In Indonesia, the security distribution business has become a lot tougher. Product commoditization has left distributors waging price wars against each other. As a result, some distributors turn to solutions to get a better competitive edge. One such distributor is Thano Technologies, which focuses primarily on acce
In Indonesia, the security distribution business has become a lot tougher. Product commoditization has left distributors waging price wars against each other. As a result, some distributors turn to solutions to get a better competitive edge.
One such distributor is Thano Technologies, which focuses primarily on access control and carries international brands including Kaba, Actatek, Elka and Microelektronika. “We're handling physical access control, meaning barricades, turnstiles, so on and so forth. Almost all public transportation systems are looking for them,” said Hagus Santoso, Director of Thano.
According to him, Indonesia's security market is growing as some projects that were delayed are now back on track. “Last year because of the oil price and US dollar exchange rate, some of the projects were postponed. But now sales have become quite stable, and some projects are expected to continue this year. We see growth for this year and next two years,” he said.
Meanwhile, the 2018 Asian Games will be held in Indonesia, an event that is also expected to drive security growth. “They require a lot of security equipment for stadiums and public transportation for safety,” Santoso noted.
Despite this growth, challenges still remain, and one of the biggest challenges is intense competition in the distribution market. This not only has to do with the emergence of low-price Chinese products but also poor channel management by vendors, or principals, many of whom have more than one distributor in the country.
“In most cases, the principal doesn't really manage the distributors. In order to sustain the business, you have to have the price control, support control, and last but not least, marketing,” Santoso said. "If not properly managed, it's a price war among the distributors; in the end it will be a lost-lost situation.”
That's where Santoso decides to move to solutions to offer more value to customers. “The value is on the solution, not product,” he said. “For example, I take Kaba products, and then I combine it with other products, say video surveillance, access control or elevator control. Then I put software applications on top of the devices and sell them as a solution.”
According to him, not all distributors in Indonesia have this kind of capability. “Some distributors just want to sell the products and sell cheap, cheap, cheap with poor support to the customers. If you sell the products only without adding values, then at the end it's only comparing the price,” Santoso said. “We have to add values, not just sell the box.”