A Year of Change Awaits
As recent world events made only too clear, some changes come upon us suddenly. After decades of wearing away the direct sellers' stranglehold on large-volume buyers of printed products, distributors have finally broken through.
Now, the largest distributors are claiming national account prizes worth dollar amounts that dwarf all prior sales. But, the breakthrough also heralds monumental changes that will occur within the distributor segment.
Many small distributors will flock to join the giants in order to garner a piece of the action. Mid-sized distributors will do the same or band together to form their own conglomerates. Many new distributorships will be created as displaced salespeople from the directs open shop on their own or affiliate with distributors who have claimed their former accounts.
The larger buying groups will command lower prices but will have to guarantee volumes and accept lower margins. Manufacturers will scramble for contracts that provide them with stability and fill their press time, albeit at reduced profitability.
Small and mid-sized distributors now face a choice. These distributors do not gain the benefit of the lower prices. Nor do they have the pull for getting their orders favorable placement in a supplier's production line.
Manufacturers have already trimmed down from the times when production capacity far outstripped demand. The addition of several large national contracts could make the supply side much tighter, putting press time at a premium for non-affiliated distributors.
Distributors who want to remain independent should ask their main suppliers whether or not industry changes will affect their relationships.
Bill Drennan
Editorial Director
bdrennan@napco.com