Industrial Distributors Tracking Consumer Channels' Move to Private Label

Key findings from Industrial Distribution magazine’s 61st Annual Survey of Distributor Operations suggest that channel players in industrial B2B markets are following their consumer market brethren a dangerous move away from trusted brands and greater use of private label products. Key findings form the August, 2007 research:

• Internet sales to end-users not significant
  1- 10% of revenue for over half of distributors
  70% order products from suppliers on the Web

• Distributors ramping up value-added services - 64% do not charge for them
  Engineering capabilities
  Plant audits
  Special lead times
  Set up and installation
  Employee training
  Technical product support
  Integrated supply

• 79% sourcing overseas - over 35% ramping up private-label
  Top-50 Interline Brands, a major MRO products distributor of plumbing, electrical, hardware, security hardware, and HVAC parts says that over 20% of their sales come from private-label product

• Major reason for winning business from customers
  36%: product availability
  20%: technical support
  9%: customer service/relationship or delivery time
  5%: price

But even with all the emphasis on value-added services (albeit without charging for them), distributors say their top rated strategic concern is: price competition (43 percent)