I nde p?ndent wh o le1alert ar? under attackl

Bv Bob Brovles

[NDEPENDENT wholesale distributors are under attack.

IThe assault is coming from several different directions at the same time.

First, the distributors' customer base is being chipped away by new competitors from outside the traditional supply chain. Big box retailers such as Home Depot have been selline to small contractors for a decade on a cash basis.

a close customer relationship. All of these are being weakened by the new competition.

With a customer base that is being courted by new competitors or a product base that is constantly under pressure, what's a midsize independent wholesaler to do?

l. A good offense is a good defense: Pick your market specialty and grow it.

The Internet is breeding

a whole genre of suppliers that specialize in selling only one thing.

Their longer store hours have made them attractive to the single-person businesses.

Home Depot has since begun opening a chain of "Home Depot Supply" stores. The first of the chain are in Dallas, Tx.; Phoenix, Az., and Colma, Ca. This supply chain is aimed directly at the traditional middle-of-the-market wholesale customer.

An interesting parallel development is rapidly taking place. A whole new segment of the industry is evolving as "logistics suppliers" who are targeting the needs of large customers with services directly aimed at taking the fat out of the supply chain. Second, the distributors' product base is being chipped away by new competitors.

The Internet is breeding a whole genre of suppliers that specialize in selling only one thing. These specialty suppliers are popping up in the two areas where the Internet model makes sense-smallish items where freight is not too large a hindrance and specialty items where the Internet's large customer base can make stocking the items a worthwhile venture.

For another example, look no further than the plumbing business and the growth of on-line faucet sales. For the past decade a new breed of wholesaler has been emerging in the "specialty vendor." Whether it's wire, lamps or controls, the electrical industry has been breeding these vendors.

The traditional formula to justify the existence of a wholesaler has been a four-pronged approach consisting of local stock, available credit, product knowledge, and

2. Continue to cut the cost: For the past two decades, wholesalers have invested in computer technology and received extraordinary returns in terms of automated procedures and better inventory control. Now the returns may not be a large, but the need for investment is just as critical.

3. C"t closer to your customer.

These suggestions are only a beginning. These skirmishes are the daily battles in a war of who will control the supply chain in the future!

- Bob Boyles is founder of Smarter Distribution Inc., (972) 304- 1 1 80 ; www. smarterdistribution.com

Ihe lillion llollar 0ub

Two- Step W holesale D istributors with 2004 sates of LBM exceeding $1 billion