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Survey: Is The Distribution Industry Model Obsolete?

See The Results

What's Your Opinion?
Background Article

Historically, manufacturers have determined prices to distributors, and to a great deal, end customers, too. Distributor markup averages just over 25%, yielding slightly better than 20% Gross Profit. Distributor operating costs range just below that.

The point: Manufacturers control 80% of the pricing equation. But what if that changed? What if manufacturers paid distributors for the marketing and sales services they performed and distributors invoiced customers for products at cost? Or, what if distributors invoiced customers for services and products at cost? Would it expose manufacturer price and put the margin pressure back on THEM?

With continued downward price pressures from end customers, and upward cost pressures from IT and personnel costs, distributors are in a bind. Expecting Gross Profit to cover costs without charging for services may not work any more. What do you think about that?

Answer this survey and find out what others think, too! Immediately! Send this link to others so they can answer too. www.channelmkt.com/brokenmodel.htm

1. Can distributors survive in an industry model where Gross Profit is expected to cover operating costs?

	No, things can't continue this way.
	Yes, we're just going through a bad economy
	I don't know

2. What's the best answer if the model is obsolete?

	Industry has to switch to fee based services
	Combination of fee based services and markup based pricing.
	Manufacturers pay distributors for distinct services rendered, distributors Invoice product at cost to customers.
	Combination of Markup based pricing and the above
	I don't like any of these (sound off below)
	Things are Fine, no changes needed.

3. What do you really think? Sound off!