Is Sales Pressure Breaking Partners?

Ask
a vendor about the status of the market and he/she will say everything is
hunky-dory. Ask a partner and he/she will reply that nothing seems to move in
today's market.

Why is this double talk in the marketplace? How is that the
vendor feels things are moving pretty smoothly while the channel has a different
tale to tell about sales?

The answer lies in two critical issues: One, to keep the
vendor happy, partner keeps lifting goods and tends to overstock; second, goods
keep rotating among different layers of partners giving a feeling to the vendor
that sales are happening without a hitch while end-users are nowhere near
partners to buy products!

But why are the partners behaving in this fashion? The truth
is that they are under tremendous pressure from vendors to sell and this
pressure has reached to the breaking point.

The slump in the market has worsened the situation for
partners. Customers are either not buying or postponing their purchase
decisions.

Thus, it is time for vendors to reflect on the extent of
direct and indirect pressure that they exert on partners to sell. And if this
reflection has to take place in an unbiased manner, vendors have to take it for
granted that partners are always at the receiving end when it comes to sales.

When we say, partners are at the receiving end from vendors,
what we mean is that they are not in a position to say "No" to
vendors. If they say "No" today, they face the uncertainty of what
would happen to them tomorrow, when they have to actually fulfill an order.

So, partners tend to lift goods without saying
"No", sell these at a small loss, rotate the cash among three to four
vendors and keep the sales cycle going. But for how long?

Not for too long because in this game of rotation of cash,
the break point comes rather quickly because partners have limited capital with
them. With limited cash options, the escape point for partners is to down
shutters at the point of no return. When this happens, great harm is caused not
only to the partner but also to the different links in the channel chain
including vendors.

On the other hand, vendors may pooh-pooh this argument and
say that there is no pressure whatsoever on partners from their end. Vendors may
remark that partners are free to buy or not to buy. But, do partners really
enjoy this freedom?

We do not think so. The market dynamics do not allow them to
enjoy this freedom especially at a time when demand has dried up. Partners are
there in the market to do business and for this they depend on both, vendors and
end-users.

When end-users have deserted partners, it is eminently in the
interest of vendors to understand the market dynamics and not to push partners
to a break point with undue pressure on sales. Vendors will have to be flexible
enough to understand that their interests lie in the well being of partners and
not in their demise.

sylvesterl@cmil.com