“There is little to no margin in box shifting these days unless you’re doing it on an enormous scale. There’s no getting away from the fact that the traditional distribution model has changed considerably and it is not necessarily a viable business on its own.
“As a wholesale aggregator, we are working with distributors to help them identify how they can add value over and above box shifting. They are becoming increasingly aware that they need to see past the traditional tin and start looking at how they can provide solutions that sit behind it. It’s by doing this that we’ve been able to help them win some lucrative new opportunities with on-going recurring revenues at great margin. It’s about generating new revenue opportunities from a customer you already have.
“A distributor’s existing customer base will also be made more ‘sticky’ to them if they can create recurring margin opportunities. In simple terms, distribution can entail selling products and services in order to make a 5% profit. The key to successful distribution, is selling a solution that you make 25% on each month, which adds a different revenue line to the business and changes the shape of the opportunity.
“Another advantage of value added solutions is the fact they steer the customer’s focus away from what the piece of equipment actually costs. Normally in distribution, the common focus is on who is offering the best price for that particular solution, whereas if you are providing a solution wrap, it is not just about the equipment, but the overall service.
“Ultimately, it is very tough to distinguish yourself on distribution alone when it’s mainly about box shifting and price. If you can deliver something beyond that box then distributors should have the opportunity to generate more revenue.”