US Trends in PPE Distribution

8/13/2019 US Trends in PPE Distribution

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TRENDS IN PPE DISTRIBUTION IN THE US MARKET

Daniel K. Shipp, president, International Safety Equipment Association

International Trade Conference Distribution of PPE Today and Tomorrow

Dsseldorf, Germany November 6, 2013

As I was preparing for this talk, I interviewed PPE manufacturers and distributors, industry analysts and

observers, all of whom were quite willing to share their views. The presentation that results from these

conversations is not a scientific review or an economic analysis, but rather a snapshot of an industry in

transition, and one whose challenges are how it will adapt to the pace of change over the next few

years. The people I interviewed identified a number of trends affecting the PPE marketplace too many

for a brief presentation but four stood out:

Changes in the channel what kinds of companies are supplying PPE. Changes in the brand the emergence of private labeling and in-house PPE brands.

The importance of knowledge-based selling helping customers find solutions to their healthand safety issues.

The emergence of e-commerce and on-line buying, and its potential to bring about radicalchanges in the way PPE is sold.

The association for which I work, ISEA, was founded in 1933, and is the association for manufacturers

and distributors of PPE. For about 40 years, the distribution side of the business had its own association,

the Safety Equipment Distributors Association, or SEDA. SEDA prospered for a number of years, but

struggled to keep up with the changes in distribution and went out of business two years ago.

Nearly all PPE for the industrial marketplace in the US is sold through distribution. Here are theproducts were talking about:

Head, eye/face, hearing protection Respiratory protection Gloves Protective apparel, including chemical protection, FR protection, and high visibility apparel. Protective footwear Fall protection Gas detection

Distributors also carry associated products such as first aid kits and supplies, emergency eyewash &

showers, signs and warning devices, and hazardous material containment and cleanup supplies.

Most PPE distributors in the US do not carry uniforms or workwear, nor do they sell sporting and

recreational PPE.


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In this business-to-business market, there is a small volume of sales direct from the manufacturer to the

user, usually high-value items; and some retail sales mostly to small businesses, individual contractors

and specialty markets. There are specialized distributors in markets such as welding, fire and

emergency services and healthcare, but the great majority of products get to the customer through

safety distributors that carry a full range of PPE.

Trends in this industry are common to most industrial distributors in the US, but some are unique to the

nature of the products we make and sell.

Changes in the Channel

One of the most important comes under various names: consolidation, channel proliferation, channel

convergence even the tongue twisting disintermediation. What they all mean is that the number of

independent distributors is falling, the number of different sources of PPE is expanding, and yet an

increasingly large share of the market is being concentrated in a few large companies.

Not that many years ago, safety equipment distribution was a specialty, a business of independentcompanies operating locally or regionally, prospering on intimate knowledge and relationships with

customers in a defined geographic area or type of business. The sales people knew the safety directors,

the business owners knew the CEOs, and the products they sold bore brands from established

manufacturers.

Today, as one observer told me, it looks like almost everyone is in the PPE distribution business. The big

distributors of PPE are industrial giants, with broad product offerings, national or continental reach and

global connections. In some cases they have built their safety portfolios by buying independent

distributors, in others they have developed a safety business from the ground up, as an add-on to their

core sales. These include full-range industrial distributors, tool suppliers, power transmissiondistributors, and even electrical and plumbing distributors. Their influence on the market is substantial,

with the top four or five companies accounting for an estimated 50% of PPE sales in North America.

For customers, especially large industrial customers, these distributors are able to sell simplicity and

convenience, providing a one-stop shopping experience for a broad range of supplies. For the

manufacturer, they offer high volume and sales forces able to promote a brand nationally. For everyone

in the chain, they offer sophisticated e-commerce capabilities, reducing paperwork and time, taking

costs out of the process.

These companies are logistics pros, and they are bringing fresh concepts to the supply of safety

equipment. One of these concepts, mentioned by almost everyone I talked to, is vending. Its not a newidea a worker goes to a machine in the plant and keys in an ID or swipes a card, open a door and gets a

tool, a pair of gloves, a set of goggles. But with technology, vending offers more than convenience. It is

a tremendous source of data. The safety director knows whos using what, the employer knows how

much is being used company-wide, the distributor is getting information about product delivery in real

time and restocking the machine as needed. Its vendor managed inventory with automation thrown in.


