Investigation: Who funds whose salary?

Our industry used to be relatively simple. As products got sold, the vendor, distributor and channel partners made their own margins and employed their own team members. This was complicated by rebate structures and marketing development funds (which anecdotally seem nearly impossible to cash in on at the moment). But in the last few years things have become even more complicated with funded BDMs and vendor desks.

What is a funded BDM?

Generally, this is where a vendor doesn’t have a presence in New Zealand for that particular product range, or wants additional focus on it at the distributor level.

The vendor pays the salary and commission structure of the sales position, with the individual actually being based within the distributor’s business. The vendor would set the general focus of the position, which mostly revolves around market share growth, recruiting new channel partners and or connection rates with higher margin solutions.

These individuals then get out on the road visiting channel partners with the message and supporting larger deals / transactions.

The same has occurred inside retailers, for example when Renaissance funded Apple Black Shirt employees to be based at Harvey Norman, Dick Smith, Noel Leeming and JB Hi-Fi. Although these where phased out in the end.

But one much more interesting approach has been the growth of what most are calling ‘vendor desks’.

A recent example is Integral (including Axon) which has its own Ingram Micro vendor desk occupied by David Orsborn. Gary Bigwood, General Manager at Ingram Micro New Zealand, says this isn’t anything new or controversial. “We have a lot of staff that will work alongside resellers on a regular basis, and that is often on their premises if it makes sense. In turn, we have a lot of our own vendors that occupy desks on a regular basis in our building where it makes sense. This is not new, and has been going on for years.”

But it really is an interesting phenomenon, to have a supplier’s employee working in your purchasing department.

• Is a member of your purchasing team funded by a supplier?
• If so, how do you ensure you are getting the best pricing with these other allegiances?
• And can other suppliers get a foot in the door?