IT and Business Insights for SMB Solution Providers

D&H is Investing Big in Partner Resources

Coming off the first $5 billion fiscal year in its 104-year history, the distributor has increased credit, more hiring, and a new distribution center on the way, but foresees higher prices on hardware coming too. By Rich Freeman

More credit, more sales and technical assistance, and enhanced logistical resources all await partners of distributor D&H in the year ahead.

So too, though, do higher hardware prices in all likelihood, according to Michael Schwab, the company’s co-president, thanks to ongoing component and transportation shortages.

“The manufacturers at this point probably have no choice but to reluctantly raise costs,” he says. “That ultimately flows through the channel to a higher end user consumption price.”

Both the investments D&H is making and the price spikes it foresees stem from a now receding pandemic that has been severely disrupting global supply chains since last spring while also spurring greater demand for IT products and services. D&H, for example, recorded 19% sales growth in the U.S. during the fiscal year it concluded last month and 15% in Canada, resulting in combined revenue across both countries above $5 billion for the first time in the company’s 104-year history. 

Not surprisingly, those results exceeded Schwab’s expectations a year ago when lockdowns had just gone into effect and GDP was entering a sickening plunge. “When you start seeing the economy shut down and people being restricted to not travel outside their home, when you see that non-essential businesses are being shut down state by state, it would be hard to predict that there’s any growth in any segment of the economy,” Schwab notes.

To his relief and that of many D&H partners, however, sales of work-from-home gear, remote learning solutions, telemedicine systems, and other technologies all jumped as businesses and consumers alike scrambled to accommodate changed conditions. “That was perhaps the silver lining” of COVID-19’s otherwise horrific toll, Schwab notes. “The technology that we sell has never been more in demand.”

To help channel pros capitalize on that demand, D&H will soon raise the $225 million in downstream credit it currently provides U.S. and Canadian partners each month to $300 million. “We want to lean in and make sure that we’re providing the right capital opportunities for our customers to maximize their business,” Schwab says.

That extra borrowing capacity, which will affect 1,500 to 2,000 partners, follows earlier financing increases dating back to the pandemic’s earliest weeks. “We made a concerted decision to deploy hundreds of millions of dollars of additional customer credit to enable the growth that we saw on the horizon,” Schwab says. The result, he continues, was “a win-win” for everyone involved. “D&H saw increased revenue and customer engagement, and our resellers had access to capital that perhaps without which they would not have had as strong of a year.”

As it has historically, D&H will decide whose credit limit goes up and by how much based on a case-by-case assessment of which partners couple high potential for growth with low risk to the company’s balance sheet.

In a further bid to sustain current momentum, D&H plans to fill over 100 new sales, sales support, and solution engineering positions in its new fiscal year. That represents an acceleration in hiring that was already up to accommodate a recently formed PC gaming and esports business unit, a major push into professional services, and other recent initiatives.

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