Industry drug of choice (rebates) or valuing yourself?

I was talking to a couple of distributors this week and the topic of new / potential suppliers and rebates came up in the discussion.

Now mind you, I know the value of rebates to distributors as I was the VP Marketing and eCommerce for IMARK from 1990-1995, knew all of the rebate deals, was involved in negotiating some of them, did the dividend rebate projections for prospective members and more.  In other words, I understand the importance of rebates to distributor profitability.

And I’ve worked with manufacturers on their rebate programs and “preferred distributor initiatives.”  I’m not against rebates based upon some level of performance.

With that as the caveat …

In talking with these distributors, they were telling me that these manufacturers were offering rebates and some definition of “preferred” / “initial pricing” without requiring anything from the distributor.  By “anything” I mean no stocking order, no minimum dollar purchases, nothing as reciprocity.

In other words, they were not valuing their company, their product offering nor their ability to help the distributor capture business or be more profitable than competition.

They were leading with price and the distributor drug of choice … rebates.

It then begs questions to distributors of

• Do you really want to work with a manufacturer whose claims to fame are solely price and rebates?
• Will this type of manufacturer add to your profitability (as inevitably these are small dollar lines that are solely moving dollars among suppliers)?
• Should you spend more time on your value-added lines that bring some other level of value to your business and your customers?

Rebates are important to distributors and should be considered as part of a performance-based offering from a manufacturer, but leading with rebates to get into a distributors’ door is buying the purchasing agent’s time but not building a compelling reason for the distributor to spend time on the manufacturer’s product offering.

Remember, rebates are not earned unless something is sold … and sometimes they are not worth the time to claim the rebate if the manufacturer has to expend time on “small dollar lines.”

Thoughts?