With more people shopping online, many predicted the demise of distributors and wholesalers. Yet, distributors like Grainger are thriving today. Here's why.
With more and more people shopping online, many have been predicting the demise of distributors and wholesalers. It was believed that manufacturers could bypass channel intermediaries such as distributors, wholesalers, and retailers by "selling directly" to customers. Theoretically, if customers could bypass distributors and buy direct from manufacturers it would lower costs, make the system more efficient, and eliminate the costs siphoned by intermediaries.
Yet, distributors like Grainger are thriving today. Grainger's value proposition: "The One Item You Need + 1.5 Million More."
Grainger – A Case Study
Founded in 1927, Grainger works with 5,000 manufacturers and serves more than 3 million customers worldwide. Grainger stocks over 1.4 million products in its distribution centers and branches globally. For any given manufacturer, it would be virtually impossible to have Grainger's reach and scale.
- Grainger retains title of the inventory shipped and provides manufacturers with credit.
- Grainger takes delivery from the manufacturers in large lots and assorts into smaller lots to match the quantity and assortment that customers desire.
- Grainger provides service and support to customers.
- Grainger can make substantial technology investments to improve logistics for manufacturers and customers worldwide.
Conclusion
Distributors like Grainger add substantial value to a supply chain by performing functions that manufacturers cannot perform or that would be cost prohibitive for them to perform. Distributors can typically perform these functions faster, at lower cost, and with higher accuracy and quality than manufacturers. That is why distributors and wholesalers are thriving in an era of ecommerce.