Deciding when to work with Distributors

The distributor is a Channel Partner that can sell to clients and other resellers. You could also say a “reseller-reseller”. Distributors can play an important role when expanding a company's reach and covering a specific region or industry. “Pre-Cloud” distributors were critical for software vendors because they also covered the logistics of the physical data storage (disks and CDs) on which the software was distributed to the resellers and clients.

Pro Distributor:

Local or industry expertise
Increased speed to market
Increased sales reach
Efficient onboarding and enablement (when offered as a service)

Con Distributor:

Reduced margin for vendor or reseller
Less control of the channel
Customized or complex implementations for clients are less feasible
(Potential conflict with brand and other resellers)

With the availability of cloud computing, the distribution of physical data storage has become obsolete, and resellers often don’t need to go through a distributor to reach the SaaS vendor. Instead, resellers can obtain the license directly from the vendor.

However, distributors can still play an essential role in expanding a SaaS vendor's reach if they deliver additional value compared to resellers.

Distributors can bring value by:

covering a region where we do not reach out to clients and resellers directly
serving types or sizes of resellers that we would not serve directly (e.g. the distributor covers resellers for the SMB market while the vendor runs an Enterprise reseller program)
providing additional services to resellers, like implementation, onboarding, and distribution of sales and marketing materials
Local tax and accounting, charging or commission payout to reseller

=> A distributor is a good choice if the product requires many local resellers to reach the clients.

Distributors may not be the first choice:

in markets where we reach out to resellers directly and offer a partner program
for highly complex products that require deep implementation. While it can still be feasible to do this with a strategic partner (co-branded), another layer (distributor) in between can make it too difficult. Or at least a long journey to have a workable process running.

As part of the partner tiering, it is also possible to allow preferred resellers or strategic resellers (that have the capabilities) to sell to other resellers.