Nearly 30 Percent of U.S. Small and Medium Business Sales Will Be Sourced from Value-Added Channels Over the Next Year, According to NPD

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Small and medium businesses (companies with fewer than 1000 employees) expect to purchase almost one-third of their core IT hardware from value-added resellers, such as Solution Providers, VARs and DMRs over the next year.

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Source:The NPD Group/SMB Technology Monitor, July 2012

“While direct selling is well established in low value categories, we are seeing SMBs of all sizes turn to value-added channels to provide them with complex products such as servers and networking infrastructure,” said Stephen Baker.

Small and medium businesses (companies with fewer than 1000 employees) expect to purchase almost one-third of their core IT hardware from value-added resellers, such as Solution Providers, VARs and DMRs over the next year, according to leading market research company The NPD Group’ s SMB Technology Monitor. These SMBs are also expected to place a similar amount of orders directly from manufacturers.

“While direct selling is well established in low value categories, we are seeing SMBs of all sizes turn to value-added channels to provide them with complex products such as servers and networking infrastructure,” said Stephen Baker, vice president of industry analysis at NPD. “With different purchasing expectations among large and small SMBs and across different categories, purchase expectations show that a multi-channel strategy is the right approach for most hardware companies.”

Larger businesses (between 500-1000 employees) expect to favor direct purchasing, with some categories such as PCs seeing almost 50% of sales orders going through direct channels. But in network and storage products these large companies rely just as much on value added channels as they do manufacturers with approximately 40% of expected purchases going through each of those broad channels.

For smaller firms (fewer than50 employees) the primary purchase channel is expected to be retail and ecommerce, which will account for 44 percent of all orders over the next 12 months. These low-value-add channels dominate preferences for client devices like tablets, printers, and PCs and are expected to account for as much as 64 percent of all orders. Even these very small businesses, however, are beginning to turn to higher value channels as complex products become more important to the management of their business. In the storage, server, and networking categories these SMBs expect to place one-third of their orders over the next 12 months with SP/VARs and DMRs.

“Smaller SMBs use more channels, and use them more diversely across product categories,” said Baker. “These SMBs are looking to the channel and manufacturers to offer a broader brand or product selection, especially as they continue to spend more on complex products.”

About The NPD Group, Inc.
The NPD Group is the leading provider of reliable and comprehensive consumer and retail information for a wide range of industries. Today, more than 2,000 manufacturers, retailers, and service companies rely on NPD to help them drive critical business decisions at the global, national, and local market levels. NPD helps our clients to identify new business opportunities and guide product development, marketing, sales, merchandising, and other functions. Information is available for the following industry sectors: automotive, beauty, entertainment, fashion, food, home and office, sports, technology, toys, video games, and wireless. For more information, contact us or visit npd.com and http://www.npdgroupblog.com. Follow us on Twitter: @npdtech and @npdgroup.

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