Jim Olsztynski 0000-00-00 00:00:00
“I think that the future is bright for independent wholesalers.” — Ranson Roussel An industry veteran who cut his teeth at Texas-based Morrison Supply, Ranson Roussel was responsible for one of the PHCP industry’s most notable recent startups when he founded Birmingham, AL-based The Distribution Point (TDP) in 2003, as a master distributor supplying plumbing wholesalers with an extensive inventory of leading plumbing brands. The ensuing years have been economic hell for many of TDP’s customers.However, a recent conversation with TDP personnel revealed a rather significant turnaround. Master distributors have a unique perch from which to observe industry trends, so we decided to get some input from TDP’s president about issues impacting his business and the industry as a whole. Supply House Times: Do you believe a recovery is underway, and if so, what’s driving it, given that the housing market is still a train wreck? ROUSSEL: I don’t believe that a recovery is underway, although the economic climate is certainly not as bad as it was. I suspect that we will see some lift during the election cycle; however, until we have some predictability coming from Washington, I do not foresee businesses deploying their capital reserves. The Obama administration’s effort to repeal LIFO could have devastating effects on our industry and the economy in general. Also, I am not confident that the last wave of foreclosures is behind us as many of the 7-10-year adjustable rate mortgages written prior to the crash have not come to term. If the economy is still soft when those ARMs (adjustable-rate mortgages) come due, we could see further erosion in the housing sector as homeowners try to refinance an asset that has lost significant value. Q: Independent wholesalers are the lifeblood of master distributors. What’s your assessment of the future for independent plumbing wholesalers? ROUSSEL: I think that the future is bright for independent wholesalers. Independents are entrepreneurial, passionate, hard-working business people who enjoy what they do, and have the freedom to make long-term, strategic decisions without having to worry about hitting an earnings forecast. Q: How has your business evolved since it started in 2003? What are you doing differently today that you didn’t do back then, and has anything taken you by surprise? ROUSSEL: Scale has certainly helped. Starting any business is difficult, but entering a market with well-run, well-respected competitors is incredibly challenging. As we have grown, we have been able to drive Continual process improvements and work our supply chain in ways that were not possible when we were a much smaller company. Q: Have you observed any significant trends in your customers’ purchasing habits, either in the products they buy or the way they buy them? ROUSSEL: Over the last several years, we have certainly seen the trend move towards repair and affordable luxury, clearly a sign of the times. We’ve also seen that our customers have changed the way they communicate and order from us, evolving from phone and fax to phone, fax, e-mail, EDI, instant messaging, etc. Q: How are you adapting to competition from the Internet? ROUSSEL: We don’t compete with the Internet because we don’t sell to contractors and consumers. Some master distributors in various categories have elected to have an e-commerce presence. However, I view that as an inherent channel conflict that violates the commitment we have made to our customers. Q: I notice increasing reference to your company as TDP instead of The Distribution Point. This reminds me of Kentucky Fried Chicken transitioning to simply KFC, Federal Express to FedEx, United Parcel Service = UPS, and so on. Are streamlined initials an advantage from a marketing perspective? ROUSSEL: The Distribution Point is certainly a mouthful, and it is our customers who started calling us TDP. From a branding perspective, I like The Distribution Point, as it gives an insight into what we do. However, TDP seems to have become a quick, readily identifiable acronym. Q: What are the most pressing day-today issues you face in your business? ROUSSEL: Managing a complex inventory of 25,000 SKUs is not without its challenges.Over the last several years, we have worked diligently to adjust the depth and breadth of our inventory offering to the new economic reality. Q: If you could wave a magic wand and change any single business practice of your vendors or customers, what would it be? ROUSSEL: The biggest change I would make would be for branded manufacturers to spend more time and effort in writing and enforcing Internet MAP policies. We have seen massive brand erosion from manufacturers who have failed to act by either not enforcing their policy or not having a policy or distribution agreement. It is my feeling that wholesalers will not support and provide showroom space for vendors who do not rein in the MAP violators.
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