Wholesalers Can Solve Distributors’ Challenges

Q. What is the biggest threat facing distributors today and how do wholesalers help address this challenge?

Lancaster: One of the biggest challenges distributors face today is eroding margins, due to the fact that other vertical markets like office products want a piece of the jan/san pie. In addition, consolidation of smaller distributors and the entry of consumer marketplaces into the space means companies that have not traditionally offered jan/san products can do so. As a result, a jan/san distributor’s operation is more expensive than it was 10 years ago, and decision makers must stretch limited resources to match the Amazon distribution and delivery standard.

Wholesalers address this challenge by allowing distributors to improve inventory turns and boost margins (ultimately improving GMROI). Over time, the supply chain efficiencies of wholesale help jan/san distributors free up cash, space and energy in other areas of their operation. In fact, wholesalers can help distributors reduce their inventory investments by as much as 60 percent, while also doubling inventory turns (if not even greater increases). Sophisticated wholesalers also have technologies in place to add intelligence throughout the entire supply chain and use forecasting to inspire higher fill rates.

Schinner and Turner: There have been dramatic changes taking place in our industry. Technology for instance, has advanced many of the aspects of our business, but can also pose a threat to distributors. The advancement of new technology has changed buying habits down to the end user and exposed pricing much more, compressing margins.

Wholesalers can help distributors stay on top of these changes by helping them maintain the flexibility needed to be responsive to the changing needs of their customers. Wholesalers will be able to offset these pricing challenges by increasing their value-added services to their customers. With this partnership, distributors can create a greater return on their investment by reducing excess inventory, increasing product availability and expanding their product offering.

Hilbert: The changing buying habits of the consumer trending to online internet purchases whereby the buyer lacks product knowledge, competitive pricing and support a distributor can offer. A wholesaler who invests in their inventory levels, maintain high quality sales support and customer service offer an excellent resource for distribution. Again, a pure redistributor is a distributors supplier partner, not a competitor. In addition, availability of certain product lines is becoming limited to some distributors because many manufacturers are being selective in who they sell directly in certain markets. The wholesaler’s breadth of lines can assist in such circumstances providing the desired line of products or a comparable line.

Moon: Everyone complains about Amazon and big box stores like Home Depot or Staples, but frankly, the biggest threat to distributors is losing sight of their primary business goals. If a distributor tries to compete with huge organizations that are only nibbling away at ancillary sales, they’ll waste too much effort for diminishing returns.

Q. What are the advantages to working with a national wholesaler vs. a local one? Or vice versa?

Hilbert: RDA Advantage is the largest group of independently owned redistributors (wholesales) in the United States. This allows the RDA membership to both present as a national wholesaler and a local wholesaler.
One of the advantages of a local independent wholesaler is they know the market, have strong relationships with their distributor customers and can assist the distributor in growing their business and enhance margin return. Because of the close personal relationship RDA Advantage members have with their customers they are more in tune with customer needs and can respond quickly and efficiently to those needs.

On the national level as a group RDA Advantage has access to numerous national programs and buying groups throughout the United States.

Schinner and Turner: National wholesalers have more leverage within the industry to create more aggressive programs overall. Some advantages can include a larger mix of products, the ability to globally source, better price points, and the ability to accommodate requests of distributors easily.

A national wholesaler also has the added insight of seeing what is working in different parts of the country. This allows the wholesaler to adopt and apply these ideas and techniques to many other areas.

Lancaster: When working with a national wholesaler, you have the ability to service a larger customer base and support the distributor’s strategy in growing business regionally and nationally. Having a national platform is attractive to suppliers who utilize wholesalers to reach more customers in the marketplace. Additionally, when suppliers can leverage a national position, they are willing to invest more significantly in programs that allow the independents to grow.

And finally, there’s technology. Technology is critical to growth and national wholesalers have more advanced technology than local wholesalers. While this varies by company, this should also be considered when evaluating the choice of a national wholesaler.

Moon: While a national wholesaler might have access to more products, especially if the distributor needs something specific or unique, they tend to be less flexible and accommodating that a local or regional wholesaler. Local companies generally have a better handle on the specific market and are more willing to provide a distributor with customized programs or marketing support.