Episode 24: The Case for Local Industrial Distributors
by Matt Johnson, on Mar 3, 2020 11:41:58 AM
If you're a local, independent distributor, sometimes it can feel like the walls are closing in. From online retailers to global brands, the competition is fierce. The water may be red with blood, but if you know where to look, you can find golden opportunities to stand out from the crowd and earn customer loyalty. On this episode of The Takeover, we share three ways independent distributors can blow Amazon.com out of the water with the local advantage.
Carter's Hardware and Turn The Page Bookstore
What does Carter's Hardware and Turn the Page Bookstore have in common? Well, more than you would think. Where I live, we have a Lowes, a Home Depot, and Carter's Hardware. Where do I turn when I need a bird feeder, a chainsaw, or a gallon of paint (actual purchases in the past few months)? You guessed it, Carter's Hardware!
While the store is surrounded by big box competition, they always seem to have just what I need. They know me by name, make me feel welcome, and are genuinely invested in the community. They're always my first choice when it comes to hardware or home improvement. Plus, because they know their customer base, they carry an extensive collection of Big-Green-Egg grilling and smoking products. It's like this store was custom-designed for me!
Turn the Page Bookstore is my wife's first choice when it comes to buying books and gifts. It's owned by Nora Roberts, the best-selling romance novelist. Do you think she knows her readers and can anticipate the experience they're looking for? You better believe it.
They serve tea in the mornings and wine in the evenings. They offer comfortable places for women to read, relax, and talk about the latest releases. Yes, it's an undeniably feminine space, and there's absolutely nothing wrong with that!
The merchandise is largely comprised of local artisans crafts and knickknacks that appeal to the readers who might recognize a necklace pendant or a mug from one of the Author's novels. It is completely specialized and personalized for her fans.
Both of these little stores are thriving, and it's no fluke! While pressure from Amazon forced Borders out of business in 2011, indie bookstores staged an unexpected comeback. Between 2009 and 2015, the ABA reported a 35 percent growth in the number of independent booksellers, from 1,651 stores to 2,227 [source].
For distributors who are paying attention, a similar opportunity may be within reach. But how do we make the most of our local advantage? Do we work harder to look like Amazon? Do we hire better sales reps?
Three Ways Local, Independent, Industrial Distributors Can Blow Amazon Out of the Water
Have you ever noticed how so many things in life are a paradox? It goes to show you why we often get it wrong, slow growth, and fail in our business ventures.
In golf, you should swing slower into the wind, hit down to go up, and aim left to go right. In the keto diet, you lose fat by eating fat. I've lost 75 lbs, by the way, so I can testify to the validity of this paradox.
Even Jesus said "the first would be last, the last first", and "whoever wants to save his life will lose it, and whoever loses his life will keep it forever".
Okay, enough philosophy, let's get back to where the rubber meets the road.
What if in your distribution business, the way to grow is by getting smaller? What if you stopped trying to compete with the national brands and Amazon.com's of the world and instead became the first-and-only choice for your local community.
After all, you have the advantage here. Grainger's not sponsoring your a little-league team, is it? Fastenal's not attending the local Chamber meeting, are they?
If you're serious about killing it as a local distributor, here's what you need to do...
1. Champion Local Trade Schools and Serve The Community
The United States has 30 million jobs that pay an average of $55,000 per year and don’t require a bachelor’s degree, according to the Georgetown center. Sadly, many philosophy majors (not me) are slinging double-whipped, mocha-frappes and sitting on thousands in college debt!
Most experts agree that we need a resurgence at the high-school and trade-school levels to better equip industrial workers, welders, electricians, and foremen (and women) of the future.
With state budgets in constant flux, colleges and experts say it’s essential that companies help pay for educational programs that directly benefit them. California Steel chipped in $2 million for an education center, which it leases to Chaffey College for $5 per year. Other local companies have invested, too. While that kind of cooperation has been rare (ehem, hello, opportunity), Chaffey College’s InTech Center is an example of how it could work [source].
This is a win-win-win for the community, the kids, and the companies that participate. When the graduates walk the aisle, they essentially have job offers waiting for them, and local industrial businesses have the workers they need to grow and meet demand.
