Read the full article here: https://thekinigroup.com/optimizing-distributor-profitability/ Distribution is a low-margin business. Sometimes it’s as low as pennies on the dollar.There are just so many costs involved. And that’s not good for your bottom line. In fact, distributors need a gross profit margin (GPM) of at least 10-15% to remain profitable.You can only whittle your costs down so far. If you want to increase your profitability, you need to start focusing on other elements. Obvious Element One: Volume If you sell more, you make more, right? Wrong. Even with cross-selling complementary products, it often isn’t enough. Which brings us to, the second obvious element…. Obvious Element Two: Price A 1% price increase can improve profits by 11%. Pricing is a very powerful lever if you price at the transaction level with your highest profit potential at the forefront of your mind. Unfortunately, for most distributors, pricing at the transaction level is very difficult. So where do you look next? Your real opportunity for optimizing distributor profitability is in mix shift. Your real opportunity for optimizing distributor profitability is in mix shift. Mix is just as important as price and volume when it comes to your profitability. But it’s often overlooked – or worse – ignored completely. It’s challenging to manage mix, because it’s usually a mystery. The data is difficult to manage and understand. But that’s NO excuse. If you start from the ground up with accurate formulas that don’t use plugs, mix data can lead to major margins. Start with 4 types of mix data: 1. Product Mix: how product sales vary across the business between two time periods. Rank your sales transactions by profitability and determine the underlying sources. Which product and sales strategies are working? Which aren’t? Use these findings to optimize your sales tactics. Rank your sales transactions by profitability and determine the underlying sources. Which product and sales strategies are working? Which aren’t? Use these findings to optimize your sales tactics. 2. Customer Mix: how customers purchase at different price points for the same products. Evaluate your sales transaction data to segment your customers and identify what each group truly wants. Then optimize your transactions by customer segment and optimize each for maximum profitability with custom pricing strategies. 3. Business-specific Mix: every business is unique, and each also has its own types of mix shifts.This could be channel mix, region mix, segment mix, order size mix, etc.Take advantage of it! Mix Matters Mix analysis helps distributors understand confusing sources of margin variance.

1. insights from
1
Yes, You Should Be Optimizing
for Distributor Profitability

2. insights from
2
Distribution is a low-margin business.
Sometimes it’s as low as pennies on the dollar.
Yes, You Should Be Optimizing
for Distributor Profitability

3. insights from
3
There are just so many
costs involved.
And that’s not good
for your bottom line.
Yes, You Should Be Optimizing
for Distributor Profitability

4. insights from
4
In fact, distributors need a gross
profit margin (GPM) of at
least 10-15% to remain profitable.
Yes, You Should Be Optimizing
for Distributor Profitability

5. insights from
5
You can only whittle your
costs down so far.
If you want to increase your
profitability, you need to
start focusing on other elements.
Yes, You Should Be Optimizing
for Distributor Profitability

6. insights from
6
Obvious Element One:
Volume
If you sell more, you
make more, right?
Yes, You Should Be Optimizing
for Distributor Profitability

7. insights from
7
Wrong.
Even with cross-selling complementary products,
it often isn’t enough.
Which brings us to, the
second obvious element….
Yes, You Should Be Optimizing
for Distributor Profitability

8. insights from
8
Yes, You Should Be Optimizing
for Distributor Profitability
Obvious Element Two:
Price
A 1% price increase can
improve profits by 11%.

9. insights from
9
Yes, You Should Be Optimizing
for Distributor Profitability
Pricing is a very powerful lever if you price at
the transaction level with your highest profit
potential at the forefront of your mind.

10. insights from
1
0
Yes, You Should Be Optimizing
for Distributor Profitability
Unfortunately, for most distributors,
pricing at the transaction
level is very difficult.
So where do you look next?

11. insights from
1
1
Yes, You Should Be Optimizing
for Distributor Profitability
Your real opportunity for
optimizing distributor profitability
is in mix shift.

12. insights from
1
2
Yes, You Should Be Optimizing
for Distributor Profitability
Mix is just as important as price and volume
when it comes to your profitability.
But it’s often overlooked – or worse – ignored
completely.

13. insights from
1
3
Yes, You Should Be Optimizing
for Distributor Profitability
It’s challenging to manage mix, because
it’s usually a mystery.
The data is difficult to
manage and understand.
But that’s NO excuse.

14. insights from
1
4
Yes, You Should Be Optimizing
for Distributor Profitability
If you start from the ground up with
accurate formulas that don’t use plugs,
mix data can lead to major margins.
Start with 4 types of mix data.

15. insights from
1
5
Yes, You Should Be Optimizing
for Distributor Profitability
1. Product Mix:
how product sales vary across the
business between two time periods

16. insights from
1
6
Yes, You Should Be Optimizing
for Distributor Profitability
Rank your sales transactions by profitability and
determine the underlying sources.
Which product and sales strategies are working?
Which aren’t?
Use these findings to optimize your sales tactics.

17. insights from
1
7
Yes, You Should Be Optimizing
for Distributor Profitability
2. Customer Mix:
how customers purchase at different
price points for the same products

18. insights from
1
8
Yes, You Should Be Optimizing
for Distributor Profitability
Evaluate your sales transaction data to
segment your customers and identify
what each group truly wants.
Then optimize your transactions by customer
segment and optimize each for maximum
profitability with custom pricing strategies.

19. insights from
1
9
Yes, You Should Be Optimizing
for Distributor Profitability
3. Business-specific Mix:
every business is unique, and each also
has its own types of mix shifts.

20. insights from
2
0
Yes, You Should Be Optimizing
for Distributor Profitability
This could be channel mix, region mix,
segment mix, order size mix, etc.
Take advantage of it!

21. insights from
2
1
Yes, You Should Be Optimizing
for Distributor Profitability
Mix Matters
Mix analysis helps distributors
understand confusing sources
of margin variance.

22. insights from
2
2
Yes, You Should Be Optimizing
for Distributor Profitability
These data evaluations can even help forecast the
results of strategy changes in the long run,
minimizing problems before they even arise.
Get the full explanation here.

23. insights from
2
3
KiniMetrix maps out your mix data for you.
Its formulas eliminate plugs, allowing
companies to see where opportunities for
margin improvement really are.
Click here to see how KiniMetrix
can do this for you.
Yes, You Should Be Optimizing
for Distributor Profitability