“The Channel” to Nowhere

Why do you sell through distributors, resellers, VARs, or in other words, “the channel?” Is it worth your time building lots of infrastructure to manage the rules around distributing your product, dealing with channel conflict, commissions, “owning the customer” and so on?

In other words, is it worth your time tying your brand to organizations that are only in it for the money?

Perhaps so, if your product is a long-tail undifferentiated thing that you want to sell at low margin to as many people as possible.  But all those mass-market customers could buy your thing or the other thing, depending on the price and how hard “the channel” wants to try.  And the effort the channel puts into it is usually a function of how much you want to pay them to do so, in either dollars or rights to your IP.

Or is it worth your time to craft the products and services that customers who believe as you believe really need and want?

In the former case, you can be HP and spend your time building distribution networks and the infrastructure to mass distribute serviceable and capable product.  And earn so-so margins and no loyalty by selling them to whoever needs a beige box of mediocrity.  And deal with channel conflict, constantly.  In the second case you can be like Apple and spend time getting rid of your distributors and deal with everything yourself, selling products to people who believe as you believe and earn fanaticism, margins and market capitalization.

What do you choose?

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3 Responses to “The Channel” to Nowhere

  1. Good post Mark. Not so simple in B2G, as I’m sure you know. Hope you’re well.


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