The Distributors Channel Evolves

The Distributors Channel Evolves

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Distributors are classic middlemen, occupying the crucial space midway between manufacturers and retailers. Only the best ones survive and prosper, and they do so by performing essential services for both their suppliers and their retail customers that increase their efficiency and profitability.

In an age of incredibly shrinking profit margins, rapidly changing technology and a slow-growing economy, distributors enable photo specialty retailers and other small and medium-size retail channels to compete successfully with big-box stores, large consumer electronics chains and Internet aggregators. In the current retail environment, they are still playing a pivotal role, providing important benefits to retailers and vendors alike by configuring, executing and supporting more effective, efficient and profitable business strategies and working relationships.

Distributors are deeply involved in helping retailers like you maintain lean inventories, enabling you to tailor your ordering requirements to your immediate needs rather than the demands of manufacturers and suppliers. They can help you optimize your product mix to suit rapidly changing conditions—and reap the benefits of just-in-time shipping programs. They’re also deeply involved in promotion, sales and service at both ends of the business, providing the knowledge base and financial infrastructure that deliver maximum flexibility plus the obvious benefits of bulk pricing for smaller orders.

Typically, distributors also provide a wide range of business services, such as marketing analysis keyed to your store’s demographics, timely updates on the latest products and trends, and a host of management skills. Many also handle operational details ranging from returns and credit approvals to invoicing—even collections.

While they’re definitely in business to make a profit, for many independent imaging resellers what they provide is well worth it and makes perfect business sense. In short, a good distributor maximizes your flexibility and agility so you can run your business smoothly, efficiently and predictably, despite the inevitable economic ups and downs.

For a clearer picture of how distribution is evolving, how distributors are responding to changing trends in the imaging marketplace, and an overview of the hottest emerging product categories, marketing strategies, services and convergent products, we interviewed five leading distributors and asked them to give us their candid views. Here’s what they had to say.

Mark Roth, President and CEO, Argraph Corporation

Argraph is celebrating its 60th year, and we’ve been able to succeed by hewing to the traditional values that retailers demand—fast, complete delivery, sourcing new and profitable products, providing information that keeps dealers current, and of course great customer service. We represent about 50 accessory brands, many of them exclusive to us, including Pana-Vue, Sirui tripods, Marumi filters, Samigon accessories and Pixel (professional flash triggers, remote controls, etc.).

Basically we’re doing what we’ve always done, but we’re also very responsive to changing technology. Pana-Vue has been making quality slide viewers for eons, but their Pana-Scan line is perfectly positioned for the ongoing analog-to-digital conversion market. We also represent QP Cards, a new color calibration and management system that comes with free downloadable software. This is another up-market category.

The Sirui line of high-quality tripods, heads and tripod accessories has been extremely successful for us, and we’re confident that will continue going forward. And we expect the Pixel line of professional accessories to be at least as successful as Sirui.

As more casual shooters transition to becoming serious photographers, accessory sales will inevitably increase, and we feel the trend toward increasing smartphone camera use is creating opportunities that we, along with everybody else, are seeking ways to monetize effectively.

We believe 2013 will be a great year for the photo industry, and we sure hope everybody in the industry will derive benefits from the increasing numbers of newly minted photo enthusiasts. argraph.com

Rob Eby, Vice President of Purchasing, D&H Distributing

The distribution business continues to change as mobile devices such as smartphones and tablets achieve a higher market penetration, and as camera models improve to compete.

Most manufacturers are trying to move the actual selling price upstream, especially in the point-and-shoot category, with more sophisticated enthusiast-aimed models. Interchangeable-lens compact system cameras have really taken off. We’re also seeing strong growth in the video capture segment, driven especially by outdoor sports enthusiasts.

As a distributor, it’s our role to make photo retailers aware of the growing array of offerings from different manufacturers in these high-growth areas—and to teach them how to maximize revenues from these transactions with strategies such as accessory add-on sales. dandh.com

Claudia Babetto, Director, Distribution & Logistics, Manfrotto Distribution USA
Manfrotto Distribution was originally established as Bogen Photo in 1950. Its mission is to import and distribute to its authorized dealer network the brands designed and manufactured by Manfrotto, the imaging division of the Vitec Group, including Gitzo, Manfrotto, Avenger, Lastolite, Kata and National Geographic, along with third-party brands Elinchrom, Metz, Gossen and Rotatrim. Service, innovation and quality are what Manfrotto is proud of delivering to the U.S. market.

For the past 20 years, distribution strategies have leveraged technology to drive efficiency and accuracy—improvements that help us service the customer better. In the last few years, productivity-based initiatives have become essential in meeting the demands of our customers, allowing us to increase our customer base. EDI capability as a requirement exists with virtually every large volume retailer, allowing a quicker turnaround period. Advanced ship notifications (ASN) enable retailers to reconcile purchase orders with relative ease and to receive goods in a fraction of the time.

Customers also look to vendors to develop strategies for optimizing their specific inventory levels to ensure their on-hand inventories are adequate to satisfy consumer demand. Demand-planning systems and volume analysis expertise are becoming essential. Manfrotto is managing sales forecasts and demand planning on a level usually typical of larger companies.

The fastest growing trend among larger retailers is to demand that vendors’ distribution systems provide e-commerce solutions that integrate with retailers’ systems so products purchased by the consumer can bypass the retailer altogether and are routed directly to the consumer.

Our retail partners are also demanding more services such as EDI, bar coding, VMI, JIT inventory, product videos, online support, terms, and greater profit margins. Even smaller retailers are increasingly focusing on developing more efficient inventory management strategies to enhance their bottom line. Working together with our partners allows us to deliver this type of high-level service. manfrotto.us

Doug Weaver, Business Manager, Photo Specialty Division, WYNIT

WYNIT was established in the late 1980s and has been evolving ever since. We kind of did it backwards, taking a quantum leap with the advent of the digital revolution and later backing into traditional stuff like black-and-white film.

