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The Specialized Distributor Option

Smaller component suppliers sometimes have a hard time getting the personal attention of big distributors. If you are number 47 on the list of DC-DC converter suppliers, your product might not be mentioned by a distributor's applications engineer. If yours is not a household name, a salesperson is likely to steer a customer toward a more familiar product. In both cases, the customer might not end up with the best solution.

The specialty distribution model can be a win-win for both suppliers and customers for a number of reasons…

Specialized distributors focus on you (and your customer): So how do we break the cycle of the tail (distributor) wagging the dog (customer)? Enter the world of franchized niche distributors. Niche distributors carry a limited number of lines that are highly complementary. Customer focus likewise is narrow. If your product line is specialized, your product matches with the target industry's, and it requires above-average design-in support, chances are a smaller distributor might be worth signing on.

What you can expect: Suppliers get more leverage with their product group if there's just a handful of lines available. Because a niche distributor's line card is narrowly focused, the distributor can better collaborate with manufacturer's reps. A focused distributor has the time to learn about your products in depth rather than just grasp a few key features. Each product can be handled as a “marquee” line. Finally, because of the high level of technical involvement up front, you can expect motivated after-sales support.

How to spot a good specialized distributor: Does it have the industry experience, the technical know-how, a synergistic alignment, and customer focus to succeed as your partner? In addition, make sure best industry practices are being followed. Ask how many relevant customer contacts are in its database to which your message is being broadcast. Inquire and review its marketing plans and consider entering into a co-op marketing agreement.

A niche distributor can give both suppliers and customers a lot of “face time.” Let us know if the model works for you.

32 comments on “The Specialized Distributor Option

  1. ITempire
    May 19, 2012

    I totally agree with contacting the niche distributors if you want the right technical details and a shortlisted product range which are available to you before you trigger a purchasing decision. This can help you make a precise decision. Also reasonable after sales support can be expected as the distributor knows that the customer is here at his doorstep because he needs the specialized technical support which distributors with a diverse line of products cannot deliver due to the impossibility of doing so due to the nature of their business. 

  2. _hm
    May 19, 2012

    Yes, you need to develope partnership with organization with similar needs. If big distributor does not give due importance, there is no point in working with them. Specialized distributor can give much better result.

  3. elctrnx_lyf
    May 19, 2012

    I just started to understand the challenges in finding the right distributor partner for a supplier. Finding niche distributor who has a special line card with very good customer list is always a difficult thing considering the fact that many of the big oem's doesn't work with smaller distributors in general.

  4. itguyphil
    May 19, 2012

    A large part of that process is trial and error. It may be painful in the beginning but when you find the rigth partners, you may be able to recoup the initial losses quickly.

  5. William K.
    May 19, 2012

    I have found that some of the ditributors are a bit more like manufacturers reps, and there is a problem that I find with that. If the product is the best solution it works well, but the other side is that “when all that you sell is hammers, everybody's applications all look like nails”. When I am in the searching stage and collecting information is not the time when I need sales calling me, when I was just checking to see if the product might be what I was looking for.

    Of course, presently I am having problems with a specialized distributor who will not quote a price, even though I explained that when I get the price I will place the order the next day. I know that they have the product that I need and that the price is OK, so please sell to me but…. And I was willing to pay at the time of order, which is a zero risk deal for the seller.

    I really don't understand that.

  6. ahdand
    May 21, 2012

    Specializing a distributor or the distribution process is a good thing but don't you think it will complicate things for the supplier / retailer ? Process will not be streamlined

  7. tioluwa
    May 21, 2012

    I've never used a specialized distributor, and i'm not sure i even know of any, and right, now i'm I don't see how it will make things easier for an OEM, especially one that is not very large having to go to multiple distributors to get products.

    Maybe someone could shed more light here.

  8. Mr. Roques
    May 21, 2012

    Well, those specialized distributors probably come with a higher price. As some point, the engineers need to establish the minimum requirements but also, when too good is bad (based on costs). Efficiency comes with buying what's good enough.

  9. ahdand
    May 21, 2012

    Well price is the factor which decides the supply and demand so when you specialize a distributor which way will the pendulum flow ?

  10. Barbara Jorgensen
    May 21, 2012

    Although niche distributors tend to focus on high-end products, they don't necessarily determine the price of the product. That's up to the supplier. The specilaty model most often gravitates toward premium components becuase you really need something like that to compete against volume distributors. Being on a niche line card also helps suppliers. Let's say you have a pricey line: when someone quotes you on a BOM, you'll fail by comparison to less expensive lines on a broad line card. On a niche linecard, where everything might be pricier, it doesn't look quite as bad.

  11. Barbara Jorgensen
    May 21, 2012

    WilliamK: That sounds curious to me as well. What a pain in the neck. Whether or not this company is a niche distributor or not, that's just bad business practice for any kind of business. Especially when you call. I see why companies might not publish prices online but they should certainly quote you by phone.

