The Digital Economy Requires Changes to the Two-Tier Sales Model

IT distributors are beginning to tweak the two-tier model – supplier to distributor, to partner to end user – to add more value throughout the channel.

The result: new opportunities for partners via innovative business models and services. But how do you successfully tweak the two-tier model?

In his presentation titled “How the Two-Tier Model Must Evolve for the New Digital Economy,” at the Channel Partners Conference & Expo, April 17-20, in Las Vegas, Sergio Farache, senior vice president of global cloud solutions at Tech Data, will share insights on the future of two-tier selling and ways to optimize end-to-end digital connections among all members of the IT ecosystem.

In a Q&A with Channel Partners/Channel Futures, Farache gives a sneak peak of what he plans to share with attendees.

Channel Partners/Channel Futures: Is the traditional two-tier model for selling not as effective anymore? What are some of the issues?

Sergio Farache: The two-tier model is and will be a valid model because it provides scale, value and extensive expertise toward the vendor solutions. The two-tier model was originally designed with a linear value-creation process that limited the number of players that could provide or add value in the chain. In some cases, linear value creation is enough, but in others, solutions-aggregation value creation plays a significant role and requires additions to and expansion of the current model.

CP/CF: What are some of the changes that can make the two-tier model more effective?

SF: The primary opportunity in the evolution of the two-tier model is that it expands the value chain. The current model is a linear value chain, and digital transformation offers an excellent technology opportunity to expand the business model to a circular, multi-point, multi-tier value creation. The distribution industry today is well positioned for this transition, and this change will enable expansion to encompass a role as solution aggregator where multiple participants contribute to a solution. In this case, the value creation is expanded and, as a consequence, a network effect is created.

CP/CF: What are some of the benefits of an evolved two-tier model?

SF: The new expanded model and the solutions-aggregation approach using a digital platform as the basis of the model can provide the following benefits:

CP/CF: What do you hope attendees walk away with and make use of from your session?

SF: Ideally, participants will gain a better understanding of the evolution in progress and how to take advantage of the opportunities that the enhanced model offers, and embrace and adopt the change.