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Friday, March 15, 2013
Interstate Electrical Joins AD
Recently we saw AD's press release in www.tedmag.com announcing Interstate Electrical Supply as a new member, which, as you could surmise knowing us, generated some thoughts ...
- We started thinking about other marketing group announcements that we've heard of recently ... and couldn't remember any (and we did a little research)
- Which then got us to thinking, are there many "good" / "decent size" distributors who are still unaffiliated? We assume that there are a number of real small ones as there are about 2900 distributors in the industry, take away the EW Top 200 (bottom one was about $15-20M) and we understand that IMARK has about 900 distributors who are less than $20M (ex-EDN distributors). That leaves about 1800 distributors who are unaccounted for. Perhaps AD has 50 US distributors under $20M? Means doubtful that there are many decent size companies left.
- Knowing the marketing group recruitment "game", and reading the comment from Walt Morrison, it can be assumed that they received dividend (rebate) estimates from both groups and that AD's was better ... perhaps from some better manufacturer alignment, perhaps some better negotiating. And the networking part can be a differentiator as it looks like Interstate was looking to network with larger distributors in order to learn more to improve their business (after all, they do compete with Mayer who is a formidable competitor).
And with quality (defined as "size" as manufacturers are more focused on larger distributors) perhaps waning, perhaps that is why we've heard from some distributors that they are re-evaluating their marketing group relationship. It appears that the group's cultures, at the management level (and we know both and personally like both), have changed over the years. There remain tight networking groups amongst long-term members that should be valued. Looking forward, the biggest benefits that distributors can gain from their marketing group is not the rebates (as prior to getting rebate estimates one needs to presume that manufacturers would have some comparability) but 1) who they will network with, 2) what are the tools / programs that the group offers that the company plans to participate in and 3) what is the group's vision to help distributors compete against chains ... over the next 3 years, 5 years, 10 years.
As a manufacturer, distributor or rep / salesperson, how do you see that the group's differ or maybe you feel there is no difference? Can the group's help independent distributors beat the national chains or only keep up financially (as chains will grow in overall market share through acquisitions as chains are most companies' exit strategy).
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A-D has a number of growth programs that we are employing today. SKU attribution has long befuttled us, especially as we develop tools and aps to reach our customers on-line. Accessing accurate and meaningful market share data in current or future markets we are considering has proven to be a significant challenge. Associates are more engaged at all levels of our organization as a result of the AD Rewards program. I look forward to meeting with my new Canadian network members at the upcoming meeting to learn from them about best practices that may benefit my company. We are engaged with AD today. With new programs and ongoing and increasing support from A-D's suppliers, we will continue to look for ways to enhance our engagement because it makes us a better company and affords us a much better chance of attaining our company goals. They will be a part of our growth strategies for years to come.
ReplyDeleteAs an Afiliate, I get a lot out of my network. also like the focus on new programs. no sure we will use them all, but currently using clean engery and ad rewards. looking at co ventures too...the chains can't do that.
ReplyDeleteIt is all too often that the "numbers/rebates" are used to define the groups and their effectiveness... The vendors look at it differently... does the investment buy me more business and even better more profitable business? Does my association gain me some exclusivity and separate me from other competing vendors at the distributor level??? or is this just an ante to play poker at their table??? I see one group aggregating volume and focused inward on growth (of the group) and on dynamics that will benefit the group members (acquisitions, new members etc).. and another focused on mutual growth with new programs that will allow not only group member growth but will address the needs for vendors to grow their business... No judgement on the groups or their plans, but these groups need to remember that they fuel everything on the checks that are written for the memberships of the vendors.
ReplyDeleteAs a long-term member of IMARK we've started wondering how all these small distributors are benefiting us. The programs continue to be good but there hasn't been much new recently. Competing in today's marketplace has new challenges from the chains such as ecommerce and employee development. I wonder where we are going with this. The small guys, while nice, don't benefit us and we've heard the same from manufacturers. Don't know if we'll change, but some change is needed.
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