By Bill Wade, Wade & Partners
Business for the average heavy-duty distributor seems to have been solid through 10 months. (Why? Don’t ask!)
These good short-term results can create a complacency trap. Without an obvious wolf-at-the-door, what’s motivating life-blood innovation? How about better results? Recent multi-source research concludes that 60 percent to 80 percent of premium profits (profits over industry averages) are directly due to innovation.
We have repeatedly shown that in the intermediate term, innovation is the only creator of increased distributor net worth.
Some of the leading distributors/service providers and marketing/buying groups are innovating to avoid death. Maybe they can see that Amazon Business Prime and a few innovative distributors and truck dealers are taking customer-centric, digital commerce to new levels, and are profiting handsomely.
Without innovation on your part, these leaders will steal sales on your most profitable items bought by your lowest-cost customers. Think: sales off 5 percent, profits off 50 percent.
For ‘proof’ look at publicly available industrial distributors’ earnings and market cap trends over the past year. It’s likely that valuations for private distributorships and their rep relationships will suffer the same fate.