Our list of suppliers includes a few hundred manufacturers, and we serve about 800 retailers overall, with our top retailers numbering about 150. Our mission is to offer products and services that are relevant and profitable for our customers and also for our suppliers.

What differentiates WYNIT is that the entire company is rooted in the photo business—that’s where we came from. We’re able to serve a wide range of clearly differentiated, vertically integrated market segments because we’re photo business people who eat, sleep and breathe photo and understand the special needs of your individual business. Indeed, our motto is “We make it our business to know your business.” We’re one of the largest photo distributors in the U.S.—big enough to service multiple warehouses but specialized enough to meet your specific needs.

The biggest trend in distribution today is that suppliers are looking for strategic relationships that are more targeted and aimed at specific markets. In terms of product trends, I see cameraphone accessories as one subcategory that’s expanding because they enhance the user’s photographic experience with these ubiquitous devices. Even waterproof, shockproof cell phone cases or mounts that allow consumers to use them like a GoPro, or filters built into the cover, enhance the cell phone user’s video experience. Photo specialty dealers should not only offer them but also display them and tell their customers about them.

Convergence is in the air; we’re selling a lot of Eye-Fi cards, all kinds of electronic devices are talking to each other, and people are using their cameras to connect to social networks. HD video for DSLRs is another category that has yet to reach its full potential, although it’s gradually building.

In short, 2013 is going to be a banner year for everybody; we had a fantastic January and that was coming off of 2012, which was really very good. There isn’t an earth-shattering number of new trends, but business is chugging along and is pretty healthy. wynit.com

Jeffrey Seidel, Director of Sales & Service, OmegaBrandess Distribution

OmegaBrandess, founded as Simmon Brothers of enlarger fame more than 70 years ago, offers about 10,000 discrete products from dozens of branded lines in the imaging space. We serve upward of 400 retailers, and our goal is to be a one-stop shop for everyone who needs the latest photographic accessories at attractive prices—accessories are what we’re all about.

Distribution is becoming more challenging since many manufacturers believe it’s more efficient and profitable for them to sell direct to larger retailers with multiple locations than to serve smaller and midsize stores with what they see as limited quantities. That’s one reason acquiring new lines is becoming more difficult.

To put a positive spin on that, it’s also why it’s more important than ever for small and midsize stores to support distributors like us; we have no minimum purchase requirements, but we’re still able to offer retailers popular product lines at competitive prices. We take the risks of stocking new brands and new product categories, and we provide retailers with the opportunity to try new things without investing lots of money in a risky proposition—one of the most important ways to grow your business in a period of rapid technological change.

We’re also committed to serving niche markets others tend to ignore. When Kodak dropped the Ektachrome film line, we jumped in by offering E-6 products from Agfa because there was a small but steady demand. Whenever there’s a hole in the market, we do what we can to find different products to fill that void.

Insofar as new product trends are concerned, we think accessories for smartphones have a lot of upside potential for 2013, providing dealers help customers make the connection—it’s a growing but challenging market. Retailers that have established strong relationships with their customers have a definite edge in making the necessary connections with people who walk into their stores, but you have to be proactive: “Bob, have you seen what this thing can do for that iPhone 5 you’re texting on?”

As every retailer knows, the profit margin is in accessories, and these days that definitely includes wireless stuff, external hard drives, battery packs for the iPad, etc. While 2012 was a good year, we’re expecting 2013 to be even better. That’s why we’re adding new products from existing vendors and adding new and innovative product lines. A good example is the Hyper line of products from Sanho Corp. that includes HyperJuice battery-related products, HyperDrive storage products and HyperShield cases and camera protectors. As some smart guy once said, nothing ventured, nothing gained.

Essentially, what we offer retailers is in-depth product knowledge and the ability for smaller specialty dealers to take advantage of our large-scale quantity pricing. We pass along the lion’s share of the savings to our dealers. That’s why we’re becoming an increasingly important connection for smaller dealers in helping them to compete with the big boys, and to survive in a fiercely competitive environment by combining attractive prices with their strongest suit, one-on-one relationship marketing. omegabrandess.com

Rick Sanchez, General Manager, Retail Sales Division, SED International
Founded in 1980, SED International Holdings, Inc., is a multinational distributor offering a wide range of products, including consumer electronics now in the photo specialty space.

The company also provides custom-tailored supply chain management services in e-commerce, B-to-B and business-to-consumer markets. Headquartered near Atlanta, SED represents 300+ suppliers in the U.S. and has about 400 employees.

Our mission is to work hard to help our retailers and other customers to diversify and grow by providing superior service through a results-oriented organization driven by talented and passionate people. Our most valuable asset is our people, and every department is trained and focused on customer service. Our reps are consultants and business partners, not just order takers.

Recently, we’ve seen a dramatic upsurge in our accessory business, and as a result our accessory partners are now developing innovative and ingenious products to bring to the table. Over-the-ear headphones and audiophile-quality Bluetooth speakers are quickly becoming accessory leaders, and these and other CE items are moving into the photo space with the rapidly increasing market for HD video accessories of all kinds.

I’m personally very optimistic about the way 2013 is shaping up, and I see smart TV and television accessories, such as wireless audio/video streaming devices, becoming more popular. With the convergence of cameras, smartphones, tablets, home computers and music systems, the home media center will be redefined and more important than ever going forward, since user-generated imaging such as still photos and video will be an emotionally significant part of that transition. sedonline.com

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