1. Distributors are basically warehouses and offer no true differentiatorsWhile some distributors simply offer customers the ability to buy or store products, true distribution partners like Comstar Supply offer something more. Strategic communication between a distributor and customer allows for continuous value exchange. Compelling business factors from both the distributor and customer should be communicated appropriately for crucial support of each other’s respective business goals.
2. Customers lose margin to the distributor
According to a study conducted among vendors by the Global Technology Distribution Center (GTDC), economies of scale from distributors result in vendor cost savings considerably higher than 3-5%. From logistics to credit infrastructure, distribution vendors are in fact much more valuable to buy from than a direct model.
3. Advent of the cloud and other Internet-related tools de-value distributor model
According to the GTDC, as more and more transactions occur on the Internet or through the cloud, there is no substitute for the specialized skills and capabilities of distributors to drive the sales and fulfillment processes. While an e-commerce model makes sense in industries such as software, outside plant and telecommunications products require physical logistical infrastructure, storage, and inventory to support demand for one-stop shopping.
4. Distributors just take orders
Within the OSP and Communications marketplace, distributors not only offer products, but also machine tools and technical support. Distribution plays a vital role in ensuring customers are fully informed on technical specifications of products, as well as advising on configuration issues and compatibilities. Without this role, many new technologies would move far more slowly through the adoption cycle and resellers would struggle to realize their business potential.
5. Carriers and Subcontractors Would Prefer to Deal Directly with Manufacturers
While some want a direct relationship, most carriers and subcontractors have such demanding logistical requirements they insist on distributors handling the supply chain and providing the related transaction processing infrastructure, including credit provision. Large accounts want the ability to connect with vendors at a strategic level backed up with day-to-day account management to be able to resolve issues with the right level of priority. In some instances, the customer will deploy sales support that works directly alongside distributors to develop end-customer relationships.