Rep Distribution - A Puzzling Landscape
By Deborah Smith
Executive Director, Professional Audio/Video Reatilers Association (PARA)
Wherever CE specialty and custom dealers gather these days, the most widely discussed and highly charged topic of conversation can be summed up in one word: distribution.
Over the past several years, dramatic changes have rocked the traditional rep and distribution practices for the regional marketplace. As a result, the new landscape that determines how products are sold, by whom, to whom and for how much, is demanding a complete rethinking of brand positioning, brand loyalty, and market strategy. All four cardinal points of the CE chain — dealers, reps, distributors and vendors — are being affected by the shift.
Given the depth of emotion that the distribution debate evokes, one might think the new landscape formed itself overnight. But complexity like this takes time to unfold, and in fact, the seeds of change were planted over a decade ago. The current state of distribution, which can fairly be called a fait accompli, shaped itself in response to a CE market in rapid transition. In particular, the changes were spurred by the emergence of a new strata of small independent custom dealers that needed product, and for whom the transactional cost of selling them product became too expensive and unwieldy for the vendors.
Today, these dealers are acquiring and selling product through methods that don't fit easily (or at all) into the traditional distribution paradigms. The market has evolved, and distribution practices have had to evolve along with it. For some, these changes have been a welcome response to an outmoded system that was ripe for change. For others, the changes feel like a deck stacked against them. Who's right and who's wrong?
THINGS USED TO BE SIMPLE(R)
There have always been distributors in our industry. But from the 1970s through much of the '90s, there was a clear division between types of distributors and their functions. On the one side, there were regional and national distributors, which stocked and sold commodity products directly to non-specialty independents, along with appliance and discount stores. On the other side, there were independent rep firms, which sold specialty products with a selective distribution strategy to independent specialists (and over time to regional and national superstores) in a given regional territory.