Sep 23, 2007

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)

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