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Done With the The Dip...

In May of this year, I sadly realized that I would probably waste my opportunity with a time machine. Instead of all of the cool stuff you COULD experience, I had decided that I would punch my theoretical ticket to go forward 10 years and see who the new “thought leaders” would be for our Industry.

All of that cool stuff you could theoretically do, and I would throw it away. Toss it all down the drain just to see who emerged to lead the Industry forward from this moment in time.

In my defense, this curiosity isn’t entirely crazy. You can look back on major events from our very recent past and see what leaders and trends branched off as repercussions of the event itself.

The 90’s -- A burst and a future determined

We start in the ’90s because this was the last period when our Industry was represented by Distributors pounding the pavement into a Client’s office with an attaché full of Supplier catalogs. At that moment, Business was still reliably built on card drops, canvassing for new clients, and face-to-face sales. It was also when the new digital world started making outward waves. While the Dot.Com boom didn’t directly affect any of us, the retrospective view clearly marked that the future marketplace would be considerably different from the previous market. ALSO, one had to be careful with their newest sales resource: the cell phone! While undeniably cool and convenient, the costs on Roaming Rates, Messaging Limits, and Overages on Talk Time would wreck a good month’s worth of sales.

2001 – Abrupt change

The old school era ended abruptly in September 2001. The adjustments made in business, however, were actually pretty easy pills to swallow. Given the digital push in the ’90s, businesses had been trending towards new digital resources and tools rapidly. Sudden reliance on engagement through email, small business websites, and software as a service platform was not uncomfortably forced upon most, as these tools had already become the norm rather than the exception. On top of that, digital outreach allowed Distributors to easily work around the tighter security measures designed to keep strange people out of places of business.

2008 – We actually did break the bank

It is easy to forget just how prosperous a year 2008 had been PRIOR to the October financial crash. By the end of the third quarter, our Industry was at or around, $20 Billion in annual sales for the first time in its history. The fall off the fiscal cliff was the worst possible event, at the worst possible time imaginable.

In keeping with how business was then done, Suppliers were prepping for the biggest 4th quarter sales cycle any of us had ever seen based on projections created in the first three quarters. Furthermore, many had already placed pre-orders for 2009 products that would be arriving at their warehouses soon.

When the economy plummeted, Suppliers were overloaded with inventory, and Distributors were losing Clients every minute. Nobody could have seen this coming… except of course, for those people who were paying attention and saw this thing coming.

In June 2008, one of the finest examples of journalistic brilliance was written in Counselor Magazine by Michele Bell. She identified troubling signs that most in the Industry turned a blind eye to while laying out challenges that we would be dealing with only 2 months later. However, with all her brilliance, there was one specific section, not written by Michele, in the June 2008 copy of Counselor that laid bare the world that was about to come. It was in a standard Q&A filler section where one of the Industry’s largest Distributor firms plainly stated the game plan that would take over the Industry: “We are training our sales team to use their pricing benefit.”

Now, in my view, a pricing benefit is the only actual benefit Large Distributors have to offer over their smaller Distributor peers. When the economic floor fell out from under our feet, price DID become an issue for Buyers and – as was clearly stated in June 2008 -- the largest distributors in the market had been actively training their sales team to capitalize on that moment.

As the dust cleared after the economy went boom, Suppliers needing to dump inventories did so by dropping their prices for those Large Distributors, and they didn’t hesitate to turn that pricing inch into a product deflation mile. By 2010 the average profit margin for the Industry had dropped by over 5 points. The long-term net effect has been that for past 12 years we have seen a commoditization of this Industry happening from the tipity-top and trickling down to the rest of us down below.

I’m not going to argue that this is a bit of a simplification of what transpired. There were hundreds of variables at play – not to mention the Buyer and the Internet's role in this whole process. Regardless, it is inarguable to say that robust abuse by a shockingly small number of Large Distributors has created a dangerous imbalance in the Industry. It has meant that Suppliers have lost pricing controls of their own products while also seeing the Traditional Distributor being left to offset profit losses for those same Suppliers.

So now we come to today.

A pandemically altered state of reality has created an opportunity for a new class of thought leaders to emerge, and in May I had been immensely curious as to who those thought leaders would be.

Let me repeat, “in May I had been immensely curious.”

We are now fast moving into December, and after having arched through my own process of dealing with The Dip, I have concluded that I am no longer satisfied with being a passenger on someone else’s ride. On top of that, the messages I have been receiving from Distributors and Suppliers tell me that they too, are done being collateral damage to the whims of the powerfully self-appointed few.

It now feels obvious to me that waiting for someone to step up translates to NOT being a part of the change – and I am not content with that any longer. WE are not satisfied with that any longer. WE went through the Dips of 2020 together, and WE will come out of it together. Once on the other side, WE will take control of our own future. WE will eradicate the abuses that have damaged this market, and WE will build together the Industry that best represents ALL of us.

WE will once again have an Industry that ensures that WE will be our own competitive advantage. WE are the SOMEONE we are waiting for.

Jeremy Chacon, PromoEQP

© 2020

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