MRO distributors are changing the way they operate. By expanding their product line, they are diversifying their portfolios and blurring the traditional lines between their businesses.
Distributors are under pressure
Pressured by a lack of growth in manufacturers coupled by strong competition from new online competitors, traditional organic growth methods are drying up for MRO distributors. While some acquisitions have occurred, many companies are seeking to leverage their distribution and sales systems by expanding their product portfolios.
Blurring the Lines
The continuing expansion of product offerings and the fact that non traditional MRO companies are gaining large shares of MRO business has blurred the lines between the various suppliers. While technology was once considered a key differentiator for some suppliers, increased investment by most key players has achieved a certain degree of parity. Our traditional mental maps of the categories served by each supplier are quickly becoming obsolete.
Effect on the Market
This expansion has not been without issues. Some areas of MRO are heavily knowledge based, and while new online entrants and other distributors now carry the products, they lack the knowledge base to effectively council customers regarding their purchases, especially for technically advanced areas. MRO users can definitely take advantage of this product expansion, but being someone’s experiment is not going to end well. Gaining experience regarding the quality of these new services is vital.
Diversifying The Portfolio
It is hard to envision a world where a company can buy, both cheaply and effectively, all of the MRO items that they need along with the advice to use it, from one company. While we remain far away from that panacea, it is becoming easier to at least use less suppliers than a decade ago. Understanding which suppliers have the best JanSan, industrial, safety, PPE, and other offerings is critical. Working with CoVest can provide that insight without the pain of finding out the hard way that a supplier cannot deliver on their new program.