The 2020 Mid-Year Economic Update_long

November 12 2018

Tariffs Impact Still Mixed

Volume:

48

Issue:

21

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Features
Even with the United States 10 percent tariff on $200 billion worth of Chinese goods set to rise to 25 percent Jan. 1, 2019, industry watchers and executives have yet to see a significant impact on bottom lines for distributors. Companies are addressing the Trump administrations indefinite timetable for the levies by adjusting business practices to make up for losses using a variety of tactics many expect will allow business to remain stable through at least the first half of the new year.

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Distributors have been through cycles of challenge and response before, but change is different in the digital age. Past challenges came from industry insiders with game-changing business models built around leveraging scale and removing redundancies across the value chain. Examples include big-box retailers, high-share consolidators, integrated suppliers, disintermediators and vertical integrators. The challenge for distributors was real, but the changes were familiar. New rules of competition emerged, but the fundamental roles of manufacturers, distributors and customers remained.

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Some industry analysts feel data transparency is inevitable, and that fear of the Amazon Business Marketplace is overblown; the real focus should be on how to survive in this new environment, not how to keep it at bay. Others see a threat to traditional distribution models. Some distributors are focusing on transitioning to new services-based revenue, away from traditional core product commodities. Justin King, Mark Dancer, Alex Moazed, David Sass and Ian Heller provide their takes on where they think distributors can best focus their resources.

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Even with the United States 10 percent tariff on $200 billion worth of Chinese goods set to rise to 25 percent Jan. 1, 2019, industry watchers and executives have yet to see a significant impact on bottom lines for distributors. Companies are addressing the Trump administrations indefinite timetable for the levies by adjusting business practices to make up for losses using a variety of tactics many expect will allow business to remain stable through at least the first half of the new year.

Subscribers should log in below to read this article.

Distributors have been through cycles of challenge and response before, but change is different in the digital age. Past challenges came from industry insiders with game-changing business models built around leveraging scale and removing redundancies across the value chain. Examples include big-box retailers, high-share consolidators, integrated suppliers, disintermediators and vertical integrators. The challenge for distributors was real, but the changes were familiar. New rules of competition emerged, but the fundamental roles of manufacturers, distributors and customers remained.

Subscribers should log in below to read this article.

Some industry analysts feel data transparency is inevitable, and that fear of the Amazon Business Marketplace is overblown; the real focus should be on how to survive in this new environment, not how to keep it at bay. Others see a threat to traditional distribution models. Some distributors are focusing on transitioning to new services-based revenue, away from traditional core product commodities. Justin King, Mark Dancer, Alex Moazed, David Sass and Ian Heller provide their takes on where they think distributors can best focus their resources.

Subscribers should log in below to read this article.