If you had to explain the value of two-step distribution, could you? Two-step distributors buy products from the manufacturers and then sell the product to the dealers and boatyards. The dealers and boatyards, in turn, sell it to the end user, thereby earning the two-step definition.
For those of us in the industry, it is the way we do business so we do not think about the value. It just is. Many times the simplest and easiest way to explain something is to just list some of the benefits for the retailers and boatyards; explaining why they would want to use distributors, and then do the same thing for the manufacturers.
So if you are a dealer or a boatyard, why would you want to buy from a distributor?
Your distributor can provide:
• “Just in time” delivery allowing you to order on an “as-needed” basis, which improves your cash flow, increases your turn and increases your ROI (return on investment).
• More productive use of your square footage by becoming your warehouse.
• Catalogs and Web sites where ordering can be done 24/7, with delivery usually the next day.
• Marketing and dating programs that allow you to have the most impact on your market by increasing store traffic and building sales.
• One-stop shopping for product with exceptional seasonal assortments.
• Merchandising assistance, flyers and signage to help bring customers into your store.
If you are a manufacturer, why would you want to go to market through distribution?
Selling through distribution saves you from invoicing hundreds of customers for small shipments; the distributor takes care of that.
Credit risks are reduced by dealing with reputable distributors.
Having a nationwide network of distributors eliminates the need for regional warehouses by the manufacturer.
Storage and delivery costs are reduced, and factories can be used for production rather than warehousing.
Distributors provide market feedback, allowing more accurate production planning.
Shipping five pallets to a distributor instead of 500 individual shipments reduces transportation costs.
Stronger, positive relationships can be developed by concentrating on fewer customers.
Promotions, flyers and signage by distributors increase the number of manufacturer “impressions” and help build market share.
One way that National Marine Distributors Association continues to add value to their members is by producing the biennial S.T.E.P. Training Conference. As explained elsewhere on this page, S.T.E.P. stands for Sales, Training, Education and Purchasing. Purchasing is held every year and, since 2003, we have co-located the purchasing portion of S.T.E.P. with the MAATS show.
S.T.E.P. Training, our biennial event, will be held in January. How does this event benefit the dealers, boatyards and manufacturers? It provides specific product knowledge to their salespeople who then share the information with the dealers and boatyards. The distributors send their salespeople to S.T.E.P. Training, where the manufacturers provide classroom training — often hands-on — of new and existing products. The salespeople are provided with all they need to help their customers (dealers/boatyards) provide exceptional service to the end user. By training the distributor salespeople, we help improve the professionalism of our segment of the industry and help the retailers increase sales by selling their customers the right product the first time.
The marine industry often gets referred to as an industry of relationships. And it is the people who make up the relationships. It is the people who are at the heart of the distribution system, and it is the people who provide the service. Service is what distribution is all about.
It is their reason for being; it is the key to success.
Nancy Cueroni is executive director of the National Marine Distributors Association. The NMDA is the leading trade association for U.S. and Canadian marine products distributors. Members include major distributors, many leading product manufacturers and manufacturers’ representatives. For information, visit www.nmdaonline.com or call (860) 767-7898.
This article originally appeared in the July 2008 issue.