It isn’t easy being a distributor of video surveillance equipment. They usually finance the supply chain, bear the commercial risk of stock being unsold, and, according to new reports from IMS Research (now part of IHS Inc. ), face increasing competition. Still, at least their market is growing quickly. The reports, “The EMEA Distribution Market for Video Surveillance Equipment” and “The Americas Distribution Market for Video Surveillance Equipment” forecast that both these markets will grow at an average annual rate of more than 10 percent to 2016.
Much of the newer competition is coming from IT distributors. The video surveillance market has been gradually migrating from analogue equipment to network equipment. IT distributors have therefore started to recognise video surveillance equipment as IT devices and a potential new revenue stream.
According to report author and IMS Research Analyst Jon Cropley, “It is generally recognised that distributors are responsible for transporting video surveillance equipment from manufacturers to installers and systems integrators. They are less well known for other functions that they sometimes perform like advertising and promoting offers and product announcements, on-going technical support, and operating physical locations where products can be viewed and purchased.”
Distributors reflect the level of their involvement in the price they charge. This price is typically a fixed percentage of the equipment selling price and is known as the “distributor margin.” IT distributors are generally used to operating at lower margins than security distributors (although security distributors claim that IT distributors offer fewer functions). This is placing average margins for distribution of video surveillance equipment under pressure.
IT distributors have already gained a firm foothold in the video surveillance supply chain. It is estimated that they accounted for almost 15 percent of the distribution market in EMEA in 2011 and an even higher percentage in the Americas. What is more, they are not alone. IT value added resellers and broadline electrical distributors are getting in on the action too. This, combined with the fact that some systems integrators try to perform the role of distributor themselves, means that competition for distribution of video surveillance equipment is truly intense.