:: Barriers to Entering The U.S. Channel

1. Direct marketers, web resellers, and big box retailers generally do not purchase directly from emerging manufacturers.
   
   
2. Resellers and retailers limit the number of distributors that they will buy from.
   
   
3. It is not economical for a manufacturer to have many direct relationships with smaller resellers and VARs.
   
   
4. Tier I distributors reject many new manufacturers because they have yet to generate significant revenue.
   

Direct marketers, web resellers, and big box retailers generally do not purchase directly from emerging manufacturers.
Direct marketers, web resellers, and big box retailers usually do not buy directly from manufacturers unless they are very big. This is largely driven by the retailer's need to streamline their logistics and ordering processes. EDI and JIT deliveries are standard practices among large retailers. So while it is critical for manufacturers to convince companies like Amazon.com, CDW, or CompUSA on why they should sell their products, this step alone is insufficient. Buyers do not order directly from the manufacturer and the manufacturer will be required to find a distributor who already supplies this reseller and then convince the distributor to carry their product.

Resellers and retailers limit the number of distributors that they will buy from.
Everyone is looking to simplify their life and large technology channel players are no different. Their strategy is to limit the number of distributors that they buy from. Large resellers may have distribution relationships with smaller specialty or regional distributors, but there is no consistent pattern. Without a relationship with a Tier I distributor, a manufacturer would need many Tier II and III distribution partners to cover the channel. This is not practical.

It is not economical for a manufacturer to have many direct relationships with smaller resellers and VARs.
Smaller resellers will purchase directly from emerging manufacturers, but this model is not scalable for the manufacturer. It means having many reseller agreements, many accounts receivable relationships, and shipping many small quantities. Overall this approach is too expensive and gets in the way of growing sales.

Tier I distributors reject many new manufacturers because they have yet to generate significant revenue.
Large distributors incur considerable fixed overhead for each new manufacturer that they add to their catalog. As result, distributors require that manufactures have an established sales run rate (typically $2 million per year) that can be immediately switched to the distributor. Prior to AccessChannel, most emerging manufacturers were caught in what seemed like an impossible situation. Without existing revenue, they cannot sign-up the channels to generate revenue.