Are you ready for continued growth? Or are you experiencing stagnation in sales? Product line expansion is one of the most effective ways to grow your business. However, that doesn’t mean it’s a risk-free venture. Lack of preparation is one of the most common stumbling blocks that distributors experience when launching a new product offering. For the greatest chance at success, I suggest distributors start by building a simple and measured plan.
Want to expand your offerings but don’t know where to start?
With the right product expansion plan, you can expect to see increased profits simply by selling to existing customers. With added offerings, you have more likelihood of attracting new customers who are looking for a partner nimble enough to meet their needs, yet focused enough to be their partner for years to come.
An added benefit? By helping customers consolidate their vendors, many distributors sell new categories at margins above their average margin.
If you’re looking to increase your market share and expand your offerings, I recommend a few key factors:
- Consider what your customers use that you don’t provide them with today.
You may not sell portable lighting today or even flashlights. However, if you begin selling flashlights, then you should also offer batteries. You might sell safety products but not traffic control. Selling traffic control for a customer worksite or parking area can provide you with additional wallet-share opportunities and help your customers consolidate vendors for improved efficiency.
- Does the product fit with your current inventory?
It can take considerable resources to learn about product lines if you have no experience in that category. Consider the time it will take to train your salespeople to sell the new product line. The difference between going it alone and partnering with a buying group means you have manufacturer-direct training opportunities right at your fingertips that make training more cost-effective.
- Are you prepared to launch marketing initiatives for the product launch?
Any time you launch a new brand or product line, it can be expensive to create the marketing material your sales reps and customers need for a seamless purchase. Many NetPlus preferred suppliers work directly with their distributor partners and provide marketing materials, showroom displays, and other collateral.
- Does your manufacturing partner have a plan for growth?
Accountability is one of the key motivators for success. When there is a clear and detailed plan, both the distributor and the supplier have the potential to achieve the best results possible. NetPlus strives to deliver support, guidance, and resources to our distributor members at every stage of the expansion. Additionally, our distributor members and preferred suppliers have experienced great success when they embark on a Growth Plus Plan.
How should I select the best product line for expansion?
Choosing the right product mix for your expansion may seem like a daunting task. To get the right information to help you make the best decision for your business, go right to the source. Start by huddling your sales team and customer service representatives and ask them to collect data from your customers. Ask them to gather customer data on:
- Additional product or application needs
- New projects that may require additional stock
- Regularly and one-off purchases
- Partnership needs that aren’t met by their current supplier
- Gaps in product coverage and availability
Aside from customer information, there are other ways you and your team can identify areas of product expansion.
One of the best ways to learn what solutions your customers need is to simply look around and observe your customers’ worksite or facility. Ask for a tour or visit their storeroom and note inefficiencies, danger zones, and potential areas of improvement.
Scour the websites of online retailers and see what suggested or recommended items come up when you look at various products and solutions.
Finally, let your customers know that you are open to expanding your offerings to better serve them. They may not know you are willing to add certain product lines or brands and may never think to ask.
By doing a little research and legwork at the front end, I would be shocked if you couldn’t find some common opportunities across your customers.
Here's what one NetPlus member shared with us:
“After asking one of our customers about other products we might provide, we discovered they were purchasing a product we had never considered selling. We scanned the NetPlus supplier list and discovered that Cable Tie Express had the product. With the supplier’s help, we tested the product with the customer. The initial order is about $10,000 and should be about $50,000 per year. This whole process will allow us to look more creatively for other opportunities.”
Planning tips for a productive product expansion.
A coordinated effort is always better than a scattered approach. However, distributors are often discouraged by the tyranny of the urgent. I remind distributors to resist the urge to think they are too busy to coordinate this effort.
After all, failure to plan is planning to fail. Some simple ways to get started include:
- Hold a meeting with your team and include them in discussing and defining key opportunities.
- Assign a champion within your team to oversee product expansion.
- Ask your supplier representatives about potential offerings you might consider adding.
- Start by reviewing the NetPlus product categories.
- Build your plan in Growth Plus to keep you on track and reach Growth Rebates.
- Systemize your cross-selling efforts.
Note: We have both paper and digital versions of the supplier list so members can learn the categories and suppliers in each category.
NetPlus Alliance is the ideal place to start.
NetPlus Alliance is an industrial buying group that facilitates partnerships between distributors and manufacturers of industrial and contractor supplies. NetPlus offers programs that drive profitability and sustainable growth to ensure long-term success.
Small to mid-size distributors know that getting a foot in the door with certain manufacturers can be a challenge. Competing with national brands is yet another hurdle. That’s why it pays to leverage your purchasing power with a buying group like NetPlus.
We regularly add suppliers in existing categories and expand into new categories to provide our members with new and diverse opportunities.
It doesn’t end there.
We help our members drive market growth and profitability through stronger channel partnerships, financial incentives, progressive marketing, joint sales planning, training programs, and business best practices. Plus, we’re always open to new suggestions from our members.
Discover the power of partnership.
NetPlus members enjoy better supplier access, improved buying power, and our competitive rebate program. Grab a larger slice of the market and become more valuable to your customers by expanding into new product categories today.