Down on distributors

Jul 01, 1998 9:30 PM  By

A survey released in April by the Northfield, IL-based consulting firm Industrial Performance Group (IPG) shows that manufacturers are highly critical of their regional distributors, with 36% of those surveyed giving poor or failing marks to distributors’ sales capabilities, among other results. (See “Unhappy numbers,” below.) With this in mind, industrial catalogers could become an even more attractive distribution alternative in the future.

“Distributors used to be accustomed to having exclusives” with customers, says Bob Dunn, vice president of marketing for Rochester, NY-based Transmation, an $85 million- plus cataloger/manufacturer of measurement and calibration instruments. “But today catalogers like ourselves publish big catalogs with a broader product selection, as well as offer field sales support. Distributors, in fact, see us as coming into their turf and outmaneuvering them.”

As IPG president Edward Stecki notes, distribution channels, like products, have life cycles. And “a channel becomes obsolete when it is no longer capable of meeting the needs and expectations of the customers it was intended to serve.” While he says he doesn’t see the distributor channel going away, “you may have more catalogers interested in picking up this distribution.”

At the same time, however, the IPG survey results could also foreshadow the continued growth of disintermediation-essentially the elimination of the middleman between a manufacturer and an end user. If this is the case, the industrial catalog middleman, like the regional distributor, could be at risk.

But not all catalogers are concerned. Chuck Moyer, senior vice president of marketing for $575 million-plus MSC Industrial Direct, for one, believes customers will choose to buy from his catalog over catalogs launched by manufacturers. “From a customer convenience standpoint, we offer everything, while any manufacturer will primarily offer its own products,” he says. “So for the customer, that means less selection or more phone calls.”

Northfield, IL-based consulting firm Industrial Performance Group (IPG) in April released the results of a national study of 250 manufacturing sales and marketing executives. The results demonstrate the extent to which manufacturers have been reevaluating the manner in which they bring products to market. For instance, 47% of manufacturers surveyed gave their distributors poor or failing grades in local market penetration; more than one-third of the survey participants rated their distributors’ sales capabilities as poor or failing; and 42% gave their distributors poor or failing marks in inventory management.

Manufacturers’ dissatisfaction with traditional distributors, some observers say, has helped fuel the rapid growth of the industrial catalog market. “The industrial supplies market as a whole is not booming, but the catalog segment is,” says Chuck Moyer, senior vice president of marketing with cataloger MSC Industrial Direct.