Feedback on “Are Distributors in the LED Market”

Earlier this month we shared some thoughts on the impact LEDs are having on the lighting industry.  The posting, entitled “Will Distributors Capture the LED Market and Retain Share of Lighting Sales?” generated a couple of comments on ElectricalTrends (but not too many as many people want to see what others say vs. posting something … but remember, you can post anonymously, and yes, someone does need to go first.)

But, and this is where it gets interesting, I shared it with a number of the LinkedIn groups (Innovations in Light, which is run by Philips, and Electrical Wholesaling) that I am a member of and thought I’d share those comments:

• Distributors continued success will depend on the value proposition the distributor is able to offer. What are the customer’s pain points? How can the distributor help with these issues? Is the distributor able to offer vender managed inventory for a complete line of the customer’s electrical supply needs? What about assisting the customer with fixture conversion or lamp recycling or SKU reduction or partnering with a quality electrical contractor or helping with government rebate programs? Do they have issues with extreme temperature? Is it a corrosive environment? Are there safety and contamination concerns? I feel the key to sales acceleration is demand creation by understanding the customers market trends and issues, develop a relationship with the executives, influencers, consultants, financial buyers, subject matter experts, specifiers and maestros, utilizing high gain questions to understand concerns, then developing and presenting a value proposition with solutions.
• This is a very valid question indeed in the rapidly changing Lighting “field.” There are two types of distributors. 

• Those who sell the conventional lighting sources – such as CFLi and TLs – and their primary customers are household users.
• Those who offer lighting solutions. 

The first type may go out of business – but at what pace? The answer will vary for various countries. However, for the second type of distributors, they will be required to acquire knowledge – on the lighting aspects as to which LEDs to use where and design the Lighting to the needs of the individual customer and also come up with tailor made fixtures. This “knowledge” will play a greater role that even the product availability itself (I am not saying at all that the product availability is insignificant in any way). I am convniced that to be able to assist the customer in Lighting up their needs will be the key to success.

• Distributors are not in the game yet
• This is what i’m seeing here in the UK. 

The more informed wholesalers have lighting specialists and/or relationships with lighting suppliers who can provide the solution using the tradditional route to market that is the wholesaler.
Whether that changes in the future remains to be seen? From a business stragey point of view, it’s better to distribute through a few wholesalers than have a myriad amount of small/medium direct accounts.

• Distributors have a very important role to play. In the main, they are the manufacturer’s contact with dealers and integrators. This being said, in order to be a valuable contact, they have to offer intelligent service and advice. This is the key – not how much inventory they hold, because this is usually days away. Education leads to understanding which leads to knowledge. Knowledge is power. Until we professionals are knowledgeable, we cannot provide the information or product which our customers need.
• Distributors are cautious and once the technology moves mainstream more, they will bite.
• I’m already seeing the guru’s who are doing church technology start taking bites out of traditional distributors and electrical contractors. The 20 to 30 year old tech guys who started doing LED/DMX for churches AND doing younger gen touring shows are way ahead of the game. LED lighting is taking off. Control of LED lighting is totally different. That’s where they have ramped upwards.
• American lighting distributors have done more to inhibit this industry than anyone. Distributor habits are to put a manufacturer’s product on the shelf (maybe) and do little or nothing with it until someone asks for it. Their second method of operation is to only chase large accounts and not make waves by introducing new product. We avoid doing business with distributors whenever possible.
• Let me clarify my previous point. There are two types of distributors, order takers and value added distributors. The former, as Steven describes above, put product on their shelves and wait for their customers to purchase. The latter offer expertise, advice and other services including product selection and even design. Value added distributors will be key for LEDs because of the rapidly changing technology. Order takers will still play a role, hopefully with more knowledgeable contractors. All need to have educated and experienced staff to assist customers with real facts and selection criteria.
• No. They have been slowly losing their grasp on the industry as Lighting Specialists are channeling directly to manufacturers. 

As Steven puts it, distributors inhibit by not stocking state-of-the-art, but rather; continue to push hard wired product. Along with that, distributors want the manufacturer to ‘stock’ product.  Lighting Specialist are responding to the Architect and Designers energy efficient – wireless – battery free requirements and develop direct relationships with the manufacturers of newer innovative product.  The VARs, that Les is talking about, seem to be at the Specialists, Architects, Designer level of the industry today.

• From my experience it would be difficult for a distributor to stock due to all the variables in LED lighting. Color temperature, beam angels, driver amperage….It’s not a lot, but every project is different. A distributor would ending up selling to suit inventory needs rather than the customers needs.
• I believe they will as long as they have lighting specialist on hand. Being that do many LED manufactures are popping up everywhere end users will rely on the experts for the best advice.
• While I agree that EDs, especially those with lighting specialists and a commitment to LED training, are preferred, as a start-up LED company, you know that getting the attention of a distributor, let alone larger distributors, is a challenge. How would you recommend that they break into the market? Distributors want to know that a manufacturer has credibility – best way to do that is to show customer demand / sales
• I just see the ED’s turning their back on unknowns and then when the new LED Companies take alternate routes it is noticed by the Channel and and walls are put up. Just my perspective and mine is unique, but fighting the up front battles eases the multi channel approach new companies are forced in to.
• One can only hope that electrical wholesalers will retain a share of the LED lighting market as many of the ‘so called’ specialist LED distributors here in Europe won’t be around to back up the ten to fifty(!) year guarantees that they have handed out to end users over the recent years. Here at YESSS GROUP we are fully committed to new technologies whether they e lighting, home automation, solar, HVAC or other associated products. Through our YESSS ACADEMY we train our staff to understand the advantages and the pitfalls of new technology and we always endeavour to pass our knowledge onto our customer. Some of the less scrupulous ‘LED experts’ simply import from Asia, cost plus and then use their profits to re-invest in more product that has never been tested and the factory may not have been inspected! Electrical Wholesalers will still be around to back their guarantees in ten years time and in most cases fifty years time. This is why we remain a most reliable supplier on any new technology.
• We certainly hope that Electrical Wholesalers retain the share…because local support is essential. Understanding that people wish for cheaper is all about manufacturing and distributing quality at the right prices. To buy “on line” has more danger…its why we only support electrical wholesalers with high quality competitive products.
• There are very few quality led manufactures supplying into the UK but claim they are! Some of the bigger lighting companies in the UK are choosing to go direct due to what the led market is choosing to do! 80-90% of the led companies supplying in the UK are all box buyers who rely on Chinese data and the myth of led! These companies will if not careful ruin the led market! As with us and other UK lighting manufactures we have a constant battle on our hands with these importers but we fight on!
• Agreed with all comments prior. However, we are in changing times and not only LED lighting is at risk. How we create demand and what real value lies at the core of holding onto and growing our sector. The reality is that the bigger manufacturers that have yet to penetrate the market deeply could well be tempted to sell direct and have done with other technologies which they now dominate.