Offering value-added services should be integral to any distribution company’s business model. Value-added services go beyond the immediate delivery of goods and provide additional customer benefits.
With manufacturers deploying disintermediation strategies, the emergence and growth of large e-commerce platforms, and larger competitors, competition is fierce. A company can stand out from the competition by providing a greater range of additional services. This can be especially beneficial for smaller companies needing more resources to compete with larger companies on price.
The Benefits of Adding Value in Distribution
These services can range from providing technical support to offering customised packaging solutions. By offering value-added services, distribution companies can:
- Increase customer satisfaction
- Build loyalty
- Solidify customer relationships
- Increase sales and profits over time
- Differentiate from competitors
Key Value-Adds in Distribution
Examples of value-added services include:
- Customised packaging to meet customers’ needs, including specialised boxes, labels, and other materials
- Technical support and expert guidance to customers, including advising them how to use a product or troubleshooting any issues that may arise
- Kitting by combining multiple products into a simple, easy-to-pick-and-use package, grouping commonly purchased products into a separate sellable SKU
- Assembly, taking different components and builds sellable units
- Light manufacturing, starting with a stock product and modifying it to suit the customer’s needs, empowering the distributor to stock fewer product variations, freeing up space and capital
- Vendor managed inventory (VMI) means housing inventory at the customer’s location, but the distributor remains responsible for its management, for example with bins or vending machines
- Rentals of items to customers that do not wish to purchase them – either long- or short-term based on their business models – such as high-value and seldomly used tools
- Field Service provided to customers that purchase equipment but do not have the expertise to service the equipment themselves
Now the Question Becomes, How?
A best-in-class industry-specific enterprise resource planning (ERP) solution is critical for efficiently delivering value-added services. Distributors face supply chain disruption, aggressive competition, and labour shortages, which make providing the products and services people desire increasingly challenging.
These are just a few examples of value-added services that industrial distributors can offer. By providing these services, companies can increase customer satisfaction, build loyalty, and ultimately increase profits.
For more information about how to optimise your distribution business with technology, please contact Paul Bouchier at paul.bouchier@ioco.tech.
Written by: Paul Bouchier, Sales Director at iOCO, within iOCO Software Distribution, an Infor Gold Partner