If I ran a local distributorship with a small technical school in earshot, I would partner up with my customers to invest in the local education resources, show up at the job fairs, and display a genuine interest in local economic development. You've just created a farm for your customers who need to purchase your equipment -- hopefully more and more. You also will never have to worry about finding well-trained employees. Boom.
2. Personalize The Catalog to Match Your Customer's Needs
One of the hardest marketing disciplines in distribution is organizing and maintaining a product catalog. At Spinstak, we provide software, strategies, and solutions to do just that. But over the years, I've noticed that no matter how much of the load we carry in terms of building the content, organizing the taxonomy, or designing great experiences, the biggest hurdle for the average independent distributor is product selection. And that is something we simply could not do for them.
Believe me, I've tried! I've often thought that maybe what they needed was for me to pick their products for them...
Hey, I know what we'll do. I'll go to each manufacturer in each product category and ask them to give us their top-selling products. Then we'll have a "best-sellers" catalog that we can offer to our distributor clients, which they can in-turn, offer to their customers.
While that may give you a head-start, it can NEVER substitute for providing your customers with a tailor-made product selection that meets their needs. You can't be Amazon. You can't be Grainger. But you can be YOU. When you understand your market and who your customers are, you will be able to supply them with everything they need and nothing they do not.
Think back to my example of the Turn The Page Bookstore. Her primary persona was "Romance Novel Nancy", not "History Buff Billy". Unsurprisingly, non-fictional, biographical sketches did not exist in her store. If your local customer base is 99% manufacturing, then you're probably not going to carry things like non-slip ice cleats or self-retracting lanyards.
You need to organize and market your catalog accordingly.
By the way, if my local hardware store doesn't have something I need, they can get it for me. Obviously, you can handle the exception to the rule for your customers as well, but do not build your catalog, website, or retail experience for the exception. Build it for the rule.
3. Create a Third Place for Your Customers to Hang Out and Get Provisions for the Job
Remember the old western movies when someone would mosey into town (possibly from their farm or gold claim) to get some provisions at the local store. They might drop off a list of supplies, grab some coffee (or whiskey), and catch up on the local gossip. It's an example of a "third place". A place that is not home or work. Coffee shops are perhaps the most well-known example of a third place.
We miss third places in our fast-paced, get it done, in-and-out culture... and frankly, we're exhausted. I might not be a profit (see last episode), but I can tell you that whenever a string is stretched too far, it tends to come back in the opposite direction. Our work culture is primed for more opportunities to connect with real-life people in places that educate, empower, and equip them to do their very best.
Imagine if you put a break-room, coffee bar, or office lounge in your building where your customers can linger while you put together their supply list?
You might just become the welcomed respite in the wilderness!
Be creative with the space. Design a feeling in your office that makes your customers want to stick around, even if they're not buying. You could go conservative with a clean and modern look featuring computer stations with access to free safety courses, the ability to browse your eCommerce store, or locate valuable how-to resources. On the flip-side, you could offer a pub or man-cave atmosphere complete with pool table, pinball machines, and Playstation. Think about your customers and what would make them go, "Wow"! Then make it a reality!
Do you offer in-person training workshops, certifications, or happy hours? If not, why not?! You're missing a golden opportunity to rub elbows with your customers and endear them to your brand. Raffles, giveaways, swag. You need it all, and you need to advertise it over and over again. Use Facebook to get the word out. You're never going to sell a hardhat or wrench with a Facebook ad, BUT you could get hundreds of local customers and potential customers to respond to a free BBQ, lunch and learn, or in-store promotion.
Your local presence is your strategic advantage. Champion the trades, personalize your catalog, and create a third place for your customers that inspires them to perform at their very best. Be creative and think outside of the box to deliver an experience that sets you apart.
Time to Put This Into Action!
Execution is what separates the top-performers from those who know what to do but fail to put that knowledge into action.
So let me call you to action.
You want to grow your sales and increase your bottom-line, right?
If this is you, schedule a consultation today so we can provide your with a plan that is innovative, effective, and affordable.
Don't put this off any longer. Start building a legacy that stands the test of time today!
What do you think?
Are you a local distributor? Do you do any of the things we mentioned here? Are you doing something different that is getting results? Let us know in the comments below!