Small distributors can survive
There's an alternative to selling out to the national chains
By Mark Kahn -- Industrial Distribution, 8/1/1998
If you believe all the industry articles printed over the last few years, you're probably convinced that small- and medium-sized distributors are dinosaurs waiting for extinction. After all, with all the interest in integrated supply, marketing alliances and consolidation, how can a regional distributor with limited resources hold on to their customers and grow their business? And, how can they compete against the well-financed organizations that are spending millions on advertising and well-stocked warehouses? The answer is simple: VERY WELL! The key is finding a strong partner who will support the relationships the distributor has spent years developing with their local customers.It has always been our belief that the small- and medium-sized distributor is in a much better position to service the needs of their regional customers. Smaller distributors have the ability to work more closely with buyers, engineers and machine operators -- and to respond more efficiently to their application and delivery requirements. But in today's competitive environment, it has become increasingly difficult for distributors to keep up with their customers' demands for more product selection, one- to two-day delivery and aggressive pricing.
To address these needs, we created our Distributor Support Program more than 20 years ago, which combines the strength of our marketing services and inventories with the benefits that only a local distributor can offer its customers. The result has been a powerful alliance with other distributors throughout North America, taking advantage of key programs that we, as a larger company, can provide. Some of those include:
* Catalog imprint programs, in which the larger company produces customized catalogs for the smaller distributor. This gives the local distributor access to a wide variety of in-stock items.
* Customized flyers. Providing customized flyers for small distributors to mail or hand out in their local markets is also a benefit. The impact on their business is overwhelming as they increase sales from existing accounts and develop new customers.
* Mail list services. Managing a comprehensive database to develop targeted mailing lists can help increase the effectiveness of the distributor catalogs and flyers.
* Customized drop shipments. To reduce delivery time and cost, it's helpful to drop-ship orders to distributor partners using customized packing slips and labels -- with no reference to the larger company.
* Special freight programs. Recognizing the need for quick delivery at good prices, the larger company can provide special freight programs that guarantee next day, second day and LTL deliveries at reduced rates.
We have used all of these strategies in our national distributor network. In the near future, we will be introducing a new Internet service that will give our partners the ability to check our stock and pricing, as well as place an order -- in real time. It will also suggest product substitutes and related items. In addition, this online service will track distributor shipments with any of the major carriers. Future plans include offering the Internet program in a customized version with the distributor's name on it so they can market these services directly to their customers.
The bottom line for the small distributor is that they can survive and succeed in their local markets by putting their resources into sales and technical services and letting a larger distributor supply the products and marketing support. This is a win-win relationship, with the local end user benefiting from the continued contact with a local distributor who is familiar with their business.
An important element of the Distributor Support Program is trust. To maintain the loyalty of our distributor partners, we do not compete against them outside of our regional markets in Michigan and Ohio. In a real sense, the small- and medium-sized distributors are our Partners for Success. Forming a national network of distributor partners is just another way of competing in the changing channel to ensure the best possible service for the local end user.
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