Earlier this year, I was invited to speak at the annual general assembly of the European Union of Electrical Wholesalers (EUEW) in Vienna, Austria, about distribution management in the United States. The meeting provided the perfect opportunity to compare and contrast U.S. and European distributors.
The meeting's vendor/supplier presence was rather limited in terms of booths and delegates. With perhaps 200 people in attendance overall, the tight-knit group listened with polite interest as I walked them through my company's system of daily, weekly, and monthly reporting, personnel profiling and sales budgeting. For Argo International, which deals in electrical, mechanical and marine supplies, the process is built around constant re-evaluation of ongoing efforts and improvement through comparison with previous performance.
As the meeting progressed and I spoke with delegates one-on-one, I came to some conclusions about the differences between European and U.S. distributors.
European distributors still view themselves and operate largely as traditional wholesalers carrying many lines. Their objective is the quick turn. Their focus is predominantly the residential and commercial contractor market, rather than heavy industrial.
U.S. distributors, on the other hand, have become more and more selective in partnering with a limited number of manufacturers; we have learned to focus on industrial customers who tend to pay their bills on time.
There are two major forces influencing this difference in attitude and practice. The first is the sheer geographic size of the U.S. marketplace, which makes it virtually impossible for a manufacturer to sell effectively with a direct sales force.
The second is the much more powerful presence of national and international wholesaling organizations in Europe. Independents in the United States can find more ways to compete with the national chains here than their counterparts in Europe can.
Have you noticed that when European manufacturers or wholesaling companies come to the United States, their objective is to acquire companies that are connected to, or are themselves, an established distribution base? In other words, European manufacturers seek U.S. manufacturers with the strongest distribution bases, and European wholesalers seek distribution companies with a dominant presence in certain markets.
European wholesalers are also much more interested than their American counterparts in how distributors in other countries do business. They want to know how we do things here. That's why they invited me to speak at their meeting. They were also quite absorbed in the informational material from other speakers with regard to the potential of Eastern European markets.
Contrast that with a statement I heard not long ago from a U.S. distributor who said he couldn't be bothered with hearing about what European wholesalers were doing because he didn't plan to open any branches in Paris or Berlin.
You don't have to be a company with business interests overseas in Europe or the Far East to be able to take advantage of the exchange of ideas that takes place when meeting with distributors from other parts of the world.
Because Argo International has branches in Europe, Latin America and the Far East, I travel a lot. On every trip I learn something important about how we need to do business now, and how we need to plan for the immediate and the post-immediate future.
Many of our immigrant ancestors here in the states came across the Atlantic by steamship. There's a good story about an older lady who got lost on the ship and somehow found her way up from steerage to the ship's bridge. A crewman was about to hustle her below decks, but the captain was a kindly gentleman.
“What can I help you with, madam?” he asked.
After a few moments, she said, “When you're up here in charge of the boat, what are you thinking about?”
“Madam,” he said, “I'm thinking about five miles ahead.”
Distances have been shortened in this new world of cyberspace and international e-commerce, but today, we better be thinking a lot further than five miles ahead. Meeting with our counterparts from other parts of the globe is one way to help us do just that.
The author is the president and CEO of Argo International Corp., New York. He is can be contacted at [email protected].