4 Reasons Distribution Beats Buying Direct

Written 2014-01-29 by H8fRi845jF

If there is one thing we have come to realize in the 40 years that we have been in business, it is that our channel is full of a lot of really smart and savvy entrepreneurs.

We suppose that this very intelligence is precisely why our integrators can deal with an industry chuck full of challenging economic conditions, ever changing compliance requirements and rapidly changing technology all while growing their top and (hopefully) bottom lines with each and every passing year.

As a distributor we know that our role in the channel is to help our partners with their continued success.  From the technology to the top line and beyond, our goal is to help our partners drive better business outcomes for themselves and their customers. This is why we get out of bed in the morning.  Sometimes however, we find ourselves asking questions that we don’t know the answer to.

For instance, why do so many AV integrators focus on purchasing direct?  Is it really better for their business?

While we know that our business may benefit from a certain position here, we felt this was an important topic to discuss.  Our hope is to educate from our perspective why distribution makes so much sense for integrators and then open the door for a conversation with our partners to understand their perspective as well.

We believe there are 4 great reasons why  integrators should purchase through distribution rather than direct.

  • Efficiency (Cost Savings) through vendor consolidation:  If a project requires equipment to be ordered from 15 or 20 manufacturers, there is a lot to think about even if the equipment pricing through distribution is relatively the same.  For instance, on average the (often uncaptured) average cost to process   a purchase order  $100.00 per PO per vendor (Source).  This is considering all of the administrative touch points from signoff to PO placement, follow-up, receipt and payment to a multitude of  vendors.  Distribution can help cut the number of PO’s to as little as ¼ of the number if all purchase orders went direct.  When you think of the total number of purchase orders issued  each year that is a big number!
  • Improved Logistics:  I think most integrators would agree that manufacturers are great at coming out with technology and even marketing it, but few are very good at the logistics.  Extended wait times, unpredictable delivery dates, lack of logistical flexability communication  are a few of the things our partners tell us about regularly.  These challenges are precisely why we (distributors) exist and what the best distributors to best!.  It is our job  to make sure we have what you need, when you need it and make it easy and efficient to get it.   By providing best in class logistical support,  we allow our integrator partners to focus on the sales and delivery rather than wasting valuable time managing and following up on multiple vendors, POs, etc. We like to portray the value as …tell us what you need and when you need it and we do the rest!   These improvements lead to more efficient processes, cost savings and ultimately smoother installations and happier customers.  Both of which have short and long term positive impact to our partners’ bottom line.
  • Customized Warehousing Programs:  While not all distributors are the same, another area we believe is highly valuable to the integrator is the ability to utilize their distribution partners for strategic warehousing.  For integrators just-in-time delivery is critical to keeping their warehouse requirements and much important cash flow in the best position possible.  By offering our partners the ability to place orders and schedule complete shipments straight to the job site we can limit the amount of warehouse space required, expensive delivery costs and even the number of days an invoice is outstanding.  All of which mean greater margins and better run projects.
  • Direct Relationship Benefits:  Did you know that through improved point of sale (POS) tracking,  we can (and do) share data with the direct manufacturers about the sales levels of the individual partners?  In the past this could be cumbersome so many manufacturers couldn’t keep up to date sales performance of partners that buy through distribution.    Today with this information provided on an automated monthly basis,  partners can buy and benefit from distribution  while not jeopardizing the direct relationship. In fact, nothing changes between the manufacturer and the integrator. Everything you utilize the manufacturer for remains intact EXCEPT you simply send the order to the distributor. 

With so many obvious benefits to use distribution as your primary provider to source products, we are curious what the reasons may be that you haven’t done so already?

We love helping our partners drive more successful business outcomes.  How can we help you?