acquire one of the larger players in the distribution business? And
what other new competitors might emerge? Everyone, it seems,
wants a piece of the industrial supply pie, including private equity
Some of the larger players in the industry are gobbling up competitors at an increasing rate. Witness the number of companies
that DXP Enterprises has bought in the past few years. That is just
one example. Other companies like Kaman have ventured into
non-traditional markets such as industrial automation and electrical, also expanding its offerings through the purchase of fluid
power and hose distributorships.
Many of these larger distributors are not gaining market share
or additional business organically through increased sales, but
many are using mergers and acquisitions to drive up their sales
As a result, it’s becoming increasingly hard to remain independent.
Several conversations I had at the Industrial Supply Association’s
2013 Product Show and Conference in San Diego emphasized that
point. During one such conversation, the president of a well-known industrial distributorship who recently sold his company
expressed his concern about the trend. “For the first time since I’ve
been in this business, I’m really worried for the independent guy,”
“I hope I’m wrong about this,” he began, but then said it was
going to be increasingly difficult for the independent distributor
to succeed for three reasons. He identified those as national contracts, e-commerce capabilities, and capital.
Normally, I’d just shrug off these comments because I’ve heard
them before, but this distributor, in my opinion, is one of the best
in the business.
And as we see the landscape shifting, the number of distributors out there seems to have fallen.
I am not predicting, by any means, that this is the demise of the
general-line distributor, but it does mean that the independent
distributor must examine the value-added services he provides his
customers and define the type of distributor he wants to be.
What really makes you stand out from your competition? And
do your customers really know what services you bring to the
table, other than the product itself? Oftentimes, buyers are looking at the sticker price of the product rather than the total cost of
the product and service.
It’s up to you to make sure they know the difference.
Jack Keough is contributing editor of Industrial Distribution.
You can reach him at email@example.com.
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