They compete with each other on that price and on the mix of services they offer. The products are the currency of exchange. Now, thanks to the Internet, any MRO buyer can find the lowest price in the world on any item in a few minutes online. This, combined with competition from retail chains and catalog houses, is forcing local distributors to justify their prices in comparison with national and global suppliers with very different service offerings and cost structures. The business culture of continuous improvement adds its own pressure.
Customer satisfaction is a constantly rising bar.
To stay competitive, a distributor has to constantly develop new services, even in a business climate of frozen prices. Still, only a few electrical distributors have taken their first steps out onto the ice. There are a lot of people chewing at a piece of the wholesaler's business, and it's never the low-priced business. If they lose business, they'll lose it in their higher-margin areas. Therefore, they'd better start looking at the onion approach to their services and, if necessary, start charging for them.