Arrow ECS walks away from unprofitable reseller accounts

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Arrow ECS walks away from unprofitable reseller accounts

Microscope contributor

Arrow ECS is walking away from some low margin, high credit risk business and altering service levels to plough more resources into a smaller number of resellers that commit to a higher share of wallet.

The enterprise distributor claims it has thousands of resellers on the books but trades with 500 to 600 regularly, and they will be the ones that will benefit from this strategy, according to Arrow UK boss Steve Pearce.

"They will be the recipients of our best people, our best focus, our best commercial deals, our attention and marketing resources.

"In order to work closely with and finance resellers we are going to have to sacrifice wasting time on those that spend £5,000 a year with us," he said.

Resellers have been tiered as Retain, Expand and Acquire accounts, after a "rigorous profiling" process.

On the flip side, Pearce said it had walked away from £2m worth of low margin orders in December: "That sort of bad business dilutes your profits, so for the first time in many years we said no thanks."

Those that fall out of outside of Arrow's top accounts may find standard delivery times stretched to 48 hours or orders transacted on a cash only basis.

"We want to place our bets and the future of distribution is about everybody deciding who they [ally] with, who they trust and are prepared to invest in," said Pearce.

While the strategy from Arrow was understandable, said Alastair Edwards, principal analyst at Canalys, it could create an issue for vendors that are looking for wider coverage from their distribution partners,

"This may create gaps," he said, "who will develop the other several thousand resellers to take them into the value space."

Pearce said the intention was not to ignore resellers with obvious development potential, "but the reality is that we want to focus where there is real business."

One reseller customer of the distributor argued that the strategy made sense: "If Arrow works on a quote, supported it and added value, resellers should pay the price."

Some others may not be as pragmatic.

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