I want to relate some thoughts around two-step distribution and market performance within the wholesale building products and millwork industry. In my 10 years with Andersen Windows and 6 years at Hampton Distribution Companies (a window and door distributor in California)—I have always known that distribution had to add value to remain viable.
Whether a distributor, a dealer, a one-stepper, or a supplier—ALL have to individually make a difference. And with manufacturers continuing to evolve the sales, service, order fulfillment, and logistics they offer--the redundancies in the channel continue to grow.
Manufacturers choose to use distribution for 4 primary reasons:
1) The distributor's knowledge of the market
2) The execution of market and channel plans to get product to market thoroughly and efficiently
3) Access to customers known by the distributor--where relationships flourish and penetration is deep
4) The volume of business a distributor can deliver to a manufacturer
There must be an overwhelming and compelling reason why each entity should have a place in the channel of distribution. Where value is not added, where market share gains are not realized, and where customer satisfaction does not increase—a successful and prosperous relationship between distributor and manufacturer will not endure.
At Hampton, we knew we had to add value to move forward. We saw the day where we could provide specialized functions as a service for our independently-owned customers—in order to provide more well-rounded solutions for them to offer to their customers.
Our written long-term vision statement, created in late 2005, was:
Home installation and service for windows and doors in every major metro market in the West--defined as:
1) Value-added services that help our customers, and 2) HDC's foothold on continued market strength.
Strategies like this would have given Andersen and our door suppliers more ammunition in which to combat the competition—making our products easier to handle, sell, and provide to homeowners everywhere. We never ended up testing our theory due to running out of time. In 2007, external events caused us to close the company.
But the vision bore great promise in an escalating world that demands more “do it for me” service all the time.