Did they abandon marketing, or did marketers abandon them?
hundreds of visits I still never tire of touring supply houses. Their offices,
warehouses and counters seldom contain any surprises anymore, but I always get
a kick out of observing the logistical ballet that brings our industry’s
products to market throughout the country. Few outsiders appreciate the
complexity of distribution, especially the fact that its large capital and
delivery expenses get supported by razor thin profit margins. It’s why everyone
in the business seems obsessed with squeezing a few paltry percentage points
more out of their suppliers. Multiplied by thousands of skus, even an extra
fraction of a percent of gross margin can make a big difference in business fortunes.
It takes rare talent to succeed in such a business.
Every distributor that has survived the economic
maelstrom of recent years has trimmed expenses closer to the bone than ever
before, excepting the start-up era when a lot of founders worked out of car
trunks and the like. Three years ago nobody in this industry could’ve imagined
the things - and people - they could do without, even as they hated to do
without. Quite a bit of muscle got nicked along with fat, although somehow
product is still flowing where it needs to be for the most
Several years ago while on a train trip to Montana I marveled at all the pipe
yards we clickety-clacked by along the way. They signaled small town
plumbing/PVF supply houses that always sprung up around railroad tracks in our
sparsely populated western states. People who live in our country’s
out-of-the-way places may lack some amenities, but no longer are they denied
the essential creature comforts that define modern civilization. Virtually all
of them have running water, indoor plumbing and central heating to combat some
of the coldest temperatures in the lower 48. When you see how far toilets and
boilers have to travel to reach the nooks and crannies of the population,
appreciation grows for the people who make it happen.
Nonetheless, distributors have always been looked at through jaundiced eyes by
business interests desiring to cut out the middleman. Over the years, various
manufacturers, retailers and end users have experimented with handling
distribution functions themselves. Almost all have found out the hard way that
the 25% or so cut of the selling price taken by wholesaler-distributors turns
out to be a bargain. Middlemen always seem disposable until they get disposed
of. Then people with products to sell find themselves in a pickle trying to
distribute them to all the isolated locations where they are in
PHCP distributors nowadays suffer slings and arrows of a different sort. Hardly
anyone denies their capability as logistics providers, but a lot of
manufacturers and their reps complain that distributors have forsaken the
marketing function. They are good only for pull-through sales, goes the
refrain. They don’t push or pioneer lines. Outside salespeople are an
endangered species with most distributors, and reps everywhere gripe about the
added burden of calling on secondary market players.
All of this contains at least a kernel of truth, although it raises a chicken
vs. egg question. Did distributors abandon the marketing function, or was it
snatched from their grasp by a host of entities better positioned to take
charge? Did distributors have any say when manufacturers started cutting deals
with the big boxes and tossing megabucks at consumer advertising? Did
independent reps start building distributor-size warehouses because
distributors quit marketing, or because the rep role naturally evolved in that
direction? Cause and effect are not very clear-cut upon close examination.
The “distributors aren’t marketers” mantra falls apart when it comes to
showroom merchandising. Plumbing distributors are still very much in that
marketing game, and it happened largely over the span of the last generation.
Plumbing distributors operate some of the nation’s top bath and kitchen
showroom facilities, and nowadays distributor-operated heating and alternative
energy showrooms also are popping up with regularity. Anyone who disses our
industry’s distributors as marketing has-beens has some explaining to do about
Yet the fact remains that a free economy is relentless in pursuit of
efficiency. Over time supply chain functions will gravitate toward those who
can deliver goods to the market at least cost. Distributors are unchallenged in
their ability to make sure goods arrive where and when they are needed. If
others are better at creating those needs, have at it. But show some respect
for your irreplaceable business partners.
Distributors Get Dissed Unfairly
June 17, 2011