The Evolution of Distribution

The Evolution of Distribution

1220
0
SHARE

Distributors occupy that crucial space midway between manufacturers and retailers, and the best ones succeed by performing essential services to both their suppliers and their retail customers. In an age characterized by shrinking profit margins, rapidly changing technology and a challenging economy, distributors enable photo specialty retailers and other small-to-medium-size retail channels to compete on a more level playing field with big-box stores, large consumer electronic chains and Internet aggregators.

In the current retail environment, they are likely to play an increasingly pivotal role, providing important benefits to retailers and vendors alike by configuring and executing more effective, more efficient business relationships.

To give you 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 talked to five leading distributors and asked them to give us their candid views.

“In a sense, everything old is new again,” says Mark Roth, president of Argraph Corporation. “We’re reinvigorating 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. What has changed is the way we communicate, which is now predominantly electronic via e-mail and our website.

“Amazingly, we’re still selling lots of darkroom products and, would you believe, slide viewers, but we’re always on the lookout for high-demand high-profit products, and we constantly bring new products to market. A good example is our new Sirui high-end tripods in the $130 to $600 class that are beautifully made and finished, feature an innovative, lightweight design, fold to very compact dimensions, and provide high load capacity and stability. At first I thought, ‘Who needs another line of tripods?’ but Sirui makes their own carbon fiber and uses forged aluminum for lighter, stronger construction. When I recently showed them to a leading Leica dealer he practically disassembled them and then commented, ‘This factory must be run by a German engineer!’ These days everyone wants to play up convergence, and we certainly offer many new products that provide connectivity, but even an old-school product like a tripod can be part of an innovative marketing strategy when it provides the right combination of quality and value.”

Distributors are deeply involved in helping retailers like you maintain lean inventories. They enable you to tailor your ordering requirements to your immediate needs rather than the demands of manufacturers and suppliers, 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.

“The distribution business continues to change as mobile devices proliferate, and as camera models improve,” says Rob Eby, vice president of Purchasing, D&H Distributing. “Most manufacturers are trying to move the actual selling price upstream, especially in the point-and-shoot category, with more complex technologies and smaller footprints. The emergence of the interchangeable-lens systems in a compact form has started to take off. We are also seeing a 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 areas, and to teach them how to get the maximum revenues out of these transactions with strategies such as accessory add-on sales.”

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, plus a host of management skills. Many also handle operational details ranging from returns and credit approvals to invoicing and even collections. They’re definitely in business to make a profit, but for many independent imaging resellers what they provide is well worth it and makes perfect business sense. In short, a good distributor maximizes your ability to be flexible and agile, and to run your business more smoothly, efficiently and predictably despite the inevitable economic ups, downs and speed bumps.

“For the past 20 years, distribution strategies have leveraged technology internally to drive efficiency and accuracy improvements that would ultimately lead to savings to their own bottom line,” notes Kevin B. Whitehead, director, Distribution & Logistics, at Manfrotto Distribution USA. “Robust WMS, pick-to-light and voice-pick technologies are a few examples of these approaches. In the last few years these productivity-based initiatives have become essentials in the market to meet the demands of customers. Purchasing entities have grown to realize the value in engaging their vendor, and aligning systems for receiving inbound goods for a speedy receipt. EDI capability as a requirement exists with virtually every larger volume retailer. Advanced ship notifications (ASN) enable retailers to reconcile purchase orders with relative ease and receive goods in a fraction of the time.

“Customers also look to vendors to develop intelligence around optimizing their specific inventory levels as a means to ensure their on-hand inventories are adequate enough to satisfy the demands of the consumer,” Whitehead continues, “yet are controlled enough to minimize the square footage needed to store goods. Demand planning systems and volume analysis expertise are becoming essential.

