The distribution industry is no stranger to challenges, but 2025 may test even the most seasoned businesses. Tariff changes and supply chain disruptions are threatening profit margins and operational efficiency, creating many potential barriers for distributors.
However, with a clear strategy, you can still rise above these hurdles, seize new opportunities, and make 2025 a year of growth and success.
Current Challenges to Wholesale Distributors
Success this year will mean tackling uncertainty and economic challenges head-on. Distributors are expected to face changes like:
- 2025 Tariffs: Heightened tariffs on imported goods are likely to drive up costs, creating pricing pressures that trickle down the supply chain.
- Increased Operational Costs: From fuel prices to labor costs and warehouse operations, operational costs are going up — squeezing profit margins.
- Supply Chain Bottlenecks: Key industries such as construction, automotive, and HVAC are grappling with delayed shipments and unpredictable lead times, complicating inventory management.
- Supply/Demand Fluctuations: Rapid changes in consumer demand, coupled with uneven supply availability, are making it difficult for distributors to forecast accurately.
- Direct to Manufacturers: Manufacturers are increasingly bypassing traditional distributors and selling directly to contractors — driving competition.
- Competitive Labor Market: With unemployment rates remaining low, attracting and retaining skilled workers will be a significant challenge.
- Transition to Low-GWP Refrigerants: The required shift to A2L refrigerants for AC units and heat pumps marks a significant industry transition that’s gonna take steady inventory management.
What does this mean
For distributors, this looks like:
- Reduced Stability from Largest Buyers: Delayed inventory hinders large orders, and losing a major customer can cause a significant revenue gap.
- Customer Abandonment: Delays frustrate customers, leading to strained relationships and loss of business.
- Lower Profitability: Rising costs squeeze pricing margins, and passing costs onto customers is a losing strategy.
Leveraging SMB Accounts to Drive Steady Growth
If you want to keep business growing this year, reduce your reliance on vulnerable revenue streams and maximize the potential of your existing customers.
Consider the old saying, “80% of revenue usually comes from 20% of customers." Now, think of the untapped potential within the remaining 80% of your customer base. Focusing on the rest is a great way to expand wallet share and create some revenue resilience.
Your Strategy: Document, Define, Collect
- Document SMB Accounts: Identify and categorize SMBs by industry trends, purchasing behaviors, and stability.
- Define Clear Goals: Establish metrics like revenue growth, account retention, and SMB acquisition. Examples include:
- Collect Customer Information: Build a contact database with details like name, role, purchase history, and communication preferences.
Optimizing Operations to Cut Losses and Maximize Revenue
Optimizing operations cuts any losses due to inefficiencies and errors, helping you thrive over uncertainty.
How the Right Technology Powers Growth
Technology is a cornerstone of resilience in uncertain times. Tools that streamline operations and enhance the customer experience keep you ahead of disruptions.
- Simplify Order Placement: Make it easy for your customers to place orders so they don’t have to stop what they’re doing to call the branch.
- Centralize Data for Consistency: Connect all your software with APIs to ensure information, like contact data and order status, is consistent across all platforms.
- Personalize Your Messaging: Tailor messaging to the individual based on order history, past interactions, or other key identifiers.
Prokeep: Growth-Based Providers Built for Distributor Sucess
Prokeep is a relationship and revenue-growth engine built to facilitate sales by making reaching customers simple. With one centralized inbox connecting text, email, web chat, and fax, your team can mitigate any challenge and serve any customer with the press of a button.
Want a free guide packed with actionable strategies to drive growth despite disruption? Get our free guide.
