Distributors are not known for their love of reading, so we can only imagine the joy many have been experiencing this week from seeing the application form to be a Nokia distributor, which is apparently over 100 pages. It covers everything from financial stability to evidence of a convergence strategy of distributors. It has kept distributors burning the midnight oil to get their form right, and the results will be eagerly awaited as it will have as big a bearing in the handset distribution sector than any other piece of news. It also marks the huge shift in market power away from distributors.
There was a time not too long ago when distributors would openly flout manufacturers’ stipulations on grey trading and have manufacturers running around them; however, that has now changed. Samsung gave 20:20 Mobile (the biggest distributor in the UK) the boot in March. Distributors now face a decision from Nokia that will, with no exaggeration in many cases, a make or break their future survival.
It is also a reflection of the changing market that Nokia’s decision has a marginal impact on its own broader sales strategy, but will shape the distribution sector this year. Distributors have to be far more pliant for customers and suppliers – a difficult feat when the two want different things.
The pressure will have slightly eased on 20:20, after it was relieved of a huge part of the debt hanging over the company when the debt syndicate agreed to take equity in the business in exchange for writing off some of the debt. But there doesn’t appear to be any bright light for distributors, with no evidence that market power in the sector will come back. Now it will be all about who is faster, stronger, cheaper and hungrier to serve the customers and suppliers, and live to the claims the distributors made in that Nokia application.