Who should read this report?

• Tech brands and service providers will find these insights particularly timely and relevant, as they shed light on how potential customers and users plan to purchase technologies during and after this crisis. 
• IT professionals will find insights into how peers navigate the complex vendor landscape, which can help refine IT purchasing strategies — now and in the future.

1. How Businesses Choose Where to Shop for Technology

Business IT buyers have myriad options when it comes to purchasing software, hardware, and services. Because the various direct and indirect distribution channels have their own pros and cons — from price to convenience to service and more — picking the right channel is an important decision for businesses. In our study, we explored factors and variables that influence different types of IT purchases, and we offer explanations for those preferences.

Key Consideration Factors Impacting Purchase Channel Decisions

• Cost is the biggest factor influencing IT purchases across businesses of all sizes: The top reasons for an organization to buy tech through a particular channel are the ability to offer the best pricing and best overall value.
• Secondary factors include the ability to offer long-term business relationships, access to technical experts, quality end-to-end support, trusted advice on products and solutions, the ability to speak to a human, fast delivery times, and quick responses to questions.

• Business-size specific preferences: Enterprises tend to place slightly more of an emphasis on long term relationships and access to technical expertise, whereas SMBs show a slight preference towards channels and providers that offer the ability to easily speak to a human and get quick responses to questions.

How Purchase Channels Rank Across Key Consideration Factors

We asked IT buyers to tell us which buying channels they believe excel at delivering across the key purchase consideration factors included in our survey.

• Online retailers scored the highest ratings for offering the best pricing, which was the most important deciding factor.
• Direct manufacturers and online retailers both earned top marks for offering the best overall value, which was the second most important consideration factor.
• While not earning top marks for either of the top two factors (price and overall value), value-added resellers (VARs) earned superlatives for the greatest number of factors.
• Managed service providers (MSPs) earned the highest scores for being able to service all IT needs and reducing the burden on IT departments.
• Physical retailers were the only purchase channel that did not earn top marks for any purchase consideration factor, with this finding coming during a time where customers may be less inclined to visit physical stores during the global pandemic.

The following channels earned the top rankings across various purchase consideration factors:

2. IT Channel Preferences Among Businesses

Based on our IT buyer preference data, it should come as no surprise that the most popular purchase channels are also the ones perceived to offer the best pricing and value. Overall, the most commonly utilized purchase channel among businesses is direct from a manufacturer / brand (82%), followed by online retailers (71%), then value added resellers (56%) and managed service providers (41%). 

While nearly a quarter of businesses buy technology from physical stores, those purchases are restricted to a limited number of hardware and peripherals — which we’ll cover later in this report. We expect these in-store numbers to fall in the future, especially with the rise of online retailers, portions of the labor force shifting to remote work, and as individuals avoid physical contact for public health reasons.

Popularity of Online Retailers

The convenience of online shopping, paired with fast shipping and excellent product selection makes for a compelling combo. Already in the consumer world, Amazon is the king of the online retailers. This is also the case in the business world. With 68% of organizations in North America buying technology from the online giant, Amazon is significantly more popular than its nearest competitor, Newegg.com, currently used by 39% of businesses.

Ebay and Monoprice are also popular online retailers in North America, each being used by more than 20% of businesses, with Walmart coming in a distant 5th place at 11%. Across the pond, in Europe, the top North American brands are less popular. Only 35% of businesses buy technology through Amazon, and eBay is used by 15% of companies.

Popularity of Value-Added Resellers (VARs)

Value added resellers have evolved their business models over time, trending towards becoming a ‘one stop shop’ to help B2B buyers cut through complexity by offering simplified billing and a single point of contact for products and services offered by various tech brands. And the appeal of consolidating IT vendors is clear. 63% of survey respondents said their business prefers to reduce the number of vendors and channels they buy technology through, and 60% indicated buying from VARs and MSPs can make life easier for IT departments.

Many VARs have evolved beyond the role of trusted IT advisor, providing services similar to those offered by managed service providers (MSPs), who help manage solution deployment or integration after the purchase, making for more turnkey experiences. According to our data, 50% of IT buyers say the line between MSPs and VARs is blurred, with many using the terms interchangeably.

