'Marketplaces are challenging. We're still figuring out how to work with them' - e92plus CEO on evolution of distribution

Following its 35-year milestone, founder and CEO Mukesh Gupta reflects on how the distribution landscape has evolved over time

E92plus founder and CEO Mukesh Gupta admits he is trying to crack the arrival of marketplaces and believes vendors will change their minds on their lack of including distribution in their approach to the trend.

The cybersecurity distributor recently celebrated its 35th birthday where Gupta opened up to CRN on this milestone, highlights over the years, and biggest lessons learned.

As an industry veteran, Gupta also delved into how distribution has evolved and adapted to newcomers like the hyperscaler marketplaces.

"The marketplaces are challenging, and we certainly have challenges around the hyperscalers," he reveals.

"We're still figuring out how to work with them. There is a place for us in there, and we believe that will be recognised.

"We see that vendors are going towards these hyperscalers but they're not including distribution into that.

"I think that will change, because sooner or later, they'll figure out distribution adds value to allow their products to scale."

Gupta doesn't think this change will be seen as much in the higher and larger enterprise world, but certainly in the smaller, mid-market spaces.

"It's now about figuring out how you fit into that space."

Another trend Gupta highlights to CRN is the convergence of the cybersecurity landscape.

"The lines are blurred between products and vendors. They are crossing over.

"The larger vendors are able to do a lot more. There's a lot more point products being pushed out there. However, some of the larger end users will purchase based on that. They still want best of breed."

MSPs are also continuing to flourish, he adds, as the drive to consumption billing ramps up.

"We're seeing more vendors looking to bring out services in that way. But they need to scale this because they have the problem of ARR. They want to predict a few things, and therefore that's what distribution can help them do.

"We can help them do that by working out ways where they can commit to the annual numbers, and we help the bidding process in the cycle and so on.

"One of our biggest areas of growth is our MSP area. We've seen more traditional resellers move into that. We're seeing more MSPs being born into that space and purchasing products from a a from a consumption bidding point of view."

35 years of distribution

Gupta acknowledges the industry has come a long way from where it was in the early 90s, stating it has become more competitive.

But at the same time, and certainly in the cybersecurity space, there are a lot more vendors that require the need of a distributor to get their products to market and scale.

"I've been told every so often in my 35 years that distribution will disappear.

"What's the need for distribution? Why are we there? Why do we exist? And yet we're still here.

"And the reason is because vendors need to scale. They need focus, they need drive, they need people that have the reach to take their products to market immediately."

The difference, he believes, is in how distributors do this.

Gupta explains distribution has changed from being a warehouse to more about how distributors are supporting the vendor in driving their products and maintaining and enabling partners to execute and sell.

"To me, that's what value-added distribution does today. It's not just about moving the licence, but the real value is coming from how you're helping the vendor to drive net new business, retain existing partners through then the end customers.

"I don't think distribution will disappear. We have evolved over time, and I think we're going to continue to evolve.

"There are challenges coming from the likes of the hyperscalers and the marketplaces.

"The market itself is huge, so you have to find your niche, and one that works for you."

Value-add. Is it still valuable?

The movement towards a value-added distribution business model has been one of the biggest trends in the IT channel over the last few years.

Some disties see it as an opportunity to expand their profitability and re-assert their role within the channel, but others totally dismiss the term.

Last year, CRN canvassed the UK channel's top distributors for their thoughts, with former Westcoast MD Alex Tatham expressing his hatred for the term.

Gupta weighs in.

"It's an overused term, but I still think it has its place if used correctly," Gupta believes.

He feels there are a number of distributors that call themselves value-add, but are not adding anything to the process.

"Value means what else are you putting on top of just moving the item or the or the licence?

"We believe we drive value because, from a vendor point of view, as long as we are driving net new growth to them, that is value.

"How we do that is the question. We may do that with doing technical services for them, for example, or helping them deal with the pre-sales and the post-sales elements of things."

Gupta continues that value depends on which side you're looking at it. Reseller partners may see it as what value is being added to their business.

"We're not necessarily doing it for the singular reseller, but we're actually doing it for our vendors. We're adding value in terms of scaling their products, marketing out to more, recruiting more partners

"That's a service for the vendors. But the reseller may not see that as something for them."

Flipping it to the other side, Gupta says the value e92plus adds to the reseller partners depends on where they are.

"Some partners don't need our value and for them, it's just a place for fulfilment. But there are many others that would actually require our technical services or our credit facilities or our marketing capabilities and how we can help them market their products.

"When you're doing all that, then you can stand up and say you are a value-added distributor. If you're not adding anything more than just moving the product, the processing and the order then, then there is a requirement for that. So that is more of a just a distributor.

"The term is still valid. It's just a term that people have cottoned on to and use it for their own way. But there is a real value in distribution."