Are Distributors ‘Addicted to Rebates’?

A transition to a less volume-based rebate structure may be painful for some.

In the recent MDM Executive Briefing webcast, New Rules for Rebates, long-time industry expert Mike Workman says that many distributors have "bought their bottom lines" for decades, and that a transition to a less volume-based rebate system may be painful for some.

While there is more risk involved with this approach for distributors, distributors may find they can actually make more money by performing these functions rather than by reacting by working to increase volume alone, he said.

"We as an industry have bought our bottom line for decades. We make our money when we buy not when we sell," he said. "The change in alignment will be easier for some to do than for others."

As Workman outlined in the premium article, Managing the Risk of Rebates, in some industries, rebates based on quantity purchases alone have been removed from the table altogether. Pricing at the time of purchase, and special rebates or pre-bates to grow specific markets, are emerging trends. This type of shift would force many distributors to rethink their purchasing strategy, supplier relationships and their growth plans.

Hear more about what Workman has to say on New Rules for Rebates in the latest free Executive Briefing webcast. Watch the following video to learn more about what Workman discusses in this program: