Can the independent/small distributor survive the next 5 years? If you choose not to face the harsh reality of our changing market and remain status quo; no you will not. Online ordering is not the only threat to independents. Other looming threats are:
– Consolidation of large distributors
– Large box stores such as Amazon, Grainger, MSC and numerous others
The top 20 distributors have sales of a billion plus, investment in changing technology and platforms is far easier for them. If you are servicing an individual plant, consolidation of purchasing functions through the use of consultants will eliminate you from consideration no matter your value to the local plant. Consultants believe bigger is better and the bottom-line is price, price and price. Online ordering requires a substantial capital investment to compete with big box stores.
When small distributors decide it is time for them to leave the field of battle and place their business for sale, brokers are basing their valuation on unrealistic perceptions. It is no longer what a company was worth 5 or even 3 years ago, it is the value now. Oftentimes reality is a harsh lens.
How can independent/small distributors survive? Many won’t, however, some will and those who do so will have changed their approach to serve the market of now. Remember, “What was, and what is today, will not allow us to survive in the future.”
President & CEO