“Accelerated Erosion Distribution”As appeared in ISHN’s “FDO”July 2004What is the long term economic value and effect? In nature, there is natural erosion - there is monitored erosion - there is controlled erosion - there is unmonitored erosion - there is uncontrolled erosion In distribution, there is natural erosion maturity of the product or the ol’ “Bell Curve” - there is unmonitored erosion no one paying attention to the above - there is uncontrolled erosion no R & D development of new products in pipeline & there is Unmonitored, Uncontrolled erosion! (all of the above) OR “Accelerated Erosion Distribution” So! A manufacturer produces and launches a totally new, innovative and unique product. It is both useful and needed at the consumer or end user level the demand has been created. A good margin is determined for all the distribution channel. Everybody’s happy……….. For a while. Erosion, product maturity (the ol’ “Bell Curve” remember?) now begins to set in competition starts their “knock offs”, margins decline or erode with all the distribution channel substitutions erode market share too “Big Box” distribution erodes pricing and margins even more. Then “Super Big Box” distribution with their “special status” pricing erode even more margin for everybody including “Super Big Box” now it becomes everybody’s commodity. Think about it. George J. Hayward
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