Salt & Pepper #2 - One Sided Relationships

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Welcome to Salt & Pepper! Salt & Pepper is basically the PromoKitchen equivalent of debate team. The purpose of this monthly article is to open up discussion and conversation on different challenges facing the Promotional Products Industry. This month we tackle the subject of Distributor/Supplier Relationships.  What are your thoughts on each side? We welcome your comments!

NOTE: Salt & Pepper is intended to foster intelligent dialogue between professionals. This is not a dagger throwing contest. Be honest and authentic, but please also be kind and keep it classy.

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One-Sided Relationship: Distributor Perspective - Kirby Hasseman

Success in the promotional products industry hinges upon the supplier/distributor relationship. For decades this alliance has been beneficial for all involved, including the end-user. While the partnership between suppliers and distributors has been invaluable to the growth of the industry, the relationship itself is becoming increasingly tilted in favor of the supplier. From the perspective of the distributor, there are three areas where this is happening:

  • More, more, more – We are all in business to make money. Distributors understand that, but it feels like more and more policies are being put into place to add margin to the supplier business and take away from the distributor. For example, for years distributors have “sold” the setup fee based on the fact that it was a “one time thing.” So now when suppliers add a re-setup fee to the mix, we look dishonest. In addition, (my personal pet peeve) proof charges seem like a pure profit grab. Clients don’t understand why we need to charge them to make sure their order is printed correctly! In both cases, many distributors simply eat that fee and it bites away at our already shrinking margin.
  • Communication – Suppliers spend a great deal of time and energy promoting their latest products to distributors so we can take them to our best clients. That’s great, but there is nothing more frustrating that excitedly explaining how a specific product will be perfect to meet our client's promotional needs, only to find the product out of stock. It’s totally understandable when these projects come out of the blue, but when distributors ask for a quote or samples, and that stock problem is not communicated at that time, it's maddening.
  • Engagement – I never feel like my customers are obligated to do business with me, but some (not all) suppliers make you feel like it’s your fault if you have not done business with them. We are asked “Why are you not buying from us?” as if we have done something wrong. As distributors, it’s our job to differentiate. We hear that all the time. The same is true for suppliers. Great, you have pens. So do 3,000 other suppliers! I want to work with supplier companies that make me feel like we are engaged and working in the same direction. It’s not my job to buy from you. It’s your job to provide me with an undeniable reason why I should.

The distributor/supplier relationship is critical to both parties for continued growth, but it is a fragile alliance that has become decidedly one-sided in favor of the supplier. It’s time that suppliers stop looking at distributors as anything short of a true business partner where both parties are invested in each others' successes.

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One-Sided Relationship: Supplier Perspective - Bill Petrie

Success in the promotional products industry hinges upon the supplier/distributor relationship. For decades, this alliance has been beneficial for all involved, including the end-user. While the partnership between suppliers and distributors has been invaluable to the growth of the industry, the relationship itself is becoming increasingly tilted in favor of the distributor. From the perspective of the supplier, there are three areas where this is happening:

  • More, more, more – Distributors always seem to want more: price breaks, free samples, rebates, set up charges waived, no charge on shipping, free PMS matching, and free drinks/meals at shows. All of the things distributors want at no charge have both a financial and resource cost associated with them. Many distributors act as if suppliers are selling products at a huge margin and raking in the profits, when the truth is many are lucky to break even. After all the “extras” distributors want are factored in, the actual profit on each order plummets. When it comes to profitability on the sale, distributors get the better end of the relationship by far, yet many still to want more. How much is enough? Money is a finite resource and everything has a real cost. Distributors would do well to both remember and respect that fact.
  • Communication – Many distributors demand instant and constant communication in regards to orders. For the most part, suppliers are more than happy to provide that communication. However, when suppliers ask distributors for status on the countless quotes they have received, or the proof that was sent over a week ago, the communication tends to evaporate. It doesn’t feel like an equitable partnership when the communication flows only in one direction.
  • Engagement – Suppliers spend a significant portion of their annual budget on travel to distributors, but more often than not, that money appears to be spent in vain. When meeting, usually with the promise of a lunch, many distributors seem to be more focused on their Caesar salads than trying to work with suppliers to find ways to add value to end-user clients. When there is poor turnout to a meeting or no engagement from attending distributor salespeople, it makes it difficult to justify additional trips and over-the-top support to meet distributor demands.

The distributor/supplier relationship is critical to both parties for continued growth, but it is a fragile alliance that has become decidedly one-sided in favor of the distributor. The vast majority of suppliers do not sell direct to end-users and instead choose to rely on the distributors to be their sales force. As such, suppliers realize that without distributors selling merchandise to end users, their business would not survive. It’s time that distributors place the same value on the relationship and stop looking at suppliers as anything short of a true business partner where both parties are invested in each others' successes.

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What are your thoughts? Is the industry supply chain weighted in favor of the supplier, or the distributor? What are some practical ways distributors and suppliers can work together to alleviate some of the tension that often makes its way into the distributor/supplier relationship?