Is the Specialist Independent Distributor Becoming Obsolete?

independent distributor

Brands that have enjoyed long-term success know the importance of first impressions. While brand positioning and communication are extremely important, it is the distribution network that plays a key role in shaping these first experiences.

Brands launched in the eCommerce era often chose this direct-to-consumer distribution channel, which allows a better control of the brand message, and a deeper understanding of the end user.

Many established brands, launched before the eCommerce boom, continue to rely on a more traditional, indirect distribution model. Some understand the need for channel diversification and slowly adapt, while others remain stuck in the same distribution model for fear of channel conflict.

Luxury brands in particular have been reluctant to adopt the online model, continuing to rely on specialist, independent distributors to push the brand to consumers. In many instances, the manufacturer-distributor relationship can be tense.

Brand owners feel they need more brand control, and demand more transparency from their independent distributors.

For their part, distributors feel the final customer is their most important asset; many are reluctant to share any consumer information for the fear the brand owner go direct, bypassing them altogether.

It’s obvious that selling via independent distributors can lead to some awkward situations, which brings us to the topic of this article: are independent distributors capable of serving the modern consumer while delivering the brand integrity and transparency the brand owner expects?

Specialist Independent Distributor Versus Big-Box Retailer

If you are in the market for a premium, luxury, or simply a niche product, you will probably have to get in touch with an authorised retailer, which in many cases is specialist independent distributor.

The independent distributor plays a major role in the distribution strategy of many brands, particularly those in the low volume, premium price segment.

These businesses act the interface between the brand owner and the final consumer, and provide value-added service to the consumer, such as shopping convenience, a carefully curated product assortment, professional advice, and post sales service and warranty.

Unlike big box generalist retailers, independent distributors are typically specialised in a few closely related categories, such as jewellery and watches, audio and video equipment, or photography and video. The sales force is very knowledgeable and able to provide in-depth advice, versus your typical retail clerk who knows a little bit about everything.

For these reasons, independent distributors are very popular in the B2B space, where the consumer relies on specialist advice to make a purchase, due to the complexity of the product.

Product-wise, independent distributors carry a fairly narrow but deep product assortment, including premium and super-high end models. Unlike big box retailers that stock everything from toilet paper to TVs and computers, independent distributors offer complementary products within a particular segment, or need.

These characteristics make specialist independent distributors a favoured distribution channel for many premium and luxury brands that hope the in-store experience will reflect an authentic brand experience.

Here are some advantages of this distribution model that makes it a popular choice for upscale brands:

-a more cost-effective distribution method compared to the direct-to-consumer model, in particular brick and mortar retail. Starting and managing a direct-to-consumer physical channel is very costly in markets with high cost for real estate and employee salaries, which is where the premium and luxury consumer is typically located.

-a distribution channel that is faster to implement. Many independent distributors have multiple locations in various geographical areas, providing instant brand access to consumers in those areas. Building a direct to consumer distribution channel is very time and resource consuming, in particular for manufacturers with no distribution expertise, or those looking to penetrate international markets.

-an existing customer base the brand can tap into. Since independent distributors provide a one-stop shop for a specific category, it is able to reach a broader customer base than a single brand can.

Are Independent Distributors Keeping Up with Consumers?

In theory, this distribution model that provides a lower cost, existing customer base, and an already trained sales force is the ideal choice for many manufacturers. In reality, the model often leads to frustration for all parties: brand owner, distributor and final consumer.

I will start with the consumers, and my own personal experience. Since my shopping philosophy is “buy less of better quality”, I often found myself looking product and advice at a specialised store. In many instances the experience was less than satisfactory, especially considering the amount of money I was willing to spend.

To begin, distributors did not stock the product I was looking for, making my in-store visit worthless. While most of them are able to order it on demand, this defeats the whole purpose of brick and mortal retail: the ability to see, touch and feel the product, before spending a considerable amount of money.

Another frustrating factor is the sales clerks’ tendency to push other brands than the one you came to purchase.

While personal advice is always great, most product research is done online, before you reach the store. At least that’s what I do, until I narrow my decision down to the exact model I plan to purchase.

Once I go to the store excited to make the purchase, not only is the product I want to buy not in stock, but I am presented with alternatives I am not really interested in.

The lack of transparency is another conversion killer. In many industries, you will find no prices clearly displayed, leaving you to ask or wonder how much a product cost, and if you get the best deal.

Most manufacturers provide MSRP prices for their products, but in many cases you should be able to purchase for less. I found that distributors have a “fluctuating” retail price, depending on who the customer is. A headache for manufacturers looking to maintain price consistency across distribution channels.

These experiences lead to lack of results for brand owners, who experience sales stagnation or even decline. The lack of transparency towards manufacturers leave brand owners shooting in the dark, and promoting their brand to a consumer they don’t really know.

Many brands are fighting back, by offering less support to independent distributors, choosing instead to build direct-to-consumer channels.

In a candid interview with French newspaper Le Temps, CEO of Audemars Piguet’s, Francois Bennahmias provided a blunt justification for the brand’s decision to no longer participate in trade shows catered to distribution:

“Apple sells 99-cent songs on iTunes,” Bennahmias told the newspaper. “However, thanks to the username, credit card details, etc., they know their client better than us, who sell products at 25,000 francs. Do you see the problem?”

In an era of instant comparison and elevated consumer expectations, the role of independent distributor is becoming blurry.

The lower barriers to enter into e-Commerce have only accelerate the pressure independent distributors to stay relevant. Brands have also more options to reach consumers, while preserving the brand DNA and creating a good first impression.

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