Should Distributors Sell Labor Too?

Distributors are struggling to remain profitable (relevant?) in the internet age of procurement. Not only do they have difficulty justifying value to their customer resellers, but some actually directly compete for the same business.

As we covered here, Amazon is reselling labor. Not directly, but with a network of approved subcontractors they pre-screen. Amazon gets up to 20% of the invoiced labor total, and their total revenues get a bump. - a welcome wrinkle for many (struggling) distributors.

What if Security Distributors followed? What if distributors like ADI, Anixter/ Tri-ED, or ScanSource started (or openly continued) selling end users directly, but referred 'labor-only' projects to channel resellers?

Would the existing reseller channel revolt?


I don't speak for all integrators, but if a distributor sells to and end user directly and I find out about it, they are finished in my shop.

I couldn't agree more with you. Working for a National distributor, we have a corporate mandate that we will never sell Security products to an end user. That also includes the Government, which is why we don't have a GSA schedule.

Amazon owns the customer already because they sell them lots of stuff.

ADI, despite possibly going around integrators to deal direct with end-users 'whales' on large projects, are largely unknown to the typical Amazonian end-user.

They would have to make a major unmistakeable retail push to acquire them. This would jeopardize their core business, and begin a revolt. If ADI didn't try to appease them and changed to a retail strategy anyway, they would be abandoned by resellers. However, if ADI successfully transformed its business to retail, then eventually dealers would register with them for projects. Since a job is a job. But I don't think that they could capture both levels of distribution at the same time.

This topic makes we ask the following question:

Any lawyers here in this forum ?? .... Is there any legal wording in the U.S. / Canada's Commerce and Trade body of laws that sanctions and can lead to a legal/criminal prosecution of a MANUFACTURER or Distributor to just go ahead and invest in a chain of retail stores of their own ?? I guess not. They would simply go around it and invest with another corporate name, but still owned by the same shareholders.

For example: Apple (a manufacturer) sells directly to end users in many countries via their own Apple Stores. Apple of course also sell to wholesale distributors in Miami, which in turn sell to big or small electronic stores in Latin America.

So is this unfair competition ?? I guess from the small electronic shop, they just quit fighting and look for other alternative products that can give them more margins. For the BIG BOX Electronic chains of stores, I guess they simply "partner" with the manufacturers (skipping the distributors altogether) and negotiate prices per volume (i.e. Walmart / COSTCO asking: I will push 10,000 iPhones per month, give me your absolutely lowest price).

At the end of the day, integrators / dealers have to make a profit. There is no doubt that how we do that is changing and that the Internet has become a great equalizier in the selling process taking manufacturers direct to consumers. I am staying higher end, specialized trades. I have no interest in dealing with a distributor or manufacturer that takes business and marging away from me unless they are adding value to the process and helping me to stay profitable, which some are doing. They have resources and capital way beyond my means and can drive business to me. It can be a win/win, but I fear is the exception rather than the rule.

Easy question - NO. We are a distributor and would never want to compete against our customers.

Sherman antitrust laws loosely address this. I'd invest my money in a swamp before I would try to claim damages using these anti trust laws.