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Today house brands look different. Responding to pressure to keep lowering prices and the availability

of high-tech manufacturing in other parts of the world, manufacturers went to Asia to source PPE.

Before too long, distributors realized they could source the same product directly, put their own brand

name on them and knock some pennies off the price. Customers responded favorably, and private

labeling expanded to the point where today the line between PPE manufacturing and distribution is

blurry. Distributors have the financial and market strength to manufacture and market their own

brands, and instead of offering them as low-cost alternatives, their sales forces are leading with them,

the companies are advertising them in national publications, and working to build brand awareness and

loyalty. The advantage is obvious lock the customer into a brand for which your company is the only

source.

Many distributors see their private brands as enhancing their credibility in a market sector, offering the

customer more choices, and incidentally enabling their suppliers to sell a higher, more feature-laden

level of PPE.

But many manufacturers see this trend in another light: their distributors are becoming their

competitors. As they bring their own brands to the forefront, how well are they serving their suppliers?

Are these products cannibalizing the R&D and design work done by other manufacturers and copied by

contract producers? What kind of technical support are the distributors able to provide for house-

branded products which theyre simply buying off the shelf?

The customer isnt going to know the difference. When the customer buys a branded product from a

distributor, he likely thinks that its been made by, or at least under the direction of, that company. The

distinction between manufacturer and distributor is unimportant at that level.

If the customer sees the mark of a standard on the product, he also expects that its been tested and

that the company selling it to him knows that it meets all the requirements.

Knowledge-based Selling

This points to another critical issue, one potentially made more serious by distributor private labeling.

In the US, there are no uniform requirements for testing and evaluation of most PPE. Government

certification is required for respirators, there are some product standards that require certification, and

some markets such as fire and emergency services demand it, but there is no national mark or anything

equivalent to the CE mark to provide customer confidence. The user trusts the supplier to provide a

compliant product. So a knowledgeable customer is important. We all know thats an elusive goal,

especially as industrial companies are pressured to do more with fewer people and the occupational

safety responsibility is delegated to an environmental manager, purchasing agent, or in the worst case a

clerk with a computer and instructions to buy at the best price he can find.

ISEA is working to develop a voluntary standard for PPE conformity assessment, which would enable

suppliers including distributors to provide a declaration of conformity for products bearing their

brand.


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But even with the most sophisticated customer, it is vital for the seller to have the knowledge to guide

the customer to the right product. Manufacturers and distributors in the US agree that the need to train

their sales forces to understand not just the products they are selling, but their application and the role

of PPE as part of a companys safety management programs.

It is not enough to have a comprehensive mix of products and brands. It is not enough to have the bestprices and quick delivery. These are common, and offer slight competitive advantage. And they do very

little to help a customer solve his safety and health problems.

But what if the PPE salesperson can sit down with a safety director, managing director or company

owner, and talk knowledgeably about safety and health identification and evaluation of hazards,

management approaches to environmental safety and health, how all the parts of a safety and health

program work together, and the role of personal protective equipment as part of the program?

ISEA and SEDA recognized the value of informed marketing and sales for PPE, and jointly developed a

training program we call QSSP Qualified Safety Sales Professional. It is a five-day course, designed and

taught by experienced safety professionals, which provides its students with an overview of the

technical and regulatory fundamentals of worker safety and health.

Students learn the basics of occupational safety and health. They study air sampling and exposure

levels, respirator fit testing and fall protection basics, electrical safety and confined spaces. They dig

into US government regulations to learn about standards, compliance and enforcement.

The centerpiece of the course is an innovative way of looking at the health and safety value proposition.

Students learn how to calculate the real cost of an injury or fatality, how workers compensation

insurance premiums are affected by your companys safety performance, and how health and safety

management should be viewed as a business asset. To get the right perspective, they learn to calculatethe cost of an injury in sales equivalent dollars, showing how poor safety performance affects profits.

Since the course started in 1996, weve trained over 1100 people, who have come away from the course

with practical information that enables them to make the case to their customers management for a

strong, sustained EHS program.