  12. William K.
    May 21, 2012

     

    What the niche distributor can often provide is much more product expertise.  One example is in specialty connectros used with a nonstandard cable. These were a bit more than the standard MS connectors, but the ones that I needed had to be smaller and more rugged, and had to work with a cable that had much larger conductors than would normally be used with that sized connector, since the conductors had to be mechanically durable. I was using #20 wire, when normally that connector would be used with #30 or #32 size wire. So the distributor located parts that were not on a standard order sheet, and got me the parts with a good delivery time and a price that was acceptable. I don't think that I could have had that much support from the #1,2,or #3 distributors in the US. Of course, they may challenge me on that, but the specialized distributor just had to go to a different shelf for the stock. That is one example.

  13. Taimoor Zubar
    May 22, 2012

    Interesting post, Peter. It does seem that it's a good option for small suppliers to get in touch with specialized distributors. However, from the customer's perspective, do they prefer dealing with specialized small distributors? Wouldn't it be more convenient for a manufacturing concern to deal with a single large distributor for all their needs?

  14. itguyphil
    May 22, 2012

    I didn't necessarily mean to specialize. I meant it may take time to find the right distribution partners, with their processes aligning with your own. This will be the optimal scenario.

  15. tioluwa
    May 22, 2012

    William K,

    you have sighted a practical example of the importance of specialized distributors, but to me that does not seem like a situation that will occur in most designs, or for majority of components in a design. A few components may require special attention due to their significance, and very precise requirements, for those, specialized distributors may help.

  16. Houngbo_Hospice
    May 22, 2012

    “it may take time to  find  the right distribution partners”

    You may not have the right option that works  for you the first time you want to buy a product. But you can get it right when you are more accustomed to the market.

  17. Houngbo_Hospice
    May 22, 2012

    “Ask how many relevant customer contacts are in its database to which your message is being broadcast. “

    That is a good evaluation metric, but that doesn't guarantee that your products will be ranked higher on his list. You might also ask how many other similar products he has in his database.

  18. stochastic excursion
    May 22, 2012

    A reputable niche distributor is a good find.  Often it's worth keeping these sources in play by favoring their product line and using them as alternate sources if possible.  The costs of researching and qualifying such a distributor should be factored into the total costs of sourcing their parts.  

  19. PeterC1
    May 26, 2012

    Taimoor, thank you for your comments in your post. Yes, we think there is a large contingent of customers in need of specialized suppliers to get the pre- and after sales support to successfully design-in a product. For example, a Bluetooth module from connectBlue connecting to an Iphone requires more support than a big-box distributor typically can give you. 

    I agree, from a manufacturing point of view going to just one large distributor is best, however, many new designs projects need one or two specialized solutions you won't find except with a niche distributor. Our next guest blog will focus on customer benefits utilizing a specialized distributor. So stay tuned. 

     

  20. itguyphil
    May 29, 2012

    That is part of what I meant. That takes time when you are first getting started. You hope you strike gold the first time around but this rarely happens. SO you must hope to fail fast and learn from the experience to get back on your feet quickly.

  21. ahdand
    May 30, 2012

    Well true in a way but time also has to be considered when you make a decision which is important like this.

  22. itguyphil
    May 31, 2012

    True but in an ideal situation, you want to minimize the time to figure out that the relationship is not going to work out. This way, you can cut tie and move on, saving headaches and $$$.

  23. ahdand
    June 4, 2012

    Yes Phil but you always cannot focus o try to put the cost down becasue we have to remember that budgeting do play a major role and we need a adequate budget to suppot the sevices not a limited budget

  24. itguyphil
    June 12, 2012

    I'm no saying to focus on keeping costs low. What I should have said is keeping waste low (which should always be a priority). If you can get rid of the processes, people, etc that waste your time/money/resources, the operations will be a lot more efficient.

  25. ahdand
    June 16, 2012

    Well Phil do you really think processes and people are a wastage for a company ? How do you operate or run a decision to make it operate via the system if you eliminate the human resources ? I dont get it at all

  26. itguyphil
    June 19, 2012

    2 examples:

    1. If you have a process that involves two people physically having to interact in order to move to the next stage in the process, if it can be automated, automate it! This will remove wasted time & manhours from the process

    2. If you have an employee that feels the need to chit chat & get coffee every hour instead of working tasks through to completion, you can ask them to stop this behavior or they will face some type of disciplinary actions. This will also remove wasted resources from operations

     

  27. ahdand
    June 20, 2012

    Well you are right phil but mostly you are reffering to attitudes and working capabilities of the employees. I was reffering to real workers who has the knowledge and the dedication to get the business running. So if you remove them as well then its a crime.

  28. itguyphil
    June 23, 2012

    No no no. That's not what I meant at all. I was referring strictly to removing/replacing wasteful resources (not their positions completely). Just the people/processes that disrupt efficient productivity.

  29. ahdand
    June 24, 2012

    Well then you have a valid point pocharle. I thought the other way.

  30. ahdand
    June 25, 2012

    Yes that is a possibility and I guess many are trying it too. What i feel is other than firing people if we can re-analyze the budget and do a re-costing then things might be ok. I oly assuming this might not sound practical though.

  31. itguyphil
    June 26, 2012

    No problem. Glad I could clarify. I am a huge proponent of automation and simplifying processes but still believe in creating/keeping jobs as well.

  32. Mr. Roques
    July 11, 2012

    Well, sometimes price is not the only factor, probably most often it isn't the only factor. 

    It all comes down to money, but the initial price isn't everything, TCO might be a better indicator.

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