Channel Profitability

Both suppliers and distributors have a need to improve profitability. However, distributors and suppliers improve profitability in very different ways. As a result, there is often indifference or even hostility towards the performance of channel partners. The emphasis is on splitting a stagnant pie.

One example of the problem is that supplier profitability is impacted more by sales growth than any other factor. In very sharp contrast, distributor profitability is influenced by gross margin and expense control much more than by sales.

This session will help suppliers and distributors develop joint profitability-improvement programs. The focus will be on how firms can enhance their own profitability without negatively impacting their channel partners. It is an effort to make the channel profit pie larger.

Question of the Day

We feel we have to get more price aggressive to drive up our sales volume. How large of a sales increase will be required to offset a price cut?


Probably a lot more than you think.