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IT Distribution Industry Downturn Levels off in U.S.

Global Technology Distribution Council, an association representing IT distributors, notes significant trend. By Admin

The worst may be over in relation to the sharp downward IT industry sales that occurred over the past year, according to the Global Technology Distribution Council (GTDC), the professional association that represents the world's leading IT distributors. GTDC tracks trends revealed by the NPD Group's Distributor Track, which captures GTDC members' actual U.S. sales.

 "The recession that has hurt industries across the world is still a challenging reality, but it appears that the downturn has leveled off in the U.S. market for IT distributors," says Tim Curran, CEO of the GTDC. "Our members are encouraged and look forward to driving growth again as market conditions further improve."

NPD's Distributor Track aggregates member sales by product and industry segment in addition to corresponding reseller channel and pricing trends. Strong growth categories this year include netbooks, wireless products, and network-attached storage solutions, which small and midsize businesses are increasingly using to manage, share, and store their data.

A growing number of IT manufacturers and software publishers are relying on distributors to continually improve efficiency and market reach, Curran says, pointing out that over the past two years more than 100 additional vendors began doing business with GTDC members in the U.S. Even some of the world's largest manufacturers that have never sold their products through distributors have embraced the two-tier indirect model, in which distributors deliver products and services to multiple reseller and retail channels.

 "During the last industry downturn, certain vendors started to rethink their supply-chain strategies in favor of more direct sales. Over time, however, they realized that it makes far better sense to leverage distributors to cost-effectively sell their products through diverse reseller channels with specialized needs that are very difficult to directly address," says Curran.  

According to the GTDC, distributors provide the distinct advantage of fast access to multivendor solutions and a full range of related services while being able to more quickly adjust their operations as business conditions change and reseller channel requirements evolve. Market research shows IT distributors have the highest productivity levels and best inventory management performance compared to all other wholesale industries. IT distributors provide services with low selling, general, and administrative (SG&A) costs as a percentage of sales, and has maintained stable SG&A averages of below 6 percent in each of the past three years.

GTDC members include ABC Data, Actebis, Arrow Electronics, Avnet, Bell Micro, DCC SerCom, D&H, Esprinet, Ingram Micro, Intcomex, Magirus AG, Redington, ScanSource, Synnex, Tech Data, Westcoast LTD, and Westcon.

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