A More Practical Approach to Product Expansion - Modern Distribution Management

A More Practical Approach to Product Expansion

This article is a part of MDM's 2014 Distribution Trends Report. The article analyzes how distributors are approaching their product mix, including more strategic analysis of how well a potential product would fit within the company's strategy.

The annual report was researched and written by MDM editors based on interviews with dozens of wholesaler-distributors, as well as industry experts and manufacturers. MDM also conducted a survey of its readers to uncover the trends outlined in this report.

The full report is available to download in PDF format to MDM Premium subscribers. Subscribe below for full access. Or log-in if you are already a subscriber.

Trends outlined in the 2014 report include:

  • Leaving Economic Uncertainty Behind
  • Connecting the Dots Online and Offline
  • Need for Access Whenever, Wherever, However Drives Mobile Adoption
  • Avoiding Information Overload Essential with Analytics
  • Making the Case for Millennials in Distribution
  • Training, Technology Take Front Seat in Employee Retention Strategies
  • Better Inventory Management Through Data, Collaboration
  • Distributors Seek More Complete Strategy for Vending
  • Private Equity Consolidating Markets
  • A More Practical Approach to Product Expansion
  • Trend Snapshots for 13 Sectors

The report also includes the following case studies and interviews:

  • 2014 MDM Market Movers
    • Engman-Taylors Cost-Saving Teams
    • Capitol Coffees Proactive Problem-Solving
    • Redwood Plastics Online Success Story
  • MDM Market Leader Profiles
    • DGI Supply: Building on the Core
    • F.W. Webb Takes Diverse View of Market

This is a part of the 2014 Distribution Trends Report. The annual report was researched and written by MDM editors based on interviews with dozens of wholesaler-distributors, as well as industry experts and manufacturers. MDM also conducted a survey of its readers to uncover the trends outlined in this report.


2014 Distribution Trends Report


This article is a part of MDM’s 2014 Distribution Trends Report. The article analyzes how distributors are approaching their product mix, including more strategic analysis of how well a potential product would fit within the company’s strategy.

As customers look to get more products from fewer distributors, the challenge of finding the perfect balance between product and inventory is becoming more challenging. “It’s a chicken or the egg thing. They need to expand the products they offer, but they also need to be leaner on the inventory side,” says Roger Woodward, president of Alliance Distribution Partners LLC, a master distributor in Gallatin, TN.

The result is that many distributors are taking a more strategic and balanced approach to making sure that where they expand makes sense for their companies.

“I’ve never found it productive to just jump into something new because it’s something new, that’s unrelated to what we already do. I think that diminishes the impact of our efforts, I think it distracts people from what they are good at,” says Phil Derrow, president and CEO of Ohio Transmission Corp., Columbus, OH. “While we are always looking to expand our reach with customers and add value to them in different ways, if we were selling soap, we wouldn’t be likely to suddenly start selling bearings. And vice versa. They’re not related.”

The perception that expanding a line card to include jan-san or safety products is easy often comes from focusing only on commoditized items, such as toilet paper or office products. While those may make sense for any distributor to include – “They have to buy their office products somewhere and they might as well put it on the same PO as their hammer and their respirator,” says Jessica Yurgaitis, vice president of sales and marketing for Industrial Supply Company, Salt Lake City, UT. Many of the higher-end products aren’t a fit for that type of commoditization, says David Gordon of Channel Marketing Group.

Some items require specialized knowledge or training, he says. For safety items, it’s not just about a product; people’s lives could be on the line.

And just because a distributor can carry something doesn’t mean they should, says Steve Deist of Indian River Consulting Group. If companies approach product expansion from a “Hey, let’s find more stuff to sell” approach, “you’re typically not going to be very successful,” he says. “If you approach from the customer angle and say, ‘What are some things that the customer would love us to be able to offer, one stop shopping or all-in-one package or all together?’” That’s where companies can succeed.

For one, commoditized products are often more susceptible to price wars, says Ted Stark, president of Dalco Enterprises, a distributor of facilities maintenance solutions based in New Brighton, MN. If everybody has the exact same thing, customers are logically going to go where they can get the best price, he says.

Secondly, because many of the other products, such as safety gear or automation products, require specialized knowledge, distributors have to recognize that they will have to invest in training to be truly effective in those markets. It’s not just about providing the product.

“Safety’s now about 30 percent of our overall business and growing," Yurgaitis says. “It’s a place where we can be a real value to our customers and help them with OSHA requirements standards, so there’s a human element in why safety is growing for us.”

Product line expansion will continue as more distributors keep looking for ways to get more of the customer’s spend, but taking the time to really evaluate how the expansion will proceed will be the key to success, Deist says.

Share this article

About the Author
Recommended Reading
Leave a Reply

Leave a Comment

Sign Up for the MDM Update Newsletter

The MDM update newsletter is your best source for news and trends in the wholesale distribution industry.

Get the MDM Update Newsletter

Wholesale distribution news and trends delivered right to your inbox.

Sign-up for our free newsletter and get:

  • Up-to-date news in a quick-to-read format
  • Free access to webcasts, podcasts and live events
  • Exclusive whitepapers, research and reports
  • And more!

2

articles left

Want more Premium content from MDM?

Subscribe today and get:

  • New issues twice each month
  • Unlimited access to mdm.com, including 10+ years of archived data
  • Current trends analysis, market data and economic updates
  • Discounts on select store products and events

Subscribe to continue reading

MDM Premium Subscribers get:

  • Unlimited access to MDM.com
  • 1 year digital subscription, with new issues twice a month
  • Trends analysis, market data and quarterly economic updates
  • Deals on select store products and events

1

article
left

You have one free article remaining

Subscribe to MDM Premium to get unlimited access. Your subscription includes:

  • Two new issues a month
  • Access to 10+ years of archived data on mdm.com
  • Quarterly economic updates, trends analysis and market data
  • Store and event discounts

To continue reading, you must be an MDM Premium subscriber.

Join other distribution executives who use MDM Premium to optimize their business. Our insights and analysis help you enter the right new markets, turbocharge your sales and marketing efforts, identify business partners that help you scale, and stay ahead of your competitors.

Register for full access

By providing your email, you agree to receive announcements from us and our partners for our newsletter, events, surveys, and partner resources per MDM Terms & Conditions. You can withdraw consent at any time.

Learn More about Custom Reports

Request a Market Prospector Demo

  • This field is for validation purposes and should be left unchanged.