Ingram, TD Synnex Partnerships Propel AppDirect's Convergence Thesis

APPDIRECT THRIVE- Subscription commerce provider AppDirect is widening its distribution sources to give channel partners more flexibility transacting on its platform.

The marketplace company introduced integrations on its platform that give resellers the option to source technology SKUs from distributors Ingram Micro and TD Synnex. That option, set to go live in the fourth quarter, joins the option to source products directly through providers in AppDirect's catalogue or leverage AppDirect's tech service distributor (TSD) contracts.

"The choice is yours, and you can actually embrace a hybrid catalog strategy, assembling a catalog from all three sourcing options. With AppDirect you have the tools to tailor your supply chain to your needs," chief operating officer Renée Bergeron told an audience of technology advisors (TAs), value-added resellers (VARs), managed service providers (MSPs) and vendors that use AppDirect's marketplace.

AppDirect's Renée Bergeron

AppDirect chairman and CEO Nicolas Desmarais said his company has embraced a shift in strategy wherein it views "any disti as partners."

"We're not competing with distis, and over time, whether it be a ScanSource or a plethora of other ones – like Climb Channel Solutions – we're happy to partner and really be that commerce layer. We do have a catalog. If you want to draw from our catalog, that's fine. But if you want to work with a third-party catalog, that's also okay," Desmarais told Channel Futures. "And by the way, if you want to bring your own catalog, that's fine. Or mix and match."

Related:Why AppDirect Spun Out the ADCom Partner Business

The same mentality goes for value-added resellers like Softchoice and the hyperscalers they may use, Desmarais said.

AppDirect's Nicolas Desmarais

"They [Softchoice] have a direct relationship with Microsoft. But then they might want to use AppDirect's catalog for something and use Ingram for something else. We actually see the world converging like that," he said. "And Amazon Web Services we see as a distributor too in a sense. So we see Azure and AWS as 'disti 2.0' in a sense, and we're happy to bring in those catalogs as well."

AppDirect Thrive Caters to Multiple Partner Types

AppDirect is hosting its inaugural Thrive conference in Chicago, five years after its last in-person annual conference. The conference also comes a year and a half after completing its acquisition of tech services distributor TBI, the last of its major TSD acquisitions. AppDirect, founded in 2009, in 2018 kicked off a strategy of purchasing TSDs (then known as master agents), and by extension developing a developing a base of technology advisor (agent) partners that would evangelize its platform to end users and embrace AppDirect's catalog of software-as-a-service (SaaS) products.

Related:E78 Partners Launches Landmark AppDirect-Powered Marketplace

The ultimate vision is for users of the AppDirect platform (both sellers and buyers) to transact a wide swoth of technology categories, ranging all the way from energy to telecom to business software applications. Desmarais said agents seven years ago seemed like an ideal partner profile to embrace the full tech stack.

"We see convergence, and we think that they [advisors/agents] seem to have an easier time moving up the stack than companies moving down the stack. And we think that bundle size – being able to do multiple categories – is really important; it's where the world's going. And our thesis in 2017 was that actually telco agents are perfect, because if you're selling UCaaS, you are selling SaaS. So the leap between going from UCaaS to productivity is much smaller than going from, 'I sell Google Apps, and I'm going to sell as SD-WAN now,'" he said. "And I think that proved to be right. And then we're getting a huge number of technology advisors now that are multi-category. I think one of the unique aspects of AppDirect is, over time, we're adding categories"

AppDirect said it is working more than 10,000 tech advisors. Moreover, it said 22% of those TAs are transacting more than $1 million in gross merchandising value (also known as end user billings). A rough extrapolation of that number implies that some 2,200 technology advisors are driving a little more than $2 billion in gross merchandising value.

The Importance of Partners

Desmarais in his keynote reflected on the day the AppDirect marketplace first launched 15 years ago. His team waited for that first order to come in, and waited for a long time. He said that hard lesson led to a reevaluation of how a company can succeed in a digital company.

One of the company's key shifts was a move from focusing on "vertical scaling" to "horizontal scaling." In the digital economy, where technology "democratizes economies of scale," companies that function as a platform reduce the "cost curve" for other companies that want to enter the market and thus "can take a percentage of every sale." Companies like AirBnB did this very well, he said. Taking a cue from them, AppDirect invested in storefront builders, invoice editors, verification editors and other features, all coming through API-addressable technology.

