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Disintermediation Strategy: A Fact Of Our New Lighting Life

By Chris Brown

The recent discussions regarding disintermediation should be stirring conversation on how distribution deals with a fact of our new lighting life: Some manufacturers will choose to (or feel forced to) deal directly with our end users. Disintermediation is here, and we need to deal with it.

There is some inevitability at play here. Some users demand it and some manufacturers offer it. And more will feel forced to sell direct in the future. Planning for this creates an opportunity to focus on the two key distribution relationships, our vendors and our clients.

Scott Costa and I recently spoke separately to two very thoughtful manufacturers: Terry Clark, Founder and Chairman of Finelite and Menko DeRoos, Founder and CEO of Xicato. Independently, both expressed the same basic message: Distribution must constantly search for new ways to add value (and be prepared to prove it).

But what does “adding value” actually mean in the real life of a distributor? And assuming either or both a vendor and a client acknowledge there is existing value in the services a distributor provides, what additional services/solutions will a distributor need to provide in the age of Illumigeddon and smart/intelligent lighting?

Terry gave us a clear and simple challenge:

  1. Embrace uncertainty
  2. Change faster than your customers
  3. Pick your partners carefully

The challenge is clear and simple, yes. But how does it work in your real, day-to-day world? Faced with  the “tyranny of the urgent,” who has time to do this? Start with “embracing uncertainty.” SSL is both a classicly disruptive and subtly destructive technology (Is anyone out there bullish on the long-term future of the MRO lamp business?!?). We are dealing with new technologies, new manufacturers, a new language of lighting, and the convergence of lighting and technology. Our legacy lighting business changes in some unexpected way virtually every day. How does a distributor stay on top of incessant change? How does a distributor evaluate new products, new vendors, and new news on a daily basis? There are no easy answers here, but certainly don’t deny uncertainty, don’t ignore it, don’t fight it. As Terry says “EMBRACE IT!”  And I’ll add “DEAL WITH IT.” Read about it. Think about it. Talk about it. Argue about it. Plan for it.

About “changing faster” than our customers, my take on that is that you need to be the go-to authority on everything lighting and lighting related for the customer. First and foremost, understand SSL technology and be able to explain it clearly – what it is, what it does, how to differentiate it, how to evaluate it, where the technology is going etc., etc. My other take on “changing faster” is to be constantly evolving our distributorships to become easier to do business with, smarter, more knowledgeable, more valuable than our competition, and focusing on bringing new solutions – not just products – to our customers.

Finally, and back to disintermediation, “pick your partners carefully.” That suggestion speaks for itself. Understand your vendor’s “rules of the game.” And if their rules include disintermediation, deal with it quickly, directly and confidently. Because if a distributor has added clear, provable value to the customer – and has stayed relevant in the selling equation – the smart, well-informed customer is the distributor’s best ally in preventing disintermediation. And his best partner when a manufacturer isn’t truly the partner he claims to be.

So, disintermediation is a fact of our lighting business life. Fight it wisely, and pick your battles smartly. Defend your client relationships at all costs. Make sure your customer hears regularly about all the wonderful value-added services you are providing. And finally, share your disintermediation experiences through NAED and tEDmag.com; especially your successes.

My next column will explore Menko’s comments, and describe in detail one of his most helpful suggestions. I’d be pleased to include any other manufacturer’s thoughts on the subject at hand as well. My contact information:

Email: chris.brown@wblight.com
Phone: 914-643-0071
Twitter: @illumigeddon

 

 

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