In Defense Of Distributor Value

[IPVM Editor's Note: This originally was posted as a response to Manufacturers Sound Off On Distributors article but is being moved to its own discussion given its length, details and points raised.]

Truth be told - most manufacturers depend on distributors to get and keep their products in front of installers and integrators, and in addition put a tremendous amount of volume and stocking commitments, etc. for distributors to be able to make any margin whatsoever. Many love end of month deals to unload inventory and then in most cases, disappear until the end of the next month or quarter. Is this a case of corporate strategy or a lazy salespeson? The answer is somewhere in the middle I guess. Distributors also provide huge value in terms of logistics and the accounting side of things. Distributor marketing, events, counter days, trainings, are all opportunities where manufacturers have their chance to connect and re-connect with integrators. A real distributor, can be compared to a broker. If you call a good broker, he will understsand your business and review various insurance providers and put you with what makes the most sense for you, as opposed to if you call the insuran ce company directly they are only going to tell you why and how they are the best, they only company to have blah blah, made up buzzwords go here.

Of course a manufacturer would want to de-value this, because they want to get all these benefits and not give up any margin either. This is a microcosm for life in which their is a pattern of devaluation all around and leverage battles between distributors, manufacturers, and integrators. It's rather sad at times. Can't we all just get along? And be honest too? I forget, business is too cutthroat and competitive for all that.

Not to see there isn't a ton of truth to this article and the comments, because there certainly is, when you consider the distributors. In their defense, there number of locations is their value. If you need more or expect more, than simply stop buying from them as an integrator and stop supporting them so much as a manufacturer. We tend to complain about jobs, or relationships, etc. but when called out are scared to take action.

Speaking for DWG, we get hundreds of calls per week from installers as well as integrators that needs help with their projects. Now some of them might believe they don't, or like to pretend they don't in fear that this will show and value as leverage to us as the distributor, which they don't want to admit in many cases. This is often exposed with the preface, I just have a "quick, easy question for you". "Or, I'm not going to take too much of your time, I just need to know which system will, etc. etc. etc." Or, "I just need a quote on generic term 1 , generic term 2." We get this, and understand the position they are in, so we are used to it and accepting of it. And certainly they would not always tell the manufacturer that DWG is their savior by testing XYZ product in the middle of their job because that might hurt their chances of "buying direct" or getting better pricing down the line. They can easily forget or downplay the important of someone correcting their order last min ute or doing their power calculations for them. Understandable. We are all "poker players" nowadays. We have evolved. We are all great self promoters. [I am going to write an article one day on how people can sell the crap out of themselves, but can't sell anything otherwise.]

We also have integrators that send us parts list, of which we review and usually find mistakes. An example would be a reader that doesn't work with a particular access control. Or a system that just makes absolutely little to no sense for the particular end user entity. We in all cases, speak our opinion. We often will ask questions to figure out more information about the project and expose new ideas to the integrator. The power of questioning is so strong and by doing that, we make so many things better for our customers on the short and also long run. I do believe there are many good reps at other distribution firms, that also have good peope that really care, and are probably somewhat offended by some of the comments, and maybe just didn't have enough time to actually stop and write it all down in this thread.

As a distributor we are able to keep tabs on technical information, more easily than most installers and integrators. In turn we get a lot of "pick your brain" type phone calls, because our customer base knows that we will tell them true differences between various manufacturers, whereas in many cases the manufacturer themselves cannot do that. Like the broker who has insurance options, We will unravel the manufacturer proprietary names for features and break them down to what they really are, so we know what we are actually comparing. Whether they admit it or not, our customers do see value in that, or else they wouldn't keep calling us. Now there is manufacturer loyaly no question, if we know someone is using Vivotek, we will try to coach them through an issue and way out the benefits, rather than tell them to jump ship to Axis, in the face of their first technical issue.

Not to generalize, but....many manufacturer's staff sadly are often in a bubble and really believe that they have some sort of proprietary new compression, or ground breaking feature, while few do. They bad mouth each other with false claims. We are better than Manufacturer B, because they don't have XYZ (of which they have no idea). Rarely are they called out on this, so it continues. This is also why so many of them despise IPVM, because it cleans up so much of this for the integrator and is really such a good resource. We on the other hand, like IPVM are comparing and contrasting the features and benefits of these manufacturers, testing products before we stock them, and using them internally to get to the bottom and cut through the marketing information for our customers.

Now this article and comments are definitely accurate on many points, because of the distributors it is referring to. Due to their sheer size and strategy to be a logistic hub, nature kind of takes it's course unfortunately. That is why you see the comment of the manufacturers wanting to work with the smaller, more helpful distributors.

To truly be successful, the chain needs all levels, manufacturers, distributors and dealers. (With exceptions of course.) Now if a particular part of the chain is not doing their fair share, that is probably a fault in that particular link, not necessarily the strategy overall. (The grass is always greener right?) I will say that who you partner to go to market with will depend on your goals and capabilities, but make sure you partner with and work with people that actually care and are willing to understand the situation. Don't give in and feel you have to work with "lazy" people. There are good people and good companies out there, that can be good links in this chain. Manufacturers - stop giving in to the distributors that don't provide value, because you feel it's easy and start to give your best pricing to distrubutors (and project deals for integrators) to the ones that are actually "selling" your products not just taking orders.

