LinkedIn is great… except for…
Dear friends, I love LinkedIn. It’s the last platform that still manages to give me an interesting news feed. And I truly enjoy seeing what my business partners are up to.
But there’s one thing missing: a defence mechanism. I receive around ten connection requests EVERY DAY from coaches, brokers, consultants, and intermediaries. Why on earth? Does the fact that I appear to be a successful business consultant mean that I urgently need a life coach who has fewer than 100 followers?
For weeks, my tagline has read: »Requests from people who only want to sell me something are welcome. By sending me a request, you agree to pay a €500 invoice in exchange for a 10-minute call.«
But no one seems to care. These people just click without even bothering to read my text. It drives me mad. Prospecting without preparation is pointless. Honestly, good leads cost money. I could name ten people right now whom I’d gladly pay €500 for a 10-minute call with, even if I didn't want to sell them anything.
But seriously, how delusional do you have to be to think that a businessman is waiting for your cold request as a part-time life coach or sales trainer?
@LinkedIn: Please fix this! I'll even pay if you let me set a filter that says: »No requests from strangers or from people who don’t share at least ten connections with me.«
Ideally, people with fewer than ten mutual connections who want to sell something should offer something in return. This would make them valuable leads. I’d even pay for that. I'm vain enough to want to be approached with effort, creativity, and individuality, not with a one-click approach.
Distribution mechanics: why do vendors still operate their own warehouses in Europe?
To be perfectly honest, this is a question I often ask myself – and my answer is an uncomfortable one: They probably should not....
To be perfectly honest, this is a question I often ask myself – and my answer is an uncomfortable one: They probably should not. When a vendor chooses to work with distributors, it has already decided that someone else should take responsibility for warehousing in Europe. Yet many vendors still maintain their own central warehouse somewhere in The Netherlands or the Czech Republic alongside their distribution partners. With all due respect, that is an expensive reflex from another era.
What actually happens here? The finished goods arrive from Asia in containers. Traditionally, the flow looks like this: Factory → Vendor’s European Warehouse → Distributor → Reseller. That is one stop too many. The very function that the vendor’s warehouse is performing – receiving finished goods from Asia, storing them in Europe, financing the inventory, picking orders and distributing products – is precisely the core business of distribution. The container could just as easily come directly to us. We unload it, put the stock on the shelf, finance it, and start moving it into the market from day one. The vendor’s own European warehouse is simply duplicating a function that we already perform.
And the smart vendors are already doing exactly that. This duplication comes at a cost: double handling, double warehousing costs, double capital tied up in inventory, and an additional buffer stock that sits somewhere half-empty while continuing to consume cash. Then there is lead time, a subject I have written about before. Every additional handling stage makes the supply chain slower, not faster. Vendors are exceptionally good at designing and manufacturing products. Running forklifts in Venlo is not one of their core competencies – and when they do it themselves, they generally do it more slowly and at a higher cost than we can.
Now let us address the usual objections, because they deserve to be taken seriously. »We need the buffer stock.« Distribution provides that buffer – and does so more efficiently. We aggregate demand across multiple vendors and thousands of resellers. Our warehouse is continuously bustling because it processes forty brands. A single-brand warehouse will inevitably spend more time standing still. »We need allocation control.« Allocation can be managed through agreements, quotas and forecasting with the distributor. No vendor needs its own warehouse and fleet of forklifts for that. »We have slow-moving products and spare parts.« Those can also be stored more economically within a broad distribution warehouse than in an expensive, stand-alone vendor-operated distribution centre.
If I am being perfectly frank, the real reason these warehouses continue to exist is rarely financial. More often, it is a matter of control. A little bit of empire-building. And above all, the familiar refrain of »we have always done it this way.« Understandable, perhaps – but not a business argument. If a company chooses the distribution model, it should embrace it whole-heartedly. Half measures are invariably the most expensive option.
So, dear vendors, here is a candid suggestion: Close your European warehouses. Invest the capital you free up into products and innovation instead – that is where your competitive advantage lies. Storing finished goods from Asia in Europe is a solved problem. Solved by us.
And remember: »Two warehouses performing the same task are not a safety net – they are simply duplicated costs wrapped up with a ribbon.«
Distribution mechanics: why doesn’t Jarltech sell directly to end users?
In my previous article, I explained why vendors work with distributors instead of supplying thousands of resellers themselves....
In my previous article, I explained why vendors work with distributors instead of supplying thousands of resellers themselves. The obvious follow-up question comes almost immediately – one step further down the chain:
»Fair enough, the vendor sells to you. But why don’t you simply sell directly to the end customer? Surely you could cut out the reseller in the middle.«
It follows the same logic, and the same misunderstanding, just one level further down. And the answer is equally straightforward: because we deliberately choose not to. We are never in competition with our customers.
Let us start with the most important reason, without any romanticism: the reseller is our customer. If we were to sell directly to their end users, we would be attacking the very people who entrust us with their business. That is called channel conflict, and it is the quickest way to destroy a distribution business. A reseller who fears that their supplier might poach their customer tomorrow will simply stop buying from that supplier today.
In this industry, trust is not a feel-good buzzword – it is real working capital.
Yes, there are still so-called hybrid distributors who also sell directly to end users, either themselves or through subsidiaries. Anyone buying from them is effectively buying from a competitor. The fact that some vendors continue to tolerate this is much like their acceptance of non-stocking distributors: it reflects a reluctance to make difficult channel decisions for fear of losing the occasional customer somewhere along the line.
