Commentary: Think Globally, Service Locally

An old slogan is a universal truth for wholesale distribution.

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I just finished a stretch of travel sharing our research on distribution industry trends to groups from California to Germany. My far-flung conversations triggered many thoughts and a few recurring themes. One such thought is that the old slogan – think globally, act locally – is a universal truth for distribution.

This industry is in a unique transition stage with high levels of disruption and opportunity at the same time. While disruption will continue, the opportunity phase is really kicking in this year.

We have been through disruptive business cycles and technology shifts before (those heady dot-com days). But the global scale of pricing transparency and online sourcing exploding across B2B and B2C is the big differentiator today. It is why AmazonSupply is getting far more attention than it deserves based on its actual B2B market success to date.

Amazon’s digital power should strike fear into any product seller that doesn’t adapt the business model to changing buyer behavior. But you can say the same about any technological shift we have experienced – steam engine, automobile or personal computer, just to name a few.

The key competitive edge is that it is easier for a distributor to build more customer-friendly online service tools than for digital sellers (Amazon) to build local, customized relationships and services. Industrial product markets are extremely difficult environments in which to apply cookie-cutter solutions that may work in other markets and expect similar results.

My recent conversations in Europe reinforced the power of thinking big but delivering highly localized service and value offerings. North American industrial product markets are highly fragmented; European markets are even more so. As reported by MDM this week, the IPH Group, a France-based industrial distributor, made its latest acquisition of an Italian company, bringing its total annual revenue to more than $1 billion across six European markets. Also this week, Affiliated Distributors closed the launch cycle of its new power transmission division with 27 charter members.

The most powerful value propositions historically bring the scale of a larger organization to a customized local offering, whether it is through a national company with a local-market focus or some coalition of smaller distributors.

Relationships are key and hard to displace. Some things can be digitized, others can’t.

Filed In: Strategy, Management

Tom Gale

Tom Gale has been MDM’s lead researcher and industry analyst for more than 25 years on independent distribution channel trends, consolidation, technology and competitive landscape. He is a frequent speaker and moderator on these topics at company, marketing group and association meetings in North America and Europe.