Efficient distribution is crucial for any industry, particularly for lumber and building materials (LBM) dealers. The two-step distribution model is advantageous for LBM dealers looking to save money, streamline operations, and attract more customers. In this blog post, we will explore the benefits of two-step distribution and how it can help your dealership.
What Is Two-Step Distribution?
Two-step distribution (also known as two-tiered distribution) has three parts:
- A manufacturer sells its products to a wholesaler or distributor.
- The wholesaler or distributor then sells the products to retailers.
- The retailer sells the product to the contractor or end-user.
In the LBM industry, products move from the manufacturer to the wholesaler, then from the wholesaler to the LBM dealer, and finally to contractors or end-users. While many industries are shifting to a direct distribution supply chain structure, there are several benefits to using two-step distribution, particularly for LBM dealers. For example, two-tiered distribution models allow for efficient expansion into new markets, increased specialization on a single area of the supply chain, and more streamlined processes.
The Role Two-Step Distributors Play in the LBM Industry
Principia, a leader in LBM market intelligence, describes the role of two-step distributors in the LBM industry as players who “provide the necessary logistics to deliver products to pro dealers and retailers that have direct relationships with builders, contractors, and do-it-yourself homeowners.”
If you are one of the 30,000 independent hardware stores, lumber yards, and similar outlets, your primary client base is likely professionals and some savvy DIY homeowners. Professional builders and contractors expect volume. In other words, you need to have enough stock in your lumber yard or warehouse to fulfill orders quickly and consistently. Two-step distributors can provide this volume, allowing your dealership to focus on providing the excellent service your customers demand.
Considerations When Choosing an LBM Distributor
The number of industry participants in two-step LBM distribution is increasing year over year. However, for dealers new to this type of distribution model, several things must be considered when selecting an LBM distributor, including:
- A comprehensive breadth and depth of product lines.
- A staff with knowledge and expertise in their products.
- Easy ordering and on-time delivery.
- Uniform and competitive pricing.
- The capability to fulfill special orders.
- Proper handling of RMAs and warranties.
- A breadth of services that help dealers succeed.
- Support and training for contractors, outside sales teams, and counter reps.
Finding a trustworthy and consistent distributor, particularly in the midst of today’s supply chain instability, isn’t always easy, but it is crucial. The numerous benefits of working with a reliable two-step distributor are outlined below.
Advantages of Using an LBM Distributor Like BPI
Two-tiered distribution may not seem like the most efficient option. After all, it has an additional “step” compared to direct distribution models. In reality, two-step distributors like BPI prioritize customer satisfaction first, instilling confidence that your dealership will receive the right products, at the right time, and without damage. Some of the top reasons to partner with a distributor like BPI include:
- Distributors typically buy in bulk, meaning you can secure better pricing.
- They make it possible for lumber yards and warehouses to optimize inventory management, reducing waste and improving efficiency and cash flow.
- They can store and handle your products, maximizing space at your worksite.
- Enhanced packaging processes make sure your products don’t get damaged in transit.
In conclusion, two-step distribution offers many benefits for LBM dealers, including cost savings, streamlined processes, and an expanded customer base. Working with a reliable distributor like BPI can enhance these benefits even further, with better pricing, inventory management, and marketing assistance to help your business grow. If you are interested in learning more about how BPI can help your lumber or building materials business succeed, please reach out to our team today. We look forward to partnering with you.
