Notes Around Top Performing Distributors
I recently sat in on a webinar hosted by an industry business strategy giant. They were talking about top performing/outperforming distribution and sharing some insights around their study of them.
I had my pen out and jotted some notes and will share them here as rough as they may be.
They see manufacturers continuing to build digital capabilities which gives them a greater share of direct to customer sales, bypassing channel partners. The vast majority have made recent investments to ecommerce, and many cite the ability to reach customers directly and creating an improved customer experience as the main drivers.
They revisited rankings created from customer interviews to review and rank customer expectations from distributors. Some insights are as follows:
• Product availability and customer service remain top criteria for customers.
• There was a significant increase in the importance of value-added services.
• An extensive range of products while still important had fallen a number of spots.
• The ability to transact online had risen significantly displacing the importance of a sales rep relationship.
• Technical knowledge, same day delivery, payment terms and real time tracking are all on the lower end of the spectrum.
In general, digital players (i.e., Amazon Business) and big box retailers (Costco, Home Depot) continue to step up their activity in the B2B space.
Key learnings from outperforming distribution:
• Size is important. The right scale gives leverage that can boost performance.
• Growth is extremely important.
• Growth cannot come at the expense of profit. Margins must improve.
• Customers are at the centre of everything they do. Whether winning or keeping customers, there is a recognition that customers have more options than ever. Distributors must go beyond products and offer value added services and have a demonstrable corporate focus on all aspects of sustainability.
• Digital is not optional. Customers want an omni-channel experience – the ability to buy in whatever fashion they want.
Perhaps this might all seem intuitive and logical, but the execution of these themes is anything but simple.
Business plans and strategies for 2023 should be in the act of finalization right now, which of these concepts are going to be incorporated in your plans?
Interesting comments Tom. Challenges are even greater than ever for small to medium size distributors. Looking forward to developing programing and strategies for supply chain members of ISSA in Canada.
Thanks Mike. It certainly is a challenging environment for distributors these days.
Absolute facts exposing the challenges of distribution today and tomorrow. This provides any organization a roadmap to follow.
We all face increased pressure for revenue retention and growth. Remember the old saying, “if you continue to do the same things day after day, how do you or should you expect different results”
Change and adaptation is in the air!
Thanks Jim! How true
All true, we see it and feel it daily and weekly. Big business can easily afford to throw the cash resources behind it, small companies have a harder time. However, us small companies have no choice but to follow suit.
I went down the path trying to get funding for our digital platform from the Canadian government. After sever hours spent giving them information it turns out our B2B platform wasn’t qualified to receive any funding to upgrade. Only B2C platforms were eligible. I suppose our government only sees e-commerce as B2C and doesn’t recognize the fact that it’s a massive opportunity for all segments!
We will show them!