I’ve been in world of distribution for more than 10 years, covering supply chain, sales, customer service, financial management.
Distribution company is a very small margin business. Unlike retailer that still enjoy more than 25% gross margin, or local / small distributor that able to gain 15-25% of gross margin. Being national distribution company today must live with only less than 10% margin, even severals companies are battling in 5-6% of margin.
The challenge are:
- Keeping alive with only 5% margin
- Stay comply with regulation
- Aggressive sales function
- Wide spread customer coverage
Years of experience in sales function is not a guarantee of future competition. Even today, we deal with “rapid penetration of Technology” that change business model. Customer has more access into wide options. Therefore the only way to survive in distribution is by keeping available.