Among the experts in the article by IT Channel News is Kirill Kostyushko, Brand Director of Private Labels. Merlion.
Date: September 27, 2024 Edition: IT ChannelNews Author: Maxim Belous
In an article published by IT Channel News, the author, with the participation of experts, explored how the Russian IT channel perceives private labels. Among the interviewees was Kirill Kostyushko, Brand Director of Private Labels. Merlion.
Today’s hardware market is saturated, with many players: Russian vendors focused solely on engineering design, those with their own production capacities, foreign IT companies still operating in Russia, and parallel imports. Additionally, private labels (PLs) of PCs, servers, printers, and other IT devices promoted by channel participants, including distributors and retailers, are competing for the attention of end customers. How does the Russian IT channel view them?
“Developing private labels offers growth opportunities,” notes Kirill Kostyushko, Brand Director of Private Labels.Merlion, “but it also requires addressing several challenges to successfully launch products on the market: conducting market research, identifying customer needs, finding reliable suppliers, developing a promotional strategy, and ensuring high product quality. Private labels have both pros and cons. On the one hand, the distributor has data on the demand and supply of various brands and can offer in-demand products. The ability to set prices for PLs allows more flexibility in pricing. Working with trusted production facilities ensures control over product quality and features. Furthermore, the distributor’s extensive partner network ensures effective sales channel management for PLs.”
For buyers, purchasing private label products offers many advantages, such as a wide assortment, decent quality at affordable prices, and more. With rapid sales growth, the distributor quickly builds a team capable of shaping the product lineup to meet consumer needs. Therefore, changes in product features and innovations can be faster than with established vendors. However, it’s essential to note that when issues arise with products, customers may face difficulties in obtaining support and service, as service centers might be less accessible. We constantly study the needs of our customers and end-users. If a PL can remain flexible, quickly adjusting its processes to meet customer needs and consistently fulfilling them, it quickly becomes a ‘favorite brand’ or, in the case of enterprise customers, a ‘trusted partner-vendor.’”
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Another perspective on private labels comes from integrators. Do integrators generally prefer IT products from distributor PLs over vendor products, or have distinct niches formed for each?
According to Kirill Kostyushko, Brand Director of Private Labels.Merlion, PLs from large distributors will always be more competitive in large supply markets, where stable quality, timing, expertise, and nationwide service support are crucial. “An integrator might be faster in some processes, but their support and other options might be more limited than those of a national-scale distributor.”
Kirill speculates that private labels have several potential development paths. They could remain an entry-level brand, satisfying the need for low-margin but high-turnover goods. They could evolve into a major brand and become a significant player in the market, potentially spinning off from the parent company and becoming independent. A third path involves the parent company (distributor) repositioning itself and evolving into a multinational corporation, owning many well-known brands and growing into a large-scale manufacturer."
“In our view,” concludes the expert, “the market will inevitably move towards consolidation and the development of local brands. While global brands continue to hold market shares in some niches by restructuring supply chains through parallel imports, one of the most promising sectors is the server equipment market. With the rapid growth of AI, a fully import-substituted server market will continue to expand. Brands that can offer relevant solutions and reliable professional services will emerge as leaders.”
The full article with opinions from other participants is available on the IT Channel News website: Part 1, Part 2.
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