The Distributor Channel

A few days ago we posted on Benchmarking your sales growth... and getting the information for free. Below is a recent (and more detailed) listing posted today by Modern Distributor Management: Here's a quick synopsis of sales trends for public distributors and manufacturers. Second quarter 2010 is compared with second quarter 2009. (Find specific news about the largest distributors and manufacturers on MDM's Company News page: www.mdm.com/company-news. Find sector-specific news here: www.mdm.com/sector-news.) All of these distributors are MDM Market Leaders. Find the list of top distributors in eight sectors, including 2009 sales trends, at www.mdm.com/marketleaders. •DXP Enterprises: Up 6.6% •Airgas: Up 7% (6% organic growth) •Fastenal: Up 20 % •MSC Industrial: Up 28.5% •Grainger: Up 16% (9% increase in the U.S., excluding acquisitions) •Bossard: Up 18% in first half •Builders FirstSource: Up 20.5% •Wesco: Up 8.6% •L&W Supply: Down 12% And some manufacturers: •3M: Up 18%

I can’t really remember when I saw my first “Red Box”; it probably wasn’t all that long ago. But over the past few months, these things have become a part of my environment. I see them everywhere – at the local Walgreen’s, in the front entry of my neighborhood grocery store and at busy convenience stores. And, last week, I noticed one along side an interstate McDonald’s. For those of you who spent the past 5 years holed up in a hermit’s cave or incarcerated in solitary confinement, the Red Box is a refrigerator sized vending machine that dispenses rental DVD’s. What makes the machine cool is: You can locate and reserve DVD’s over the internet There are 5-6 of these machines within a few miles of my house. I can see which movies are available at the machine standing at the Walgreen’s a half mile from my house. You can rent from one location and return to another You can rent movies while traveling; basically watching movies as one hops from machine to machine across country. Your

Dire Straights’ 1987 song “ Money for Nothing ” just blasted out of my office stereo – concert volume drives creativity. It put the gears into motion. Wholesalers today live in a charmed time. Oh, we hear plenty of negative stuff – the Recession, off-shoring, closing of US manufacturing and the like. But we have tools unlike any and all of our forefathers in the industry. They say information is money – and “now days”, we get it for nothing. Here’s my take on “ Benchmarking for Free ”. So many of the folks I talk to deal in the industrial market – the great US manufacturing sector. The recovery is under way and their business is improving. The problem is they really lack any solid understanding of how much things have improved. Their business can be up 10% but they don’t really know if this is good, bad or otherwise. To combat this I suggest you benchmark yourself against some of the public companies who serve the same market (in this case I selected Industrial but it could

This has nothing to do with distribution and everything to do with distribution. I decided to publish it here so you might pass it along to those folks you know who fancy themselves as "bargain shoppers". My prioritization of safety concerns looks something like this: 1. Theoretical danger 2. Potential danger 3. Real and Present danger Theoretical danger is an event that could theoretically happen. For instance a meteor could theoretically streak from the sky and whack me in the head. They say a meteor killed off the dinosaurs – the same could happen to the last of the Hurtte dynasty. Theoretically, that is. Potential danger is more likely to occur. If you live on the San Andres fault, there is a potential for earthquake damage. To not consider this as a possibility and develop future contingency plans would be foolhardy. Real and Present danger equates to immediate danger. Danger which requires a change in habits or actions falls here. Anyone who ignores this kind

Recessions accelerate changes in way we do business. Yesterday, an old friend made the comment that his (distribution) business is doing well, but it just doesn't feel like 2007. Things were good but different. The recession has put a mark on our world. A few months ago a survey of the sales management teams of industrially oriented distributors revealed that 72% planned to expand their market by adding to their product offerings - Sell more stuff to the same people. This manifests itself in Electrical Wholesalers adding safety products, Industrial Distributors taking on electrical products and Power Transmission Distributors marketing new lines of Automation and Mechatronic technology. At the same time, distributors are changing their style of business. Case in point two recent events nationally known distributors Kaman Industrial Technologies and Graybar Electric. Kaman Industrial Technologies, a distributor of industrial parts just announced a sales/marketing collaboration with