Distributors Cross the Threshold
With the procurement of the rights to do business with Novation, American Solutions for Business (see page 8) and IBSA (along with direct seller Relizon) have tapped into a national account that purchases more than $1 billion in documents per year. Although initial expectations are conservative, the impact over the next few years will be immense.
American and IBSA, along with other distributors that land similar deals, will grow much larger—not only from the Novation business, but also because they will attract additional distributors to join their ranks. At $1.6 billion, the Top 10 Distributors already control more than 60 percent of the Top 100 Distributors' total revenue.
Assuming that the trend continues, the top distributors will grow ever larger, with each becoming its own printed products industry. Smaller distributors may find their supplier relationships affected in terms of costs and lead times, as the top distributors require additional supplier attention.
The supplier side of the industry may increase capacity by acquisition or expansion, or by purchasing plants and equipment from the major directs in order to service the new super-distributors. Or, several giant distributors may each control the output of several suppliers.
However this works out, expect big changes as more national billion-dollar accounts are won by distributors. The independents are beginning a new era.