Should Distributors Sell To End Users?

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Everybody likes to make money, and see their business grow. That’s hard to dispute. When business is slow, it’s entirely natural to seek new business partners, both inside your channel as well as out.

But how far should one go, and how far is too far?

When searching for growth opportunities, the guiding question should be whether an opportunity is totally new business, or could it potentially be cannibalizing sales from an existing partner? Sometimes that’s a difficult question to answer, and sometimes it’s glaringly obvious. What about instances when potential new business seeks you out?

A perfect example is end users who reach out to you, the distributor, inquiring about buying your products. This happens a lot.

I know it does, because I personally get queries from end users on a weekly basis. My phone number and email are right there on the website, so it’s entirely natural that interested end users would reach out to me.

My task, when that happens, is to pre-qualify the lead I’m talking to. Who are they? What are they looking for? Where are they based? And then direct them towards whichever of my dealers is the best fit for what they need. My job boils down to “help my dealers sell more of my stuff” and directing end users in the right direction is an obvious extension of that. However, not everyone feels the same way I do.

More than once, dealers of mine have vented to me about their displeasure when they’ve learned that my competitors are selling direct to end-user corporate accounts. Even better (or worse, depending on your point of view) some of those competitors go beyond simply fielding inbound queries from end users, and actively have their sales reps cold calling prospective corporate accounts — including accounts that already have business relationships with the distributor’s authorized dealers.

Poaching your customers’ customers. Think about how that sounds.

Would you want to get caught doing that by your customers? Would you want to have that conversation? I know for a fact that a distributor’s greed to make a sale, especially if that sale is at the expense of their dealers’ business, has damaged their professional relationship — sometimes permanently.

Should distributors sell to end users? No, because that’s what you have dealers for.

If, as a distributor, you elect to sell direct to your dealers’ customers, that’s not net new business: That’s business that you would have had anyway, through your dealers. You’ve just cut your authorized dealer out of the loop and taken away business from them.

In the context of long-term business growth, that makes no sense.

In order to help their dealers grow their businesses, I think that distributors should absolutely make efforts to reach out to end users through marketing initiatives, both through conventional advertising and social media. But the message that’s communicated to the end users should be to direct them towards an authorized reseller. That way, the end user gets the product they wanted, the dealer gets a sale, and the distributor and the manufacturer get a sale.

That’s a win/win/win/win outcome.