The Importance of Managing Volume Rebates
For many B2B industrial distributors, volume rebates account for most, if not all, of their EBIT. My definition of volume rebates is the rebate paid to distributors when the distributor exceeds certain quarterly or annual manufacture purchase thresholds. Sometimes this is also referred to as Growth Rebates. There are several Marketing/Buying groups in the marketplace, most If not all of these groups promote and support volume rebates to their distribution members. If you [Read more]
Rising Prices Creates Profit Improvement, or Productivity Loss, Opportunity
In an industry where adding pennies to the bottom line makes the difference between a net loss, an average year, or being a top performer, the issues we raised earlier in the week that can be caused by rising material cost prices, especially at the current pace, become critical for distributors. This can be further exacerbated by supply chain issues that are affecting many manufacturers and, as Axios, labeled “the manufacturing boom's bottleneck.” [Read more]
Profit Potentional of the Long Tail
When we study distributor transactional data, we see the same trends over and over again that reveal untapped profit potential. While there are several reasons for why distributors struggle to reach their optimal profitability, one of the biggest culprits is an unstructured pricing strategy (if a strategy exists). This generally takes the form of broadly applied margins across product lines and SKUs. By doing this, distributors miss a golden opportunity to capture premiums [Read more]