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Cover Story : Suppliers Beware

With a shifting landscape, independent JanSan distributors are making smart moves to better serve end user.

Remember when a Barnes & Noble, Blockbuster, or Office Depot could be found in just about every shopping center in America? Like these troubled chains, independent JanSan focused distribution is undergoing major changes that could someday make it as irrelevant in the  marketplace as brick-and-mortar booksellers, movie rental shops, and office supply stores.
In 1991, there were 24,000 independent JanSan distributors and today that number is down to approximately 4,000. Twenty years ago, local or regional firms that specialized in JanSan dominated the industry; today, traditional JanSan distributors find themselves competing with national MRO (maintenance, repair and operations) firms and e-commerce giants such as Amazon.
“The distribution side of the industry has been under attack for a number of years now, and it continues to evolve and change,” says Mike Schaffer, President and CEO of Tornado Industries.

The Instant-Access World

Those wanting to find a scapegoat for the deterioration and dilution of JanSan distribution can start by looking online.

The Internet gave end-users instant access to unlimited information. This allowed them to quickly and easily research products, suppliers, pricing, and more to reach informed decisions on their own time and without the help of a salesperson.

“The power shifted from manufacturers, to distributors at one point, and ultimately to the customer or end-user,” Schaffer says. “They hold the power today, and that’s really where it belongs.”

The Internet also opened the world to end-users. Buyers were no longer comparing apples to apples, but instead could compare apples to Amazon.

“In the early ‘90s, distributors were only competing against the guy down the street who did pretty much the exact same thing,” Schaffer says. “As communication changed, businesses went from being compared to the closest competitor to every business in the world and best practices in general.”

Value-added eroded

In the new global landscape, distributors who didn’t add substantial value to a channel were quickly exposed and began losing business at a rapid rate. Many were forced to consolidate in order to stay afloat.
“Part of the changes were perhaps unavoidable, but to some degree, and it isn’t my intent to be unkind, they were self-inflicted,” Schaffer says.
By the late 1990s, many distributors were relying heavily on manufacturers, Schaffer says, and handed off tasks they once took care of—demos, sales, installation, and service, for example.
This opened the door for new players to enter the market. Generalists like MROs could just as easily rely on manufacturers for assistance to gain a foothold in the JanSan channel. It also allowed price-driven vendors to peel away market share.

“The consumer began to ask, ‘What are you doing for me?” Schaffer says. “Those distributors who survived were able to show and demonstrate real value. Those who couldn’t lost out to large, national firms who may not be experts in JanSan, but were doing other things like shipping quickly, making ordering hassle-free, offering amazing return policies and on-line experiences.”

In addition to the challenges presented by the Internet, the 1990s also saw a shift in the JanSan buyer. Decisions were being made less often by the people using the products and more  frequently by white-collar executives concerned with budgets.

 

“That caught a lot of people in our industry off guard, and at the time, the sales force at many dealers were simply not as effective speaking with that buyer as they were with the actual user,” Schaffer says. “The industry had some amazing product specialists, but many were ill-equipped to discuss return on investment, workloading, or  other financial metrics that these new white-collar buyers were interested in.”

Not all doom and gloom
JanSan distribution continues to grapple with competition and consolidation, leaving many to wonder whether the industry will wither and die or find a new way forward.
“The industry has, and continues to go through considerable change, and you can act as if the sky is falling, or you can choose to view it as exciting and a time that is full of opportunities,” Schaffer says.
The key to future success? A change in mindset. “Those who stay current and add value in the channel can actually grow their market share,” Schaffer says. “Many of us come into our businesses and take off our consumer hat and put on our business hat and act like those things that are important to us as consumers aren’t important to our own customers.”

Survive by going above and beyond
Although face-to-face service is no longer an important selling point for many consumers, they do
appreciate vendors who offer product knowledge and industry expertise.

Customers don’t want a salesperson that is just an order taker (after all, they can place their own orders online). The real value is a salesperson who’s a true partner in making their operations more effective and efficient.
“Many of the remaining 4,000 distributors have never stopped doing an excellent job at providing value-added services and delivering outcomes versus simply delivering product,” Schaffer says. “The customer clearly gets value from these distributors, otherwise they would be buying from another source.”
Customers not buying from Amazon or MROs generally expect an exemplary level of customer service from JanSan distributors.
Customers want abundant information to help them make fact-based purchases that will boost their bottom lines or provide other tangible benefits. They want their distributors to not simply react to their needs but anticipate them and proactively offer solutions. They expect their vendors to stay on top of trends and show them new products that will solve future challenges before they arise.  Consultative selling is no longer an option for distributors, it’s a necessary tool for survival.

