QuickTake: Report Card on Distribution Business Models - Modern Distribution Management

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QuickTake: Report Card on Distribution Business Models

Time for a check-up on the state of the industry as 2023 ends. Mike Marks and Tom Gale review the shifts – seismic and otherwise – that have shaped the competitive landscape across the dimensions of sales channels, digital, data analytics and culture.
MDM QuickTake (Credit Panuwat Dangsungnoen from Getty Images via Canva)

As 2023 comes to a close, Mike Marks of Indian River Consulting Group joins Tom Gale on this week’s MDM QuickTake podcast episode to check-up on the state of the distribution industry.

The pair review the shifts that have shaped the competitive landscape across the dimensions of sales channels, digital, data analytics and culture. With 2024 largely being characterized as a low-growth year, what business models will come out on top? Marks and Gale think back through the year and speculate what might be key differentiators for wholesale distribution businesses in the new year.

Below are three predictions for 2024 from the conversation, which you can listen to full in the audio player above.

1. Data Analytics Integrate Deeper into Business Strategy

MDM CEO Tom Gale described 2023 as a year of traction on not only the technology front, but in innovative business strategies and AI pilots. Just as digital transformation and omnichannel sales were once core competitive differentiators, Gale sees data analytics as the next wave in 2024.

“I’ve been saying this for five years, in a lot of ways, but I do believe that this past year has seen a lot more momentum,” Gale said.

As distributors look to 2024, many are developing a more cohesive strategy that is beginning to include a data strategy component.

“I think a more integrated business strategy is starting to emerge and differentiate people from those who are just trying to sell as much stuff as possible,” he said.

2. Culture Shifts Play Larger Role in Strategy Execution 

As data analytics and other transformative business models become more mainstream in the new year, distributors will notice changing behavior, Marks said.

Gone are the days of data-free discussions. It’s not just the technology and executive leadership any more, Marks said. “People are changing.”

“2024 is going to be a year of culture transformation for many companies,” Gale said, “because it takes some work, but it also takes some time, for this to really get some traction. I think where we haven’t seen that in the last few years, it definitely is going to be much more mainstream and accelerating here over the next couple of years and be a key differentiator going forward.”

The distribution companies investing on both the data and people fronts will have the most success executing strategy in 2024, Gale said.

3. Strategy-Driven Business Models Thrive

Despite the soft year, Marks says it’s not the time to “hunker down and be a turtle,” but rather make investments to gear up for a higher growth 2025.

Marks said strategy-driven companies may come out on top.

“If you think about Global Industrial and Motion … and especially Fastenal (companies MDM has profiled case studies for at its events in 2023), what you’re seeing is companies that are driven by strategy,” Marks said. “They’re analytically led and strategically driven, and that’s a very precise use of the terms. Fundamentally, you can change the executives in these companies, and the strategy stays the same,” he said, making the point that many companies are more driven by the personalities of top leaders than strategic discipline.

 Bookmark the podcast webpage to find this episode, and all future episodes, of the MDM Podcast in one place.


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