While many of its competitors are prominent internationally, in terms of adoption among businesses in North America, CDW is the most commonly used VAR. In fact, 30% of organizations of all sizes in the region purchase from the reseller, a rate that’s nearly twice as high as its nearest competitors, Newegg Business at 17%, and Insight (including PCM and TigerDirect brands) at 16%. In terms of adoption, less frequently used players in the North American market include SHI, Ingram Micro, and PC Connection.

Among the prevalent brands in North America, Insight is also popular in Europe, where it’s used by 8% of the businesses represented in the survey.

While CDW currently enjoys a sizable adoption lead in North America, other vendors have an opportunity to close the gap. According to our data, IT buyers are open to considering other providers (especially Insight), which implies vendors have the opportunity to attract customers by focusing on the key purchase channel consideration factors.

3. Detailed B2B IT Buying Behaviors and Strategies

Our data so far offers broad insights into current channel preferences and opportunities. We’ll now delve deeper into specifics, including additional nuance around how companies purchase IT on a technology-specific level. 

Average Number of IT Vendors Businesses Buy From

We already mentioned the majority of IT buyers (63%) said they actively try to reduce the number of vendors they purchase tech from, but the reality is that most businesses rely on a wide variety of providers. Additionally, bigger companies — with more end users to support, and often more complex environments than smaller counterparts  — typically buy from a greater number of vendors. While most SMBs purchase technology from 10 or fewer vendors, the majority of enterprises buy from 16 or more.

Technology-Specific Channel Preferences

Within the broad categories of technologies and IT services, patterns in our data show how businesses purchase IT by product type.

• Hardware: The majority of businesses purchase through online retailers and direct from the manufacturer, and slightly less often through VARs 
• Software: Most businesses buy direct from the manufacturer and from online retailers, and they commonly go through value added resellers too
• Cloud services: Overwhelmingly purchased directly, but they are also resold through other channels, less frequently
• Managed services: Most often purchased when offered or resold through MSPs, but many businesses also buy them directly from a provider or through a VAR.

In-Depth Hardware Purchase Preferences

• Laptops, desktops, and servers are most often purchased directly by businesses, but many workstation sales go through online retailers and VARs as well.
• Storage and networking hardware are most frequently bought through VARs, followed closely by online retailers, with direct also featuring prominently.
• Mobile devices and printers are most commonly purchased through online retailers, though businesses also tend to buy them from VARs and directly from the manufacturer. Printers are MSPs’ most popular hardware offerings, with 20% of hardware buying companies using this channel for their printing needs.
• B2B tech buyers very rarely visit physical retailers to buy hardware — and almost never for software or services. The only major exception: 10% of hardware buying companies still purchase mobile devices in physical stores, perhaps because IT buyers have the option to buy from stores run by mobile carriers, in addition to big box stores and stores owned by manufacturers.

In-Depth Software Purchase Channel Preferences

• Industry-specific applications (e.g., medical, legal, manufacturing) and business support apps (e.g., CRM, ERP, SCM, HR) are overwhelmingly purchased directly from the manufacturer, with marginal involvement from the channel.
• IT management software, more often than not, is purchased directly, although there is some activity in the channel as well.
• All other forms of software we asked about — including OSes, productivity suites, virtualization, security, and backup / DR software — are most often purchased directly, with VARs being the second most popular channel, with online retailers and MSPs lagging behind, but still playing a role.

In-Depth Services Purchase Channel Preferences

• Cloud services are most commonly sold directly. Services that tend to be paid for on a subscription basis, including online productivity solutions, email hosting, online business support apps, and cloud storage are overwhelmingly purchased directly from the provider.
• Online backup and recovery and Infrastructure-as-a-service are primarily sold directly, but are also commonly sold through the channel, with VARs and MSPs being commonly used options.
• Web hosting services are notable, seeing that 21% of businesses using cloud services obtain web hosting through MSPs — making this the  second most popular channel behind buying direct

Regional IT Buying Preferences

Comparing North American and European IT buying behaviors, we found that businesses based in Europe are:

• Significantly more likely to purchase tech from value-added resellers (69%) than businesses based in North America (53%).
• Significantly less likely to buy from online retailers (61%) than businesses based in North America (76%)
• Significantly less likely to buy direct (73%) than businesses based in North America (85%).
• Significantly less likely to buy from a physical store (14%) than businesses based in North America (25%)

Buyer-Persona Specific Preferences

On the whole, when given the option, IT buyers seem equally split between using a website (38%) or talking to a person (38%) to place orders. But when you dig deeper into the data, you’ll find buyers with different job titles exhibit different preferences. IT marketers are advised to pay attention to these preferences — potentially adjusting marketing plans before reaching out. 

