Distributors Are Not Customers

Some manufacturers don't acknowledge this value openly and live in a "Love-Hate" relationship with their distributors. They can't live with 'em and they can't live without 'em. Of course it's true that a few distributors deserve this negative opinion. There are those who have made fortunes simply because they had products with exceptional brand equity in exclusive or selective territories that required nothing more than answering the phone to get rich. Some of these distributors have failed to reinvest in their business, putting personal needs ahead of business needs. Then when the end of the product life cycle nears and cutting edge distribution is required for new product introduction and support, the commitment, desire and competence on the distributor level is often lacking. These circumstances just fuel the fire of manufacturers' low opinion of led strip distributor. Fortunately we believe these scenarios make up only a small minority, so we need to work to change any negative generalizations.

Different Perspectives：We should recognize that there is a different business mindset between the distributor and the manufacturer. By understanding the two perspectives better, each party can work toward an improved partnership relationship. The manufacturer prefers to have a contract with point-of-sales information. Their contract would state, you will do "this," and if you don't, "these" are the consequences, and by the way, our deal can be cancelled with a thirty-day notice. On the other hand, the distributor prefers a partnership covenant that says if you do "this," we will do "that," and together we will grow market share.

Naively, throughout much of my distribution career, I believed that I was a customer of the manufacturer. I bought their product and resold it. I did not comprehend the concept of not being their customer until 1998. I was two months on the job as COO of a $400 million distributor. The first time I met our major supplier, a manufacturer of pumps, it was at a cocktail party. I was talking to their Vice President of sales. I had done my homework and knew our company was on their top ten account list as we had purchased over $45 million dollars of product from them the year before. I made a comment to this Vice President about our company taking pride in being one of their top ten customers. I expected at least a smile, kudos, or just a grateful nod. He looked at me in disbelief and with a rather firm, arrogant voice said, "Rick, you are not a customer-you are a distributor!"

At the time I was offended by his attitude but have since come to realize that in the eyes of the manufacturer, distributors are not customers. They are simply a link in the supply chain. Ideally, they are channel partners. Manufacturers have huge capital demands to cover high fixed costs. Their call to continually increase market share is essential, yet distributors sometimes get frustrated with the volume-driven needs of their manufacturers.

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