“The most current and fastest growing of the trends among larger retailers is to demand that vendors’ distribution systems develop an e-commerce solution so systems are able to integrate with retailers, and goods purchased by the consumer bypass the retailer altogether and are routed directly to the consumer. Organizations that harness these capabilities to link these transactions are instrumental in today’s market.”

“Retailers/partners are demanding more services: EDI, bar coding, VMI, consigned inventory, JIT inventory, product videos, online support, terms and more profit,” adds John T. Mascis , director of Sales, Photo and Video Specialty Markets, Manfrotto Distribution USA. “One of the trends that I have witnessed is a focus on inventory management from the retailer/partner side. The day of the large orders are gone, and now we are in the position of smaller but more consistent orders.”

Doug Weaver, Business manager, Photo Specialty division, WYNIT, also provided insights on structural changes and policies that continue to affect the distribution model.

“WYNIT has always embraced a vertical marketing strategy based on assembling a group of experts devoted to a specific segment,” says Weaver. For example, my division currently consists of eight individuals, each with considerable hands-on experience and expertise in photo retailing. We run each group more or less as a separate business and we don’t divide territories geographically like many other distributors. Essentially each one grows organically and everyone is free to prospect for new accounts in virtually any geographic area. The advantage of specialization is that each one of our representatives has a very good idea of how your business runs and what your concerns are.

“Insofar as convergent products are concerned, the chief driver is still DSLRs that are used to capture high-quality HD video,” continues Weaver, “and our greatest opportunity has been video-centric stores getting into DSLRs and HD-related gear rather than photo-centric stores getting into video. Even episodes of House and parts of Spielberg films are being shot with DSLRs these days, and we’re selling lots more high-capacity high-end flash memory to video-centric dealers. There’s also lots of action in the video accessory market, including specialty lighting equipment. We do see some action in compact interchangeable-lens cameras (CILCs) among so-called soccer moms, but among photo enthusiasts it’s still mostly a cult following and DSLRs are the dominant force. From our perspective, the sales of camcorder and pocket video cameras are flat or even contracting.

“We still do a lot of things we always excelled in, such as educating dealers on what’s hot and what’s not,” observes Weaver. “The iPhone accessory market is still in its infancy, but we’re definitely looking at it from a growth perspective. The iPhone is not the enemy and CES 2012 certainly proved that photo-related iPhone and Android accessories are an expanding market, but we’re being deliberate about adding new partners in this area. Upmarket trends include, as mentioned, anything related to HD video and action-oriented point-of-view video cameras like the Contour and Veho that are used on everything from motorcycles to surfboards. Also, a lot of dealers today are embracing the Internet via Amazon and eBay, and we can help them to optimize their Internet outreach. In other words, we can provide dealers with a map of how they can be successful on the Internet with our products. Today you’ve got to do something different, to execute outside the box, if you expect to survive and prosper, and we have the know-how that can really help dealers do that.”

Jeffrey Seidel, director of Sales & Service at OmegaBrandess Distribution, offered a different perspective of changing trends that focuses directly on photo specialty retailers and their unique position in the imaging marketplace. “Recently our retailers have been laser focused on lighting equipment, especially small portable lighting outfits, strobes used as the main light source, light stands, umbrellas, diffusers, etc. There seems to be a real ‘strobist’ movement out there. We’re also seeing an increasing demand for iPhone and iPad accessories like remote triggers, stands for shooting and viewing and, in general, accessories that allow these ubiquitous, multifunctional devices to be used in a studio setting. Significantly, this vibrant new product category relates to using iPhones, iPads and related items primarily as image capture devices and it coincides with their eating away at the P&S camera market.”

In conclusion Seidel comes back to the eternal verities of distribution that endure even in the face of radical technological change. “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,” he sagely observes. “In other words, we pass along the lion’s share of the savings to our dealers. That’s why we’re becoming a more and more important connection for smaller dealers in helping them to compete with the big boys, and to survive in a competitive environment by combining attractive prices with their strongest suit, one-on-one relationship marketing.”

NO COMMENTS