The Pros and Cons of Specializing in the Distributor Business

Do you specialize in a particular market?

This is one question I always ask distributors at educational presentations as well as one-to-one consultations. Nine out of 10 times, the answer is no.

Most feel it’s best to serve as many industries as possible and not limit themselves. They keep their websites and marketing materials very general so it’s clear they can serve any buyer.

If you use this approach, you are perceived as a general product seller as opposed to a specialist. You are competing with thousands of other product sellers, including the giants that sell online. Keep in mind these big sellers’ average order is $500, so you’ll be attracting smaller clients with low budgets. It’s going to be very hard to grow your business with this approach.

If you’re looking for larger clients who have bigger yearly budgets, you need to change your approach and be seen as a specialist in their markets.

If you are a distributor in business for five years or more, chances are your best clients can be grouped into two or three categories, whether it be by industry, by the type of events they do, or even by product lines. If so, you are one step away from becoming a specialist. All you need to do is to develop a solid brand message that clearly communicates your expertise to your ideal buyers, so when they check you out they feel they found what they were looking for.

It can be easier said than done—this is something we help our clients with by helping them identify their most profitable markets, defining buyer personas, and developing their value proposition and marketing message.

But specializing in a niche doesn’t work for everybody, and there are advantages and disadvantages to evaluate before making a decision.

Pros: Faster Growth

Fact: People prefer to work with specialists

Anytime you’re looking for a service provider of any kind, you will favor the one who has done the exact thing you need. I know I do. And it’s not just me, Google search terms reports prove it.

Picture this: You find out that a university is looking for a new vendor. You’ve done some work for universities here and there, and you’d love to have more of that type of business. You jump at the opportunity and land a meeting. You go well prepared, show a bunch of cool stuff, leave self-promo gifts for your prospects, and feel everything went very smoothly.

As part of evaluating vendors, your potential client went to your website and found nothing about you working with universities. You have a standard industry site, nice looking but generic, and you probably have just one short bland paragraph on your about page. So they go to your website and only find general information about all the promotional products you sell. Not much about who you are and what you stand for.

Then there is another distributor who also landed a meeting. Their website shows a defined brand that claims they work with universities, they have a couple of blog posts about product ideas for universities, they have a project section showing work for other universities, and even a testimonial. This makes them look like they specialize in universities.

Who do you think your potential client will go with? Most likely not you. Your competitor’s website will speak to them, and make them feel that this distributor really understands them and will be a better partner because of that. And you might even be much better at what you do, but the other distributor is better positioned.

All theory aside, in working with distributors since 2015, we’ve seen that those who grow the fastest are the ones who niche down in some way. The narrower the focus, the fastest the growth.

When you focus on a market, not only do you attract more of the same clients, but you also become more efficient in your operation. You work with fewer vendors who get to know you well, it’s easier to identify new products and opportunities for your clients, and you spend less time creating presentations and quotes because you already have at hand the information you need.

Additionally, you eliminate the all too common situation of spending endless hours doing research for products in whole new markets you are not familiar with, where you might not even get the sale, and end up never using the knowledge you spent so much time acquiring.

In the end, you have more time to focus on getting new business.

Cons: The Risk of a Downturn in Your Niche of Choice

What if the niche you choose suffers a downturn?

Some distributors tell me that focusing on a market is limiting and it’s best to diversify, so they protect themselves from eventual downturns in the particular industry they are focusing on.

This is a valid point. Before choosing a niche you need to do some research and look at its growth trends, making sure it’s been growing steadily at least at a 10% yearly rate, and there are no technology changes, legislation or anything else on the table that might have a negative impact on the niche.

Case in point, the pharma industry about 10 years ago or so, when the entire market literally went away. Distributors who specialized in this area knew this was coming. Some looked at other markets as soon as they became aware. Others buried their heads in the sand and got slammed. The pandemic is another example, with only a few markets not negatively impacted.

In the end, as an entrepreneur, you need to be aware of trends in your market. At any given point, some industries are going away while others are coming in, so you need to be aware and anticipate these changes to make the right moves in your business. This is relatively easy to do in the information age we live in, you just need to pay attention.

You can also choose more than just one area of specialization, and as a rule of thumb, you want to start with one in terms of building expertise and a clientele before moving to the next.

The Point

If you’re a generalist and not growing, you need to start thinking about what areas you could specialize in to capture a bigger piece of the marketplace. This is the time to invest in the future of your business and make changes to position you as the go-to-expert in your market.

If you need help with identifying your most profitable markets and branding your company to attract your ideal clients, feel free to reach out to have a conversation that can help you sort things out.

Also, check out our growing library of marketing information specific to the distributor business available in the resources section of our website.

This article was first published in ActionMarketingCo.com.