 resellers from each country for comprehensive insights. Ask these resellers to recommend 3 distributors they prefer or find supportive. – Compile a shortlist of favored distributors.
- Evaluate Operational Expertise: Meet with shortlisted distributors to assess their ability to support both niche and established products. – Investigate their top accounts, product strengths and weaknesses, and revenue strategies. – Check for any competitive products and their commitment to competition.
- Vendor Feedback: Gather insights from other vendors about the distributor’s market strengths and payment efficiency. – Conduct this step last to avoid bias and ensure objective decision-making. – Verify feedback from at least 5 vendors who have worked with the distributor for a year or more. Though these steps may seem cumbersome, they can prevent future complications and ensure a better fit with a distributor who will effectively support your product portfolio.
The Middle East market, dominated by distributors, often requires their involvement for successful market penetration. While some vendors have tried direct engagement, many find working with distributors to be more practical and effective.
Remember, beneath the surface of the Middle East’s distribution landscape, there may be a highly competent distributor waiting to be discovered.
“There are no secrets in life, just hidden truths beneath the surface.”
