Changing channel relationships

By John J. Keough, EDITOR/ASSOCIATE PUBLISHER -- Industrial Distribution, 11/2/2000

Changing market conditions and a more demanding customer base are continuing to change the manufacturer-distributor relationship. The question now to be answered is: How will this impactselling in the future?

Years ago the relationship between manufacturers and distributors was defined by the word trust. In most cases, manufacturers had authorized distributors who rarely carried competitive brands.

Much of that has changed. As customers reduced their distributor base, they wanted the remaining distributors to carry specific brands and products to meet their needs. They didn't care where the product came from; all they cared about (and still do) was that the product was delivered on time at a competitive price.

All this, of course, had an effect on the manufacturer-distributor relationship. Clearly, the customer emerged as the channel partner who was actually calling the shots. Take the case of an integrated supplier. A customer told the integrator what products and brands he wanted, even if that distributor did not actually represent the manufacturer.

Manufacturers, in many cases, responded by authorizing the distributor to sell the product to that customer only. In some cases, this alienated the distributor who represented the manufacturer in the territory.

In our 54th Annual Survey of Distributor Operations, we asked distributors their main concerns. Manufacturers selling to non-authorized distributors for integrated supply arrangements was a top concern, as was the threat of manufacturers selling direct.

Today, distributors say they are worried that the Internet will allow manufacturers more of an opportunity to sell direct to the customer. The reality is that such a threat has always been there, long before the Internet came onto the scene.

It is up to a distributor to prove to his customer that he not only provides a product, but also provides service that can't be matched. Distributors, in fact, have moved from being product providers to service providers. And that's something that's going to continue in the future.