Customer profitability for distributors and wholesalers

Distribution is a cost-to-serve business wearing a margin business’ clothes. Buy, hold, pick, deliver, take returns – every step is handling, and handling is where the profit leaks. Because gross margins are thin, a small difference in how a customer orders swings the account from profit to loss. The danger account is rarely the obvious one; it is the loyal customer placing many small, frequent, fragmented orders that each cost more to serve than they earn.

Once orders are costed this way, the fixes are concrete and fast: minimum order values, order-consolidation incentives, delivery-frequency tiers, surcharges for fragmentation and rush, and terms that reflect the true cost of credit and returns. None require losing the customer; they reshape how the customer buys.

Frequently asked questions