Distributors

Don’t call me a middleman

By Jack Keough

I watched an old episode of “The Office” the other night, the one in which office staffers are encouraged to bring their daughters to work. It is one of the better show episodes.

During one scene, Stanley’s (one of the salespeople) daughter asks boss Michael Scott, regional manager for a paper distributor, about the business.

“So do you make the paper?” she asks.

“No,” Michael says noting that the company distributes the paper to customers.

She then asks, “Do you cut the paper?”

“No,” he responds.

She looks puzzled and then asks something to the effect, “So why don’t they just send out the paper themselves?”  There is a pause and then Michael says “well then you’d be Staples.”

I’m sure you have been asked the same question when people ask what you do for a living.  Whether you distribute electrical products, fasteners or any other type of industrial products, some people will say, “So you’re the middleman.”

Middleman. I hate the word. It may be dictionary correct but to me it still gives the wrong impression.

I first heard distributors being referred to as “middlemen” nearly 30 years ago when I was learning about distribution and went on the road visiting manufacturers and distributors. One manufacturer (of cutting tools, I believe) told me distributors were basically order takers who met with customers to sell them products the manufacturer made. “They’re just middlemen,” he said.

A middleman implies that you add cost to the product being sold. A true distributor does no such thing. True, there are probably some people in this business that compete on nothing but price, but there are fewer and fewer of those types of distributors today. Maybe they believe they can have low margins and then make it up with higher volume. Right?

So what does a distributor bring to the party? What exactly is your selling proposition and how do you define and stand out from competitors who sell on nothing but price?

When I spoke at a seminar for salespeople a few years ago, I asked them to define in a few sentences why someone should buy from them, rather than a competitor, One of the salespeople said that his company had better quality products, outstanding reputation,  and a long history in the marketplace.

Those aren’t differentiation points.  Everyone has quality products, on-time delivery and so on. What really sets you apart (so as to not be called a middleman) is the value you add to the product: Whether that is technical expertise, solution solving or on-site assistance, for example.

A distributor told me years ago that his customer is not paying for the product, but for “what I know.”  He found that out when he lost a major customer (a paper plant in Maine) to a large distributor on a national contract basis.

A week after the contract he was called by the local plant manager who needed help right away. The national distributor couldn’t get there in time. The distributor told him he would help this one time-on a very high paid basis.

Eventually he won the contact back because the national distributor wasn’t there when an emergency call was needed.

The problem is that many buyers—and I’ve talked to many directly—tell me that distributors are the first ones that mention price, not total cost. Buyers aren’t often aware of the “extra” services that distributors provide because it isn’t pointed out to them.

Middlemen can’t exist in today’s competitive environment. It’s too easy for some to compete just on price. And that’s a sure-fire way to make sure you won’t be around in the years to come.

Jack Keough was the editor of Industrial Distribution magazine for more than 26 years. He often speaks at many industry events and seminars. He can be reached at john.keough@comcast.net or keoughbiz@gmail.com

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