Small firms meet challenges head on
By John J Keough -- Industrial Distribution, 7/1/1998
Last year was another good one for industrial distributors, regardless of their size. Sales increased an average of eight percent and the outlook for the remainder of this year and 1999 looks equally promising, according to our 52nd Annual Survey of Distributor Operations.The survey of more than 460 owners and executives of industrial distributorships shows that merger activity is moving at a rapid pace, even more than some people had expected.
Nearly 32 percent of the respondents said they had been approached with an acquisition offer in the past two years. The merger activity has spread to distributors in the $10 million to $20 million range with 47 percent of those distributors reporting that they had been contacted by prospective buyers.
Almost 18 percent of the respondents said they had either been acquired or merged with another company in the past six months. One third of the distributors said that merger activity had affected their business operations, forcing them to offer more services, lower their margins and hire more employees in order to successfully compete.
Does this mean all gloom and doom for distributors who choose to remain independent? Not at all. In this issue, for example, we profile 50 outstanding smaller distributors with sales of less than $15 million.
These distributors are flexible, strong and profitable and have a loyal customer following. Many have carved out their own niches to serve specific markets. And they're using new technologies in order to increase productivity and profits and compete against their larger counterparts.
One distributor with some $7 million in sales has a paperless system in his company in which all quotations are done online and orders are entered and filled via the internal computer network. Other distributors profiled have Web sites, allowing them to do business with customers across the country, as well as overseas. An Internet presence for a smaller distributor allows him to attract potential customers in his geographical area and beyond.
Our research also shows that nearly 83 percent of the smaller distributors said they provide just-in-time delivery, while 72 percent offer 24-hour emergency service and 44 percent get feedback from formal customer satisfaction surveys.
Being small doesn't equate to smaller profits. Sales per employee in these firms are often higher than in some of the bigger organizations. But if smaller distributors plan on surviving in the years ahead, they must be able to provide more services, streamline their operations, find new markets and be even closer to their customers. That's a tall order but these distributors are up to the task.
Talkback
Related Content
Related Content
Sponsored Links
View All Blogs
