Oh No! Overstock and Economic Slowdown
In a recent article[i] in Modern Distribution Management, this headline caught my eye, “Distributors Working Though Overstock Amid Slowdown”.
The author was expressing the viewpoint that increasingly distributors were looking at the amount of inventory that they were carrying amidst a potential economic slowdown that may extend into 2024.
This point of view was validated by the Q3 Baird-MDM Industrial Distribution Survey, in that reducing inventory levels will be a priority for distribution throughout 2024 with many distributors looking at having to sell off excess inventory.
When I pause and consider MarketsConnection, I have to say, “we have a solution for that!”
As we continue to talk to distributors around becoming vendors on our marketplace, here are some of the opportunities that distributors are anticipating:
- An opportunity to move more volume in strategic categories.
- An opportunity to sell off overstock.
- An opportunity to increase the order frequency on a key product line helping with its turns.
- An opportunity to broaden distribution in new geographies and channels.
- An opportunity to recover cash from inventory that might have to be written off
What are your needs?
How can we help? Set up a meeting to discuss with us!
https://marketsconnection.com/
[i] October 24, 2023
Tom, I read that article and I found it interesting that the estimates were that 41% of distributors were holding too much inventory and that it was estimated the situation would not be “right-sized” until the end of 2024.
There was mention of 3M stating “Industrial end-market demand mixed; distributors right-sizing inventory levels”, so it’s obviously impacting their sales and profits now and likely they are likely forecasting the same in 2024. My guess is other vendors are feeling the same. It sounds like vendor inventories could back up a bit over the next 12-24 months also.
This is an excellent time for distributors to look at MarketsConnection.com for great deals on products. They can buy products that may be discontinued but they have customers still purchasing those items, buy products that may not have great availability in their area but an overabundance elsewhere or just get great deals on items they can sell and extend margins and profits.
On the sell side it’s a good time to begin writing down items that distributors are having difficulty selling. Get them listed in front of distributors. These are people that that know what you are selling, can move volume and will buy as long as they have customers for the product.
Don’t delay, get the product on the site and don’t be shy about discounting it. Distributors know the COST of the items already, as the seller you are writing it down anyway, get what you can, while can or you’ll end up getting $0 and paying for a garbage haul-away in the end.
Keep up the great work Tom!