New Players Widen the Field of Distribution
Traditional Distributors Uphold Proven Value, Look to the Future
Even as the industry landscape broadens, the majority of security and life-safety companies rely on wholesale distributors that commonly warehouse all or most of the equipment an installation company needs. This saves money because the installation companies aren’t investing enormous sums of cash on overhead in the form of products sitting on shelves.
Relying on distributors also insulates security companies from the potential financial losses that long-term storage often brings. Such losses often occur when the purchase price drops and the dealer is left holding high-pr
iced products on the shelf.
Using a large wholesale distributor also assures faster delivery than buying direct from the manufacturer. This is because most manufacturers have a ship date of one to two weeks whereas many distributors can have it in the installer’s hands within one to two working days. This is especially true of large distributors that have many local and regional branches positioned across the country.
These large national firms, as well as regional companies, also specialize in assisting installation companies by providing a number of value-added services that go beyond the purchase. This includes design services, consulting and educational opportunities.
While the arrival of alternative distribution channels will pose increased competition, traditional distributors say they’ll be relying on their long-standing relationships to maintain and build their client base.
“We’re up against nontraditional firms that have not made the same local investment for the convenience of the customer,” says Roth. “But they do have the products, nonetheless. Because many of these firms operate at a lower cost, they do not always offer the same level of service, although they often supply these goods at a lower price to the dealer.”
Additional competition is not an entirely bad thing. Consider that new distributors bring networking and other skill sets to the table from which security dealers can benefit.
“Competition creates a positive benefit for the entire industry. It forces each of us to do an even better job of taking care of our customers,” says Teague. “Indirectly, we are actually working together to collectively contribute to making the industry better.”
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