"When you look at these digital winners in each of the spaces, they tend to be these multi-sided platforms that invite third parties to develop inventory, to sell inventory, and to consume inventory on top of that platform. And that's why these companies all share something in common. They own no inventory. No rooms, no cars, no content. And this horizontal scaling is part of the reason why they've achieved such success over the last 10 years," he said.

AppDirect has stressed its identity as a "relationship-driven marketplace," a nod to the technology advisors and other partners in its ecosystem.

"We believe that technology-plus-people is a lot more powerful than technology-minus-people. Where some companies like Amazon might view human interaction as a defect – as a bug to fix – we view relationships as an absolute core feature of AppDirect that we celebrate," he said in his keynote.

Model Flexibility

The advisor/agent model traditionally relies on the supplier/vendor for end customer invoicing and support. Desmarais said AppDirect wants to give partners flexibility when it comes to invoicing.

"We really see a world where it's pretty fluid. [If] somebody that's selling technologies to their clients, whether they're invoicing or they want a third-party AppDirect invoice for them, or they want the brokerage model where the provider's invoicing, we view the world where we need to power all three. We want to give our partner, the advisor or an MSP, the choice between those three things, yeah. I don't understand actually why it's traditionally been so rigid. I don't understand why it's like, 'No, we're TSD; we never invoice, and we'll never power invoice,'" he said.

He said that's especially true as the lines between "advisor, a provider, and a buyer" blur. For example, some of the suppliers in AppDirect's TSD portfolio also are customers of the company's marketplace for their own self-service platforms. And technology advisors like E78 Partners have built out their own marketplaces using AppDirect's platform.

"More and more we have advisors, traditionally that were just telecom advisors, who are now thinking, 'Gee, I want a marketplace, and I want to invoice for some services. AppDirect, I'd rather you invoice for some and I'd rather provide an invoice for others,'" he said.

Bergeron said end user customers are looking to consolidate the number of partners they work with.

"10 years ago, it was complex to access technology. Businesses had to judge multiple partners. They needed a system integrator for their business software. They needed a value-added reseller for their infrastructure, and they needed a telecom agent for their connectivity," she said. "Fast forward to today, where businesses are looking to work with fewer partners that can deliver an end-to-end solution, and we're seeing partners embrace this as it presents a tremendous opportunity for all of you to expand and take a bigger share of your customers technology spend. But the problem is that the supply chains have not evolved. The distributors are still very much focused on software and infrastructures, and TSDs on telecom and mobility. We look to solve this problem at AppDirect by assembling a multi-category catalog on our platform."

Bergeron said more than 29,000 technology products exist in that catalog. Kameron Olsen, who advises vendors in the TSD channel for The Channel Advisors, said AppDirect is putting itself in a category different from other TSDs with its depth of product offerings.

"I think my biggest takeaway is recognizing that they have a scalable solution. The other ones don't know how to onboard enough suppliers, and more and more suppliers want to come into this channel economy," Olsen told Channel Futures.

Rise Technology Advisors was partnering with TBI prior to the acquisition and continues to do business with AppDirect. Rise co-founder Eric Ludwig said that while Rise predominantly uses AppDirect for TBI's legacy telecom sourcing and back office functions, he sees the value in AppDirect expanding its sourcing methods. He said it's common for advisors to encounter customers who don't want to procure technology as a service, but rather prefer to buy it on a cap-ex basis and manage it themselves. Or customers may prefer some sort of hybrid model where they own the technology and a third party manages it. But many solution providers may tend to fixate on only the as-a-service option.

"I think there's opportunity like that all over the place. I don't think it's unique to AppDirect partners, but I think if a partner like AppDirect can figure that out before everybody else, I think that gives them a pretty significant advantage in the marketplace," Ludwig told Channel Futures.

Ultimately, advisors need to know the vendors they work with and the different routes to market those vendors operate, and most importantly, they need to honor their customer's preferred method of procurement.

"That's a sophisticated sale, and it's a sophisticated way to get to know your client, but very few people are doing that in the market. And as advisors, if we really want to add value to our clients, that's how we have to position ourselves," he said. "That's the type of really heavy digging in that we have to do. If we do those things, we may not get every sale, but we'll add value, and we'll continue to grow."