Opinion piece by Chris Grant – CEO | NetDynamix | @netdynamix
I am a compulsive reader and I’m fascinated by the use of the word ‘truth’ in article headlines, I am pulled in by the word hoping to find a clear, honest and truthful article on the subject matter – sadly, I am always disappointed. Too often there are industry issues that need unpacking and yes the truth to be revealed. Perhaps because of revenue and reputation these pieces are cleverly crafted by specialists and the truth is not revealed but a well worded piece is produced, and at the end the reader knows little more about the subject than when they started reading.This brings me to the ‘prickly’ subject of distributors who break trust and trade and work directly with the consumer, whilst still trying to have the network of wholesalers moving their products. It breaks trust and the natural and accepted flow of business. Yes the consumer ultimately gains the benefit as they may get the product cheaper when buying from the distributor, but the distributor fails to realize (or maybe they do, but don’t care) that their business has been built on the network of wholesalers and retailers and their brand has gone to market with the endorsement and market reputation of the wholesaler/retailer.
The consumer at the end of the day does not just want a good price, they also want product expertise and to be assisted in making the right choice of product or a combination of products to ensure that they are able to use the product as effectively and efficiently as possible.
When the distributor tries to be a retailer they only have one product range and they will want to push all their products onto a consumer. Is this right? Is it moral? We can debate this till the cows come home and no one will ever walk away having achieved a suitable conclusion on either side.
We all have an understanding of how things work commercially when products or services are developed in the mobile and audio world and the path it takes to get to market; Manufacturer – Distributor – Wholesaler – Retailer – Customer. Usually a distributor will have a recommended RETAIL price for an item. Once the retailer has bought the item they can either stick with that recommended price or change it slightly as they want to offer consumers a good deal, but also allow the consumer to have a good experience with the retailer and the products and ranges it has on offer. Mostly a retailer will be purchasing their goods from a number of wholesalers, thus giving them a variety of different manufacturer’s products to offer consumers. As they are on the floor, they understand the consumer’s needs and are able to best suggest a product to them or a combination of products.
When the distributor goes directly to the consumer – but uses the reputation built via the wholesalers/retailers marketing efforts, why should a wholesaler/retailer want to continue to support them? It’s a catch 22 situation – they may have the only product “type” on the market and the wholesaler/retailer needs to buy from them so that they have it on offer for their consumers, but then the retailer is competing with the distributor? As a retailer do you stick with the distributor through your wholesaler or not stock their product?
As a consumer all we want is;
- a convenient place and get the best products/best price/service/information and assistance as possible
- a place that allows you to transact via the multitude of electronic payment methods -not just a CASH option,
- A place that helps you get what you need when you need it.
- Warranties – when it does not work I want the retailer to sort it out for me – I don’t want to have to package it up and send it to the distributor and then follow up myself
- Stock holding – when I want to buy it I want it there and then (retailers carry stock and carrying stock means paying rentals, staff, etc).
When the distributor arrived in the marketplace they went to the wholesalers who went to the retailers and this was how they built their business, now they want to cut out the “sales network” and do it themselves. Certainly this article will spark debate, but one that needs to happen and perhaps the TRUTH will be revealed. Adding some additional food for thought to this discussion – when Apple launched they did so through their own stores, but now have changed that model and sell from their own stores, but have also added other retailers into the mix so that consumers have a broader access to their products.
Can I conclude by saying it’s not what you do, but how you do it that leaves an impression on people.
NetDynamix is a Radio Broadcast Consulting Firm based in South Africa with a substantial footprint into Africa. Specialists in Radio Consultancy and Broadcast Technologies such as Audio Streaming, Outside Broadcast and Transmission Infrastructure, Studio Build Projects and Technical Support.
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