Our salespeople shifted from relationship holders to dispensers of customer-focused services. Instead of migrating to a world of massive Internet-driven distributors providing brown boxes over the web, existing distributors molded their business to fit the new environment.ĭistributors shifted their value statement from local inventory providers to customer problem-solver and furthered their value to suppliers as advanced market builders. Online order entry, rapid communications with supply partners and a whole new round of communications tools put the distributor front and center in a new wave of business trends. I am happy to report that distributors didn’t go away. And consultants earned zillions with horror stories of “disintermediation.” Many touted the Internet as the boogey man destined to eat distribution. Computer systems exploded in capacity and complexity. The next big change happened roughly two decades later. Because customers expected more, and these folks were able to deliver, distributors launched into the first phase of the value-added revolution. Many leaders of today experienced rapid growth during this period. The wave of consolidations resulted as the very small operations struggled to keep up with the competitive pressures from other distributors, who reacted more solidly to shifts in the environment. Small standalone locations became branches of larger stores, maintaining inventory to cover emergency or service-truck situations. The results for industrial distributors were the same: closures/mergers and acquisitions.ĭuring the years that followed, distributors rethought their operations. The small-town distributors had to slowly adjust their value proposition as the perceived value of their stock just down the street was diminished. This created new competition, where alternative distributors and other suppliers expanded to cover larger geographical areas. Distributors can now send shipments that once took days or even weeks to arrive. UPS, FedEx and others have changed the value of local inventory, or at least local inventory as we thought of it back in 1978. The first game changer came in the form of logistics companies. Let’s explore a couple of examples which come separated by 20 years and a couple of recessions. I believe we, as an industry, deserve high marks for our demonstrated ability to adapt. The longest-lasting business models not only provide worth, but have also changed to match the current situation. Meaning, this business model exists only as long as it provides value in the current economic environment. For that matter, it’s no different from tinkerer or buggy whip manufacturer. In my mind, it’s no different from banking, insurance or any other business. Now, before you start gathering your favorite lynch mob and heading out to find me, give me just four minutes to explain what I mean and why it’s important to your world.ĭistribution is a business model – albeit a time-honored one – but a business model nonetheless. Then I realized that distributors are the middleman they were talking about.ĭespite our visions of mom’s apple pie, the fair-haired girl next door and all that is good and pure, distribution is not a way of life. highway, I crested a small hill and there in all its 1960s grandeur stands an old time billboard: “Cut out the middleman and save.” The message was simple skipping a portion of the supply chain could save you hard-earned cash. With the steering wheel in my hands and the abundant beauty of America’s rural heartland flying by on both sides of a two-lane U.S. Sunshine, perfect temperatures, nothing pressing it was a fabulous day for one of those old-fashioned Sunday drives. He holds a Master of Business Administration from Iowa State University.Distributors must continually demonstrate their value Kokemuller has additional professional experience in marketing, retail and small business. He has been a college marketing professor since 2004. Neil Kokemuller has been an active business, finance and education writer and content media website developer since 2007.
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