Invest in Technology
Customer service isn’t enough in today’s global marketplace. Successful distributors are also those that make it as simple as possible to do business with them online. After all, one of the biggest reasons people buy a wide variety of products from Amazon is convenience.

Unbelievably, some JanSan distributors still don’t have websites and even fewer offer robust online shopping. Perhaps less than half provide an option for mobile shoppers.

Studies show that consumers who can’t find and buy what they want on a website will simply move on to another site. Only those distributors with comprehensive, user-friendly e-commerce sites can continue to compete with massive online retailers.
Like other B2B industries, the JanSan market is getting younger. Millennial buyers, ages 20 to 35, have different purchasing patterns than their older counterparts. They use social media and vendor websites to conduct research and are accustomed to purchasing online (often with a smartphone or tablet).
“Distributors need to ditch the status quo,” Schaffer says. “Surviving and thriving in the modern marketplace is certainly possible, but it requires a change in patterns and an investment in technology and training. Rather than fighting the changes, it’s time to embrace them.

BY THE NUMBERS

  • Forty-three percent of JanSan resellers who do not currently have an e-commerce presence plan to  make the investment in the next three years.
  • Just over half (53 percent) of JanSan resellers report having an e-commerce presence.
  • The top reason JanSan respondents report losing business is lower prices being available elsewhere (54 percent), followed by wider product selection by other vendors (38 percent)— both hallmarks of Amazon.
  • Most said their biggest competitors are retailers (58 percent) followed by Amazon Business at 46 percent.
  • Most (76 percent) say they foster customer loyalty by building relationships.
  • JanSan resellers’ biggest priorities include customer acquisition initiatives (59 percent) and marketing to improve brand awareness (37 percent).

Source: A report by Essendant

OFFER MORE, STAY RELEVANT

Other expanded services that some distributors now provide to building service contractors and other endcustomers include:
Workloading. Typically using Web-based analytical tools, workloading allows BSCs and managers to better understand and determine the cleaning needs of their facilities. The exercise can uncover information such as how many workers are needed to maintain a location, the amount of time it should take to clean a facility, labor and supply costs, etc.
Enhanced Product Selection. Some distributors utilize technology to suggest product alternatives to their customers. For instance, suggesting an environmentally preferable product to replace a conventional product with similar cost and performance standards or a comparable product that is less costly or more effective. These distributors collect and interpret vast amounts of data and turn that information into insight for their customers, which empowers BSCs and facility managers to make logical, factbased decisions and streamline the procurement process.
Product Access. In some cases, distributors often have greater access to products during times of product shortages. They also may be aware of future price changes, which can help their customers save by purchasing ahead of price fluctuations.

Streamline Purchasing. Purchasing and procurement for BSCs and facility managers have  traditionally been timeconsuming and costly. Distributors can help improve efficiencies and  streamline the procurement process for their customers through new technologies and analytical tools. For some facility managers specifically, these tools provide an opportunity—sometimes for the first time—to better understand exactly what cleaning-related products they are purchasing,  if redundant purchases are being made, and if less costly or more environmentally friendly alternatives are available.
Click and Deliver. Some distributors now allow their customers to shop online for products, which are then directly delivered to the customer or ready for pickup, whichever is easier.
Cost Savings. Typically, when we think of purchasing professional cleaning products at a reduced cost, we consider mega-retailers and some online stores. However, many manufacturers offer distributors special rebates and promotions that can be passed on to customers.

Sustainable Choices. As referenced before, some distributors are now going beyond just offering green cleaning products and are helping customers become both green and sustainable. In the coming years, sustainability in all aspects of building operations, including cleaning, will increasingly take center stage.

Source: Afflink, which provides an array of comprehensive sales and marketing solutions to distributors and supplier organizations of JanSan, packaging, safety, and office products.

ABOUT TORNADO INDUSTRIES:
Tornado Industries (a Tacony Company) has been engineering quality cleaning equipment for 90 years. The company has a long history of innovative products and applying the latest technology to increase productivity, reduce costs, and improve safety. Many of the company’s products are assembled in America, with globally-sourced parts. For more information, visit www.TornadoVac.com.