Friday, March 15, 2013
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).