First we had virtual resellers - now meet the virtual distributor. Janteknology last week revealed its ambitious plans to grow its warehouse-free distribution business based totally on the Internet.
Janteknology is a niche distributor operating from Sydney's Baulkham Hills servicing the Australian and New Zealand markets with a range of security and communications soft-ware products including Wingate, MDaemon, MailScan, Conceal, Firewall, eEye, PC Guardian and Web Spy.
But beyond the products is an Internet-centric business model that new managing director Glenn Miller claims is yet to be exploited by the channel. When asked what value Janteknology can offer without a warehouse, Miller responded that its value lies in marketing. Miller defines the company's role as "market making" - the ability to take selected products from around the world and develop new markets in Australia and New Zealand through the channel.
"Basically we're a marketing company that distributes software rather than a distributor that engages in marketing," he said. "The sizzle in our steak is that we offer the vendor a business development service."
With no physical warehouse, Janteknology saves on many of the expensive overheads associated with box moving. Customers can first download the required software from either the Janteknology site or one of its reseller's Web sites for a 30-day trial. Following the trial, the customer then visits the reseller or locates one via Janteknology's Web site to download a digital key to unlock the software, according to the company.
According to Miller, the model offers immediacy to product delivery that not even the big box movers can match. The only exception is possible time zone delays with the US when it comes to acquiring product keys, he added. The money saved using this model also enables Janteknology to offer resellers above-average margins.
The prospect of a purely Internet-based software distribution model is being treated with caution among analysts and fellow distributors. David Henderson, category director at Tech Pacific, said large distributors would always need to offer a variety of means for purchase, and subsequently needs both a physical and electronic presence. "To focus on one method of distribution is a little restrictive, and will only appeal to certain markets," he said.
David Hancock, MD of channel research firm Inform, believes there are two key factors as to whether the Janteknology model will work. Firstly, he sees the size of the software as an important factor. The types of technology normally distributed in this fashion in the US are only small applications, that can be compressed into downloads of only one to three megabyte.
But of more importance to Hancock is service and support. "Technical support is the most important thing resellers look for in their suppliers," he said. "Resellers like local support and are prepared to pay for it. It means they don't have to wait until America gets out of bed to solve a problem."
According to Miller, there is no reason why other software distributors shouldn't try the same model. "Everybody talks about adding value, but there are still a lot of people just moving boxes," he said. "If you don't add value, I think you have a limited life-span."
Miller himself is known to many in the channel from his time with database vendor Ashton Tate, Sperry and Harris Corporation. His foray into the IT industry came courtesy of his own company, The Paradigm Agency, which operated as the agent for McAfee in the mid 90s, before being sold to McAfee in 1997.
Janteknology itself used to be a systems integrator before becoming a distributor in 1994. It has just 10 employees but plans to add sales and support staff as the business grows. Miller added that he's looking to grow the company's reseller base from 600 to "as many as I can get my hands on".