A B2B distributor’s main job was simply to maintain local stock for branded products not too long ago. The suppliers created demand with advertising and a small sales force who promoted the products. Resellers, dealers and larger customers went to a limited number of distributors to buy. Distributors concentrated on building warehouses closest to their customers. The distributor made a reasonable margin for having the right products where they needed them, and everyone was happy.
But the world has changed. Global suppliers have disrupted local markets eroding margins and creating an explosion of products to fill tiny niches. Sophisticated logistics systems mean shorter delivery times. And suppliers have expanded distribution channels to try to get closer to customers.
Distributors Under Pressure
So, it’s easy for a distributor to feel stuck in the middle. If you’re a distributor, you’re always pushed and pulled by your suppliers and customers to stock more, provide greater value and sacrifice margin in the name of volume. The Internet has brought more and more competitors who didn’t even exist only a few years ago. Consolidation and mergers have created large regional and national competitors who can invest more into creating a huge brand name for themselves.
With pressure coming from all sides, it may seem natural to hunker down and work harder and harder to defend what you’ve got. That tactic seemed like a good idea to feudal lords in the Middle Ages who dug moats and erected castle walls to defend against invaders. But even the best defenses can’t stand up to new technologies for long. Soon, new siege machines like battering rams, catapults and cannons made walled fortresses obsolete.
Today, technology moves at lightning speed. So, if you’re hunkering down and defending a wall, your days are already numbered.
So, what can a distributor do to take control and optimize their distribution channel strategy? An upcoming B2B channel partner blog series from ITA Group will look at ways for you to gain the upper hand. We’ll look at ways for you, the distributor, to provide greater value, become a stronger strategic partner to your suppliers, and encourage your customers to buy more from you while starving competitors out of existing.
Check out Parts 2, 3 and 4 of the B2B Channel Partner's Journey blog series: