Delivering for Best-in-Class Wholesaler-Distributors
December 5, 2019  |  ByJ. Michael Marks, NAW Institute for Distribution Excellence Fellow

It’s 2019 and more than 197 million people visit Amazon each month to browse more than 12 million products, according to BigCommerce. The numbers go up every day. But distributors don’t need to be afraid of Amazon. They need to innovate and sell to customers the way today’s customers want to buy. It’s that simple.

Complacency in the current market will lead you nowhere. As Thomas Edison wrote:

“We shall have no better conditions in the future if we are satisfied with all those which we have at present.”

Rather than be reactive to the threat of Amazon, distributors need to be proactive. Too many distributors get caught in an echo chamber that only serves to promote their beliefs about the market. The good news is that distributors already understand the value of real human interaction. They need to listen to customers and adapt; and they must use real data to gain insight into how and why customers want to do business with them.

In other words, it’s not just about the sales team. It’s about delivering real value to customers through value-added services such as consignment, vendor-managed inventory, storeroom management, diagnostics and staging, to name a few.

If we could ask the founders of long-standing distribution companies formed back in the 1970s how they would compete today, they would likely say that they would ask the hard questions and change what wasn’t working rather than doing the same thing over and over. The old model for growth was adding new product lines and geographical expansion of branches. These tactics are well past their “best by” dates. Without innovation to evolve these same old-school strategies, growth will always revert to the market mean.

The latest innovations center around digital tools and talent management. All require a serious look at your business and front-end investments, and likely adapting your value proposition. Sure, it’s risky. Distributors are definitely operating in a “fog of war” when making commitments amid market uncertainty.

Still, rather than overlaying good ideas or initiatives on top of existing organizational structures — which is what most distributors are doing — forward-looking distributors need to create a real strategy … a strategy based on customers’ buying habits today. And then restructure their organizations to execute on that. The gains will be great: fewer sales and profit declines in recessions, capturing share when the economy recovers and higher growth when the market is doing well.

Pave your own path. Be proactive, be customer-focused, and make it blindingly easy for the customer to choose you over anyone else — even Amazon.  If you are looking for a place to start, order NAW’s just-released Innovate to Dominate: The 12th Edition in the Facing the Forces of Change® Series by NAW Institute for Distribution Excellence Fellow Mark Dancer. It provides a roadmap for the kind of innovation that winners will need.

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J. Michael Marks, NAW Institute for Distribution Excellence Fellow
J. Michael Marks, NAW Institute for Distribution Excellence Fellow J. Michael Marks is Managing Partner of Indian River Consulting Group (IRCG). He became a NAW Institute for Distribution Excellence Fellow in 2002. IRCG is an experience-driven firm that continues to focus on the wholesale distribution channel. Prior to forming IRCG, Mike held the position of Executive Vice President at Lex Electronics, a vertically integrated electronics distributor. Prior to that, he was Director of Corporate Training and Development at Ducommon Inc., an industrial distribution company.

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