Then there is the question of value creation. We sell hardware – a scanner, a printer, a POS system. What the end customer actually needs, however, is a working solution: configured, integrated into their business systems, installed on site, supported by trained staff, and restored quickly when something goes wrong.
That is exactly what the reseller or systems integrator does – and they do it better, closer, and faster than we ever could from our offices in Usingen. They know their local bakery chain, their pharmacy group, their logistics provider. That final and crucial mile between »product in a box« and »solution up and running« is not our area of expertise. It is theirs.
And quite simply, we are not designed for end users. Our entire organisation – logistics, credit management, payment terms, support structures, contracts – is built around B2B business and professional resellers. End users bring an entirely different set of requirements: consumer protection legislation, retail customer support, Saturday evening phone calls asking how to switch a device on, individual shipments to private addresses, and returns without any project context.
That is a different business model with a completely different cost structure – and it is not ours. Companies that try to run both simultaneously usually end up doing both badly.
As you can see, it is exactly the same mechanism as one level above. Just as the vendor excels at designing products and we excel at distributing them thousands of times over with added value, the reseller excels at turning those products into functioning solutions for the end customer.
Three levels. Three disciplines. Each carrying its share of the burden.
If we were to skip a level, we would not be creating efficiency. We would simply be taking on responsibilities that others perform better while alienating the very partners on whom our business depends.
That is why Jarltech does not issue a single invoice to an end consumer. Not because we are unable to – but because doing so would undermine the very model that sustains all three parties.
And remember: »If you overtake your own customers, you do not arrive any faster – you simply arrive alone.«
Distribution mechanics: why do vendors work with distributors?
A question I am asked surprisingly often – sometimes by a reseller, sometimes by a new employee, and occasionally even by vendors: »Why don’t vendors simply sell...
A question I am asked surprisingly often – sometimes by a reseller, sometimes by a new employee, and occasionally even by vendors: »Why don’t vendors simply sell directly? That way everyone saves the distributor’s margin.«
At first glance, it sounds perfectly logical. In reality, it is not. And the reasons are very tangible – in fact, they have surprisingly little to do with the margin itself.
Let us imagine a vendor wants to serve the European market directly. Instead of dealing with a handful of distributors, it suddenly has to manage several thousand small- and medium-sized resellers. Every one of them requires a credit assessment, payment terms, invoices in local currency, a contact person who speaks their language, the occasional payment reminder – and every now and then one of them defaults altogether.
Vendors have done the math. Managing all of this can cost up to 14% in margin, whereas efficient distributors typically provide the same service for less than half of that. At this point, it is no longer a product business – it is a banking business. We absorb precisely that risk and administrative burden on behalf of the vendor. Instead of dealing with a thousand potentially unreliable debtors, the vendor has just one customer that pays on time: us.
Then there is the logistics aspect. The vendor prefers shipping full pallets to a single destination. A reseller, however, may only need three printers and a handheld of devices – and they need them tomorrow. Breaking down large shipments into individual units and dispatching them daily to hundreds of recipients is the so-called »last mile« of distribution. Vendors generally have little interest in doing this themselves. We do.
The distributor also plays a critical role in large projects. Shipping 10,000 terminals may sound straightforward enough, but by the end of the project the customer often wants twenty separate deliveries of ten cables each to different locations. Someone has to manage that complexity.
And the list goes on: local sales teams in every market, technical support, RMA processing, configuration services, bundled solutions, reseller training and enablement. A vendor’s field sales team can economically focus on major end users and large-scale projects, but it cannot afford to spend significant time supporting a reseller who purchases €8,000 worth of products per year. The numbers simply do not add up. We provide the reach needed to access the vast majority of resellers.
Another way of looking at it is this: vendors are experts at designing and building products. We are experts at bringing those products to market thousands of times over, in small quantities, on credit, across 22 countries. These are two entirely different disciplines, each demanding full attention. A vendor attempting to do both will usually struggle with one of them – often with the very thing it does best: developing products.
And of course, there is the balance sheet – arguably the most important point of all. By working through distribution, vendors remove receivables and inventory from their own balance sheets and transfer that burden to the distributor.
The distribution margin, therefore, is not a fee. It is the price paid for having someone else provide the capital, absorb the risk, manage the logistics, and execute the market coverage that the vendor would otherwise have to handle itself – only at greater cost and with less efficiency.
Anyone who asks the question about direct sales usually does so only once.
Because one simple truth remains:
»You can eliminate the middleman – but you cannot eliminate the work.«
Compromise is the enemy of excellence
There is a word that, in many companies, is seen as a sign of maturity: compromise. You meet in the middle, everyone gives a little, everyone gets a little....
There is a word that, in many companies, is seen as a sign of maturity: compromise. You meet in the middle, everyone gives a little, everyone gets a little. Sounds fair. But it isn’t. Because a compromise is usually nothing more than the organised defeat of the best idea.
Compromises rarely arise because two options are equally good. They arise because no one wants to endure the conflict. Because the clock is ticking. Because the courage is lacking to clearly say: this solution is better than that one. The result: mediocrity prevails. A compromise feels safe. It isn’t.
Excellence sometimes means making uncomfortable decisions. Clearly stating what you believe is right. Not hiding behind »we’ve reached an agreement«.
At Jarltech, we strive to ensure that the best solution always wins. Not the most convenient one. Not the loudest one. The best one.
And if that means we occasionally ruffle some feathers – we’re perfectly fine with that.