Dive Brief:
- According the 70th annual Survey of Distributor Operations, 63% of respondents — many of who identify as executive, upper management, sales or sales management — say that e-commerce is a priority, an increase of 3% from 2016. The importance of generating web-based revenue grew to 57%, up a point since 2016.
- Growth and development plans consist of adding product lines (52.5%), an increase of 13 percentage points from 2016; more and/or stronger marketing (52%), a decrease of three points; and an increase hiring, rising to 32%.
- Distributor and suppler priorities name quality as their main criteria at 80%, a surprising decrease of 6 points and a new four year low. On-time delivery came second at 66%, a 7.5 point increase from last year. Price is now at 60%, seven points higher than in 2016, while service and stayed level at 56%. Reputation came almost last at 29% percent, though terms were even lower, at 8%.
Dive Insight:
The current role of distributors within the supply chain is in flux, with some arguing in favor of the benefits of the personal relationship and insider access only a middleman distributor can provide, while others tout the advantages of going right to the manufacturing source.
Arguments in favor of the direct distributor model include greater flexibility than any manufacturer can provide. Quicker production turnaround times, better payment terms, and product bundling of less than truckload amounts, even from varied manufacturers, are all within a distributors' reach.
Conversely, the growing abundance of buyers who want to shop digitally, and know how to source products quickly, drives the direct model. For example, one site they might access is Arrow, a seller of electronic components that has recently added free overnight shipping for orders over $20. The initiative is booming, and is aiding engineers' production levels enough to justify continuing these terms.
