The industrial distributor

The industrial distributor as a rule handles very few lines; and he sells in larger quantities. Therefore, he is in a position to know his lines well, and to become familiar with his manufacturing sources of supply. His salesmen are in a position to become experts in the manufacturer's lines, and therefore to be marketing counselors to the industrial buyers of the products which the industrial distributor handles.
Perhaps the greatest service rendered by the industrial distributor is to provide ready inventory of the manufacturer's products in the distributor's trading area. He carries stock and supplies to fill small orders, emergency orders, and to keep the customers' equipment in operation. Especially with big installations, machinery, equipment of all kinds, "downtime" (the time the equipment is idle for lack of a part or a component) is completely lost time for the user of the equipment. The ability to service such equipment quickly and economically is of the greatest importance to the customer.
Spare parts available for emergency service is the deciding factor with many buyers of industrial goods. They prefer to buy from distributors, knowing that if they need service or emergency repairs, they have a local source for parts or components.
At the present time, there are some 10,000 industrial distributors of all types, selling supplies, equipment and goods valued at a total of over $5 billion. This in¬cludes everything from screws, cutting tools, and stationery supplies, to important components for all types of installations. The average distributor maintains a warehouse where he carries stock worth about $350,000. He sells about $1,500,000 worth of goods a year, hence he turns his stock over about four times a year. In trade language, he "carries three months' inventory."
The typical industrial distributor employs 30 people, 6 of whom are outside salesmen. Each salesman has approximately 130 "accounts" (customers and prospects ) and sells an average of $250,000 a year.
The typical industrial distributor operates on a gross margin of 23 per cent. Out of this margin comes all his expenses. He has less than 1 per cent net after taxes, and after meeting his expenses of administration, sales¬men's salaries and travel expenses, advertising, promotion, maintenance and delivery. 10. The agent middleman. The practice of buying industrial goods direct has given rise to the agent middleman, who may be a broker, a manufacturer's agent, or a manufacturer's selling agent. In essence, the principal job of a middleman is to find buyers for his principal. He gets paid a commission, a percentage of the sales price.