Key Takeaways
- Suppliers strengthen distributor loyalty by delivering reliable service, fast communication and strategic support.
- Value-added services and expertise can compel distributors to turn to suppliers first.
In every package Counselor Top 40 supplier Tekweld (asi/90807) ships to end-buyers, there’s a label with instructions on how to reorder. Instead of providing the supplier’s information, it lists the distributor who coordinated the order.
“Distributors love that,” remarks Gregg Szpicek, senior vice president of sales for the Hauppauge, NY-based supplier. The practice was started by company founder (and Counselor Power 50 member) Taylor Tadmor in Tekweld’s early days, along with another feature that won over customers: printing a “Distributed by” line on FDA-approved products that included the distributor’s email address or website.
“That’s where we started to build our customer loyalty,” says Szpicek, “because distributors said, ‘This company is working with me. They’re not just waiting for the next order.’”
Distributors have a wealth of options when choosing who to do business with. There are about 3,000 ASI-listed suppliers all vying for a distributor’s time, attention and client dollars. Competition comes from other sources, too – vendors outside the industry and even retail companies selling through other channels.
A Growing Threat
Direct sourcing isn’t new, but as more distributors become comfortable doing business overseas, suppliers are feeling the pressure. Nearly two-thirds of suppliers now view the practice as a threat to their business, up from about half a year ago. Concern increased across every supplier size category.
We asked suppliers: “Does distributors sourcing direct pose a threat to your business?”
(Percentage that agree)
And, of course, there are overseas factories that distributors source directly from. Not only has that practice become increasingly prevalent (four out of five distributors currently purchase from suppliers based outside of the U.S. and Canada), but Counselor State of the Industry findings show that a growing number of suppliers see the practice as a threat to their business.
How can suppliers rise above all the noise and competition to become the company distributors don’t hesitate to call (or email, or text)? By becoming an indispensable partner who will be there for their distributor clients, no matter what.
“We started to build our customer loyalty when distributors said, ‘This company is working with me. They’re not just waiting for the next order.”Gregg Szpicek, Tekweld (asi/90807)
At Terry Town (asi/90913), customer service and communication are at the heart of each client interaction.
“The way this industry moves now, every order is a rush order,” says Aaron Bradley, VP of sales & compliance for the San Diego-based supplier. Accordingly, the company prides itself on responding quickly to distributors, keeping them updated on orders and turning around virtual proofs in 24 hours or less. “Once someone loses trust in that communication or delivery time,” Bradley adds, “the customer won’t come back.”
The story is similar at Vernon Hills, IL-based Illini (asi/62190). “For us, it’s all about reliability,” says Allison Fine, VP of operations at Illini. “Our standard turnaround time is three days. And we’ve got deep inventory on a huge range of products. Being able to do those 10,000-piece orders and get them out within a week makes distributors come to us first and think of us when they’ve got those big projects.”
Keep ’Em Close
Suppliers on average retain three out of every four distributor clients – a figure that increased five percentage points from last year. Economic uncertainty often encourages companies to stick with proven partners, and the disruption caused by tariffs likely reinforced those relationships as suppliers helped distributors absorb much of the complexity around sourcing and supply chain management. “We have a benchmark for client retention and we’re definitely maintaining it,” says Allison Fine of Illini (asi/62190). “We’ve been around for over 75 years, and because of our reliability, our retention rates are extremely high. If anything, we’re more focused on getting in front of all those new smaller distributors that are coming up.”
Clients (Distributors) Retained by Suppliers (%)
As program business has grown, suppliers are expanding their offerings to meet the need for robust support. Active Life Promo (asi/72657) in Green Bay, WI, got its start nearly 20 years ago putting logos on skateboard grip tape, and still retains a niche in the outdoor and active lifestyle space. But the supplier has since launched Brand Flow, a service that offers product development, global sourcing and in-house decoration to help with client programs that require fulfillment, kitting and inventory management. Active Life President Rob Riley says the company was already doing things like kitting but was increasingly receiving requests for full merch store support. “If the program needs to run and the distributor wants to take a vacation, it will run without them,” he says. “So, for a solopreneur type of distributor or a smaller office, we can support them in their efforts to go after bigger programs.”
Wanting More
Distributors’ biggest asks are increasingly coming on behalf of their largest end-clients, particularly in areas such as sustainability certifications, supply chain transparency and data security compliance. Demands for rebates and requests for expanded service offerings are also increasing, particularly among larger suppliers. Active Life Promo’s (asi/72657) Brand Flow platform, for example, was developed in part as a response to customer demand. “What we’re doing is really differentiating our service offering and making it more of a complete program,” says President Rob Riley. “That’s how important those extra services are to us – we’re actually defining it by giving it a name and putting a team behind it.”
Most Difficult Supplier Challenge
Adding New Services for Distributors
Increased Financial Demands From Distributors
(Including Rebates)
The need for support extends in other ways, too. Szpicek recalls a presentation he gave at a large distributor’s national sales meeting where, instead of showing a product, he focused on data and strategy. He highlighted one research study, for example, that showed how giveaways and rewards led to decreased employee turnover in the healthcare market. The approach worked so well that the distributor increased its business with Tekweld by 47% in the quarter. “Our mindset isn’t to just show distributors a product and leave,” says Szpicek. “Our job is to educate them, advise them and help them evolve.”
Suppliers acknowledge that the trend of distributors sourcing direct isn’t going away anytime soon, and it will likely remain part of the competitive landscape for the foreseeable future. Still, they contend that their sourcing expertise – ranging from compliance documentation and cost-effective global logistics to longstanding factory relationships and even personnel on the ground overseas – provides significant value for distributors. “It’s a lot easier to work with us than using a new vendor overseas or going on Alibaba,” Fine notes.
Adds Riley: “We have distributors, and I mean very large distributors, that have their own large import programs and they still come to us.”
Those are all the positive qualities that, when things go well, keep distributors coming back. But it’s when orders go awry (a given in an industry that deals in customized goods) that the strongest bonds are formed. Bradley recalls an incident when a Counselor Top 40 distributor who didn’t do much business with Terry Town placed an order that the supplier flubbed. Terry Town reprinted it for free and shipped it next day to still make the event date. After that, the distributor asked Terry Town to become a preferred vendor.
“The coolest part,” adds Bradley, “is when a distributor comes to us and says, ‘I screwed up. What can you do to help me?’ Those are the types of relationships that last a really long time, because that’s what partnership is all about.”