E-commerce

The final trend is probably the most critical for the future of PPE distribution.

Some distributors have invested heavily in e-commerce, and its paying off for them. But are other

online purchasing channels going to overtake them?

Purchase decisions are no longer being made over lunch, or drinks, or in face-to-face meetings. Theres

still a role for a good salesman with a sample case and a winning smile. But when the salesman leaves

the room, the customer can, with a few keystrokes, discover not only the technical specifications of the

products hes shown and every competing product he can read reviews from users, compare prices,

get shipping details, and place an order with a click of a mouse.


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When the customer feels comfortable clicking the buy button on a Web site, the salesmans job gets

infinitely harder. And when that Web site delivers the product as specified, in the specified time and at

a good price, the salesmans going to have a harder time making the next sale.

Surveys of B2B procurement specialists consistently show that they want suppliers who can offer digital

commerce as well as traditional sales channels. Distributors need to have a robust e-commerceinfrastructure, with electronic access to their catalogs, real-time product information, inventory

availability, order status and all the other features that provide a seamless customer experience.

But if the distributor is no more than an electronic link, has he lost his advantage in the marketplace?

The value proposition for distribution includes a number of factors: among them are product inventory

and availability, product knowledge, a geographic location thats close to the customer, price stability,

and customer relationships. How do these hold up in an e-commerce world?

How do these hold up against amazonsupply.com?

Inventory and availability? Today, Amazon Supply offers over 123,000 products in the occupational

safety and health category, including 55,124 separate items listed as PPE (at the time of this

presentation). That number is going up every day.

Geographic location close to the customer? Amazon Supply offers free 2-day shipping for orders over

$50.

Product knowledge? The amount and level of technical information available on the Web is

comprehensive. Users can get technical data sheets, instruction manuals, use and selection guides,

videos, APPs on just about any kind of PPE. Manufacturers and consultants offer hands-on training.

User forums and rating systems provide feedback and a level of product information thats probably notavailable anywhere else.

Price stability? Amazon Supply doesnt care about price. They are able to constantly scan the market

and adjust their pricing to a level where they are going to be competitive.

Customer relationships? Think again about the last time you bought something from an online site.

How was the experience? Ecommerce providers like Amazon have made the user experience a fine art,

doing everything possible to make it convenient and comfortable. If thats not your experience, it will

be the experience of the next person to sit at your desk.

So what does this mean for distribution? Manufacturers and distributors are going to have to figure thisout, and do it quickly. The pace of change will not allow for business as usual. The impact of Amazon

Supply may seem minimal today, but in a recent survey of industrial purchasing executives, 45 percent

reported that they had made a purchase from the site, and 25 percent use it frequently.

I need to be careful that this doesnt sound like a commercial for Amazon. Its not. I recognize that

there are other e-commerce players in the marketplace, some aggressively pursuing similar strategies to


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capture parts of the B2B marketplace. Im also not suggesting that I think anything Ive said here

represents the way things shouldbe, but rather the way things are. But lets be realistic. Amazon has a

user base of over 170 million people, it is building warehouses around the country, and I am willing to

wager that nearly everyone in this room has been a customer.

Are we approaching a post-distributor world? Its hard to say. Distributors occupy a critical space in thePPE supply chain. As I said at the start, companies will survive as they adapt and manage changing

buyer habits.

One thing is certain: The marketplace in which we design, build and sell our products is unique. When I

started in this business 20 years ago, I was fortunate to be guided and inspired by industry leaders

people with a lifetime commitment to making products to keep workers safe and healthy. One of them,

Jed Bullard, shared a phrase that sums it up: Safety is special.

We all know that that means. The products were making and selling, whether theyre low-cost

commodities or technically sophisticated devices and systems, all are used and worn by men and

women to enable them to go into hazardous environments, do work, and come out in one piece.

I use this phrase because I also think that selling safety is special. Its not just a matter of having a

comprehensive catalog, getting products to the customer on time at a good price. PPE manufacturers

and distributors arent selling tools or motors or pipe or paper. Regardless of how our products get to

the customer, were selling life, and health. I can think of no better business.

US Trends in PPE Distribution

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