• IT buyers with director-level titles and above have the strongest preference (47%) for using a website to make purchases
• IT managers have the strongest preference (48%) for talking to a representative when placing an order
• Rank-and-file IT pros with other titles were equally split, but more ambivalent than the other groups, with 29% citing no preference between the two options 

4. Standing Out in the Marketplace: Insights for IT Vendors

With millions of end users working remotely following the emergence of COVID-19, businesses have had to obtain new hardware, software and services to support more flexible work arrangements. While there’s potential for spending pullback as the situation with COVID-19 evolves, the initial push to equip employees to work from home accelerated purchases in many cases, with new IT needs being created for millions of businesses across the world. 

Additionally, even after the initial rush to go remote, in May 2020 the majority of businesses represented in a separate poll said they still had to spend more to meet immediate and long-term needs relating to the crisis. 

In this time of great change, even with some businesses cutting budgets or going out of business, there are still opportunities for vendors to capture tech spend. According to our study, within the next 2 years, 14% of businesses plan to increase spending with MSPs and 16% plan to increase spending with VARs. Additionally, despite challenges presented by the spread of COVID-19, a whopping 63% of MSPs that participated in our survey expect their revenues to increase over the next two years. 

Therefore, even now, providers can still establish or strengthen relationships with businesses taking steps towards modernizing and transforming their tech stacks, catalyzed by the changes brought on by the pandemic.

However, in a crowded selling environment where hardware, software, and services are all being increasingly sold and resold directly and through various parts of the channel, players within the industry will need to differentiate and lean into their strengths, doing their best to cater to customer preferences, while effectively marketing to those most likely to be in-market to buy.

Key insights for tech brands based on purchase channel research:

1. Drive clarity around offerings: Given the crowded and complex vendor landscape, helping IT buyers — who are often busier now because of increased job scope in the new remote reality — clearly stating your value proposition and key differentiators will help you stand out faster.
2. Continue to lean into strengths: For manufacturers, that means continuing to offer the best overall value, highlighting expertise and leveraging direct relationships with customers. For channel players, that might mean maintaining competitive pricing, offering tailored and trusted advice — perhaps for organizations dealing with a growing remote workforce — across a range of solutions to help optimize productivity.
3. Continue to build relationships: For all IT providers, especially now, it’s important to bring genuine value to the table, empathize with your customer, and nurture relationships where you’ll be able to serve customers’ changing needs over time. According to our survey, 64% of IT buyers said their experience with providers is highly dependent on who they have as an account representative, and 72% said positive word of mouth is very important when selecting a managed services provider to service their organization’s needs. Investing in the customer experience now will ensure continued business in the future.
4. Help buyers consolidate: We’ve mentioned it already, and we’ll say it again: 63% of IT buyers who participated in our survey said they would prefer to reduce the number of vendors and channels they purchase products and services through. However, the reality is that in a world where businesses increasingly rely on a remote workforce and virtual workplaces, IT complexity — including post-purchase integration and support challenges — will only continue to grow. For tech brands with a foot already in the door, this presents an opportunity to expand relationships with existing customers, deepening ties and demonstrating the ability to offer proven and comprehensive solutions and services that make life easier for businesses in our new reality.
5. Beware of security pitfalls: During the pandemic, with corporate devices connecting to potentially insecure home networks powered by consumer-level gear outside of IT control, new security concerns abound. Additionally, with the U.S. government warning against supply chain attacks targeting MSPs — which puts all of their customers at risk — IT professionals have plenty to be suspicious of. According to our survey, 59% of respondents said they’re concerned about security issues that might arise when trusting third parties, such as MSPs, to do IT work. Vendors should be aware of buyers’ concerns, and steps should be taken to address these issues and create messaging to put prospects at ease.