Businessmodel of Tech Data

Customer Segments

Tech Data has a niche market business model, with a specialized customer segment. The company distributes products to value-added resellers, retailers, direct marketers, and corporate resellers.

Value Proposition

Tech Data offers three primary value propositions: accessibility, convenience, and brand/status.

The company creates accessibility by offering a wide variety of options. Over the last 20 years, it has acquired over 18 firms, including ParityPlus, Softmart International, 2000 AG, Azlan Group, Scribona, and Signature Technology Group. These additions have enabled it to add several new capabilities to its portfolio, increasing offerings for clients.

The company offers convenience by making life easier for clients. It provides fully-integrated supply chain support for various channels. It also provides technical support directly to clients’ customers so clients can save time and money. Lastly, it maintains a full-cycle, in-house marketing team that can handle promotional needs for clients, ranging from website design to outbound marketing.

The company has established a strong brand due to its success. It is one of the largest wholesale distributors of technology products, solutions, and services in the world, generating $26.4 billion in 2015. It serves over 105,000 resellers in over 100 countries, and distributes products from over 1,200 tech vendors, including prominent firms such as Apple, HP, Cisco, and Microsoft. It completes 50,000 transactions daily and has sold over 150,000 IT products. Lastly, it has won many honors, including recognition as one of the world’s top cloud service providers by Talkin‘ Cloud for two years in a row and as one of the “World’s Most Admired Companies” by *Fortune *for seven years in a row.

Channels

Tech Data’s main channel is its direct sales team, which includes field sales and inside telemarketing sales professionals. It also acquires customers through its website. The company promotes its offering through its social media pages, trade shows, and conferences.

Customer Relationships

Tech Data’s customer relationship is primarily of a personal assistance nature. The company provides training and certification services to its reseller customers in order to help them configure, install, finance, and sell products. That said, there is also a self-service component. The company’s website provides answers to common questions and access to an online client account.

Key Activities

Tech Data’s business model entails distributing products to its reseller clients.

Key Partners

Tech Data partners with several of its tech vendors to provide the aforementioned training and certification services to its clients. These partners are Cisco, Microsoft, Symantec, VMware, CompTIA, and Red Hat.

Key Resources

Tech Data’s main resources are its physical resources. They include 30 logistics centers located worldwide where it stocks and fulfills orders for its various markets. The company also maintains a “Solutions Center” at its Clearwater, FL campus. The 6,000-square foot facility is a proof-of-concept lab where resellers can explore a wide range of IT solutions and receive product training.

Cost Structure

Tech Data has a value-driven cost structure, aiming to provide a premium proposition through significant personal service. Its biggest cost driver is cost of products sold, a variable expense. Other major drivers are in the areas of sales/marketing and administration, both fixed costs.

Revenue Streams

Tech Data has two revenue streams:

Product Revenues – Revenues generated from sales of the products the company distributes to resellers

Service Revenues – Revenues generated from fees for various services, including configuration, training, and fulfillment