Two-Stepping With Two-Step Distribution

By Kenyon Gleason
NASGW President

You’ve just read the headline.

And you’re now wondering: “What does a country dance have anything to do with wholesale distribution?”

I’ll get to the metaphor, I promise. But first … A short reflection on the market itself.

Friday, Jan. 20, 2017, was a day that signaled a major change in how Second Amendment issues are treated on a national scale. And though we’re still seeing local and state skirmishes on gun control, the inauguration of President Trump brought some assurances the Second Amendment was protected from large-scale political and judicial attacks. What this also did was alter the purchasing habits of millions of consumers in our industry.

After eight of the strongest sales years our industry has ever seen, reality came knocking because “fear-based purchasing” all but evaporated. And folks, the dust hasn’t completely settled. Retailers, wholesalers and manufacturers have all fallen victim to the changing market, shutting down or being sold off to others. And it’s quite possible we’ll see more contraction before it’s all sifted through.

On the flipside, there is great merit in the notion of taking advantage of a very positive political situation before it disappears. If our friends at the NRA, CSF and NSSF are successful on legislative issues such as national concealed carry reciprocity and other initiatives to benefit the industry, this could mean very good things for every business involved in the shooting sports.

But I’m getting ahead of myself just a bit. Those are great possibilities, however, we must first deal with what we have in front of us right now.

Thankfully, after a very slow sales year in most sectors of the industry, we are now once again able to register a pulse. I’m hearing retail inventories are loosening somewhat, and likewise, the heavy inventory levels at distribution — prompted in anticipation of a different election result — are finally starting to dwindle.

This leads me to one of the most pressing considerations for the two-step distribution channel today: How does distribution fit into today’s evolving shooting sports marketplace? And, equally important: How will two-step distributors deal with an ever-growing encroachment on their sales model by places like the online behemoth, Amazon?

A Friend Or Foe?

Earlier this year I was in Washington, D.C., for an event put on by the National Association of Wholesale-Distributors (NAW). An executive from Amazon was surprisingly one of the featured speakers. The theme of the talk was: “Amazon — Friend or Foe?”

The Amazon executive’s presentation was fascinating as he tried to make the case to the audience wholesale distribution and Amazon can work hand in hand — be partners, ostensibly. He was not persuasive. At the end of the presentation, the moderator asked the room of about 300 wholesale executives, “So, how many of you think Amazon is a friend?” Not one hand in the place went up. Not one.

The moderator continued, “How many of you think Amazon is a foe?” Every hand in the place shot up quickly. The wholesale community is certainly on notice. And if you listen, you can also hear alarm bells at the big-box retailers, who for years were the main nemesis of main street businesses. Now they too are feeling the pinch from Amazon. You’re seeing a very rapid shift to large-scale online endeavors to supplement their stores. I suppose it was inevitable — there’s always a bigger fish, right?

So why do I share this? Well, primarily to illustrate the shooting sports industry and our two-step distributors are not alone. We can and should be looking to and learning from our friends in other industries, who are likewise feverishly working to protect brick-and-mortar retail customers. At the end of the day, if you can’t be the bigger fish, you need to swim faster. As a result, many industries are turning to data – data only available from within.And this is where the two-step comes in.

Pairing Technology With In-Store Experience

If your company doesn’t have any dance moves — or you’ve yet to enter the dance hall — you need to learn. Soon. And the two-step is an easy place to start.

The National Association of Sporting Goods Wholesalers (NASGW) exists to support shooting sports two-step distribution, and has known for years relationships matter most. We know trust is key in those relationships and we’ve worked for decades to build tens of thousands of trust relationships with retailers across the country. We’re in this together.

Brick-and-mortar stores still enjoy some key advantages over online purchasing (this is proven by recent national retail surveys), namely:

Purchases are available immediately.

Consumers get a tactile experience and can see, touch and feel the product before making a decision.

Easy returns (this is why Amazon now forces most of its sellers to accept “free” returns).

In the case of firearm sales, people are still actually required to come pick it up due to federal background check requirements (which is a major benefit we enjoy over most other industries).

These are basic concepts, but they’re real. Smart wholesalers and their retail partners are finding new ways to capitalize on these inherent advantages over online sales. Some wholesalers are working with retail to create software systems to monitor and automatically send replenishing stocks when inventory is low.

Other wholesalers are working with retailers to assist with excellent see/feel/touch experiences. The future may involve software offering the best “matching or compatible accessories” for firearm purchases. The accessories, along with the firearm, might then be available for “in-store pickup” when a customer arrives to fill out background check forms. It could generate efficiencies for wholesalers and retailers and an incredible buying experience for customers.

Adapt With Big Data

The possibilities are endless and the wholesale distribution community is changing to meet these new realities. I believe the distribution channel knows intuitively, in order to protect itself, more technological sophistication is necessary, along with a greater awareness of what’s in inventory and what the sales demands are — not just independently, but globally.

Getting to this point though requires data, data and more data. “Big data” is the buzzword in literally every industry. The shooting sports industry is behind, maybe as much as a couple decades compared to others. We’re starting to understand the concern though and working to change this imbalance of available information.

For its part, NASGW is pioneering a data collection initiative and partnership with wholesalers that has the potential to fundamentally change our understanding of what products are in the sales channel along with what products are in demand, and where. The program was created by distributors over the summer and revealed more in-depth in October during the 2017 NASGW Expo and Annual Meeting in San Antonio.

Manufacturers, who rely heavily on inventory supply data, along with consumer buying habits in making their production decisions, were also given a glimpse. The response and support for this new initiative has been overwhelming. We plan a formal launch to the wholesaler and manufacturing community by early 2018.

When implemented fully, this effort will give both wholesalers and manufacturers infinitely better information to make important and meaningful business decisions. In turn, this will have a strong impact on how the channel can better serve its retail customers.

It’s been a tough year, but put on your dancing shoes. The music is about to start.

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