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
Customers are looking for more value from their distributors. In order to differentiate themselves from the larger, national players, distributors need to be "trying to find a way to be more valuable in any way you can,"says Jessica Yurgaitis, vice president of sales and marketing at Industrial Supply Company, Salt Lake City, UT. "If that’s with technology, if that’s with documented cost savings, if that’s with your people, you got to be valuable or you’re going to get replaced pretty quickly."
Technology adoption is important, but human-provided services remain critical. "I think [customers] need the expertise, they need the technical side of what we bring as people and salespeople to the industry," Yurgaitis says. Especially with more technical problems, it's critical that distributors have an outlet for customers to get their questions answered.
Providing these services can also help distributors compete against the bigger players. "You have to have the web presence – we have to compete against Amazon and Grainger, and they’re going to take market share. But we have to kind of 'back door' in and make sure that our relationships are strong with our customers," Yurgaitis says. By doing so, distributors can build customer loyalty and differentiate themselves based on service offerings, she says.
Hiring effective candidates is a challenge for distributors. Like many sectors, hiring qualified candidates remains a challenge. "We are seeing lots of our customers having a problem finding qualified or skilled workers," says Matt Cohen, president of Replenex, Eden Prairie, MN.
Brand loyalty is eroding, driving the need for even better service and value propositions. In today's competitive marketplace, brands mean less than they used to, so it's even more important to offer value beyond your product, Cohen says. "What’s happened is that the brands have eroded, and there’s lots of good product out there," he says. "And so, because there is less brand loyalty, customers are more willing to look past the brand to 'What does the product do?'"
This isn't the case for every customer, but there is a definite shift in perspective, Cohen says. "When push comes to shove, if somebody can save a couple hundred dollars by moving from 3M to somebody else, they may decide to still stay with 3M, but the fact that they were open to the discussion to begin with based on business information is new – or newer," he says.