How Distributors Unintentionally
Commoditize Their Solution
By Paul Reilly
In the above quote, Bruce uses the analogy of a toaster to explain that eventually, everything becomes a commod- ity. Distributors feel this pain more than other industries.
Distributors are selling exactly the same commoditized
products as the competition. If you are just selling commodity products, then price is the only differentiator. However,
you can differentiate a commodity product when it is part
of a total solution. Yet, distributors unintentionally commoditize their solution.
When you pursue the same opportunities as every other
distributor, you’re commoditizing your solution. Distributors fail to grasp the competitive nature of these opportunities. A half-dozen other companies are bidding on the
same order, the same way. It turns into a bidding war that
nobody wins. These high-volume, low-margin opportunities
are commodity opportunities. Organizations exhaust their
resources pursuing opportunities they never should have
pursued. What if you focused resources on finding and solving problems versus pursuing commodity opportunities?
Salespeople unintentionally commoditize their solution
by only selling products with well-established demand.
They focus on selling products for which there is a generic
need. Products with well-established demand tend to be
commodity products, for example: fasteners, personal
protective equipment, cleaning chemicals and other MRO
items. There is established demand for these products.
Just selling these products positions you as a commodity
If you’re just selling products, you open the door to too
much competition. Our research on top-achieving salespeople shows that the salesperson is a unique dimension of the
solution. Customers of top-achieving salespeople believe
the salesperson represents 25 percent of the total value of a
solution. Are you bringing that much value to your customers? Are you presenting your personal value as part of the
If your goal is to quote commodities or just sell products,
you’re a commodity supplier operating in a commodity market. The last thing you want to be is a commodity
supplier in a commodity market. Remember what Peter
Drucker said about commodities, “In commodity markets,
you can only be as good as your dumbest competitor.”
“In the long run, everything is a toaster.”
— Bruce Greenwald, Columbia University