TAdviser on changes in the MERLION partner chain

The VAD-Distributors role of the supply chain key link and the guarantor of stable project realization is becoming even more significant.
23 august 2017
Media: TAdviser


According to TAdviser, from 2014 to 2017 the MERLION partner chain decreased by approximately 1,000 companies. In 2013-2014, the declared number of partners within the chain was around 9,000 companies in all regions of Russia and the CIS, and in 2017 the chain united about 8,000 organizations.

MERLION confirmed TAdvisers information on the number of partners: several years ago it really amounted to 9,000 organizations. A substantial proportion among them was and is still represented by partners in the broadline distribution sector, which encompasses distribution of computer and digital equipment, components, audio and video equipment, digital cameras and camcorders. The MERLION key partners in this sector are the largest federal retail chains and minor retail companies selling IT products, as well as numerous resellers, which can cooperate with regional retailers or sell goods through other channels.

The 9,000 figure reflects market indicators for the pre-crisis year of 2014. By that moment, the Russian IT market had been showing a steady growth for many years starting with the completion of the previous 2008-2009 global financial crisis, Yulia Pechnikova, Director of the MERLION Department for VAD (Value Added Distribution solutions distribution with Addeditional services) Business Development, told TAdviser. Subsequent gradual increase in demand on the part of public and commercial structures, as well as changing rules governing tenders and competition regulations, have contributed to increasing the number of companies involved in IT projects. Accordingly, the partner chain of the leading IT market players, including MERLION, one of the key IT solutions providers, was increasing.

According to Yulia Pechnikova, the rapid growth of the chain was also conditioned by a series of buyouts since 2011, MERLION has integrated major players businesses, such as Verysell Distribution, Axima, DNA, and some others. Each merger of the kind was accompanied by a significant increase in the partner network.

In 2015, market conditions in Russia changed, consumer activity decreased, Pechnikova explains. Customers tightened financial and other requirements for suppliers, focusing both on the prices and reputation, the suppliers reliability, she says.

In such a situation, market players traditionally unite on the basis of the most stable ones. On the other hand, the companies for which operations on the IT market in its pre-crisis growth period was non-core business can partially or completely phase out their activities in this segment. Therefore, it is not surprising that the total number of players not MERLIONs partners, but market agents overall reduced. It testifies to a completed optimization, explains the MERLION representative.

However, according to Yulia Pechnikova, another thing is important: the Russian IT market is gradually regaining its lost ground. We can state that both the partner channel and the vendors adjusted to working in new conditions. In this respect, the VAD-Distributor role of the supply chain key link and guarantor of stable project implementation is becoming even more important, concluded Director of the MERLION Department for the VAD Business Development.

Judging by the open source information, MERLION is not the only major distributor whose number of partners has reduced over the past few years.