In business the best relationships are those that are beneficial for all parties, so we need to stop looking for ways to "kill" each other and see the value we each provide objectively and be appreciate of that all around. Again, if the value is not there, than shut up and move on. No one is trapped in this industry. One thing there is plenty of is options.


Sal, thanks for sharing this. It helps better show the perspective of distributors.

Some feedback on your comments:

"Distributor marketing, events, counter days, trainings, are all opportunities where manufacturers have their chance to connect and re-connect with integrators."

So I do not know how DWG does it, but consistent manufacturer feedback on ADI and Anixter is that manufacturers need to pay separately for all of these things. Want to be at a demo day? Pay up. Want to be part of ADI's Burn Down The Rain Forest Catalog. Pay up. Want to be in a marketing video. Pay up. It seems to be just another form of trade show or trade publication, no?

"We also have integrators that send us parts list, of which we review and usually find mistakes. An example would be a reader that doesn't work with a particular access control. Or a system that just makes absolutely little to no sense for the particular end user entity. We in all cases, speak our opinion. We often will ask questions to figure out more information about the project and expose new ideas to the integrator."

Certainly, this approach provides significant value. The question is, how often is it done across distributors and how much does the average distributor employee know / contribute? Unless we suppose integrators are just being mean, it appears this does not happen a lot, given the numerous comments about problems getting knowledgeable advice. For example, Should I Let ADI Design And Quote An Entire Job For Me?

"If you need more or expect more, than simply stop buying from them as an integrator and stop supporting them so much as a manufacturer."

Given there clearly is demand / interest for alternative distributors, one major problem I see is that smaller distributors do not seem to market much. I am guessing that most US integrators have never even heard of DWG, Scansource, CSC, etc. And if they do not know you exist, how could they even consider you?

Great article Sal! Right on the money on all your points. We are a small distribution center as well, and I would say at least for us we are just like you. We tend to study up on new things, trends, and provide our integrators and dealers the insights we've picked up. We do price/lineup reviews about every quarter, and ask questions to help our customers spec out a job or at least offer a completed estimate by recommending what we know. Most of us are very knowledgeable, and we also highly appreciate IPVM's compare and contrasts and informative contents.

However, what John says also hits home. We lack marketing power. Because distribution centers are small margin businesses, as helpful as they can be, lack the funding to initiate a real marketing campaign to let the opposite side of the country know we exist! In light of that, I definitely feel small distribution centers will work harder for you than, let's say, ADI or Anixter.

It is unfortunate, but I feel like that has been the case this whole entire time. But let's entertain the thought that small distribution centers did market by hiring a third party, and they market well. Now another problem arises, lack of buying power to stock enough, or not enough employees to process and support the increased demands.

You may see it from these two views the reason why small distribution centers will never get all the big accounts. It would seem small distribution centers will be good locally at best.

"We lack marketing power. Because distribution centers are small margin businesses, as helpful as they can be, lack the funding to initiate a real marketing campaign to let the opposite side of the country know we exist!"

I would encourage you all to use more 'guerrila' marketing tactics. Use social media, use your websites.

Most importantly, be a public advocate for your buyer's needs. Think about it. ADI and Anixter will sell anything and the people in charge know very little about what works or does not work. They base their business on having the biggest network of customers and suppliers around and hope to make the sale that way.

Smaller distributors could differentiate by providing public advice about what works and what does not, what problems they are seeing and how they fixed them. Offer that, promote it on Linkedin and Twitter, build up a larger email newsletter list and you will attract more customers.

Awesome advice John. And you came up with that on top of your head. I will very much take that into consideration. Too bad many of us here are still big on the traditional way of marketing; cold calls and meetings.

Nonetheless, I like the guerrila warfare tactic. That's how the viets won their war against us!

Cold calls and meetings don't scale well.

IPVM is an example of 'guerrila marketing'. We've called anyone or bought a trade mag ad or did a trade show, etc. We simply publish interesting things on the Internet, promoted via social media and our newsletter and built a fairly well known brand without traditional marketing.

I think there are similar possibilities for smaller distributors who can leverage and showcase their advantage in expertise (at least you can do better than ADI).

Sorry for the late reply on this. So in our case, we have 2 graphics/marketing associates on staff, that under my guidance work on our website, bi-monthly sales flyers, catalogs, e-mails promos etc. My diverse background IT/sales/marketing have allowed me to "do more with less" as far as being easily competitive with the larger national distributors as far as marketing and company appearance. (collateral materials, trade show booths, catalogs, website etc.)

We do not charge our manufacturers for participation in our events or flyers, as part of our differentiation strategy in the eyes of manufacturers. We want our manufacturers to see that we pay our bills on time, create demand for them, and minimize support or faulty returns in addition to handling the customer from an accounting standpoint. We also have a 30 person training room within our facility, as well as a full demo area in our pickup showroom that provide additional value to our customers and manufacturers.

We really try to focus on projects where we can help influence the products that the dealer is using, giving us value in the eyes of the integrator and the manufacturer(s) which in turn lead to respectable margins in such a competitive industry.

One of our biggest challenges is dealers that call us all over the country to help us solve their tricky or time consuming issues, and then take our recommendations and shop at their local ADI or Tri-ed. It requires us to have a number of heart to hearts to make these dealers respect our time and appreciate the help that we are providing.

Another challenge is the fact that we create specs throughout the country, and then sometimes these specs find their way back to the manufacturers, who then try to take credit for our specs and then often try to push the projects to their more "local" distributors.