Distributors increased their sales in the third quarter of 2016 by 3.1%, according to new data from ASI. The increase is down from 3.2% in the second quarter of this year, and slightly lower than the 3.4% reported in the third quarter of 2015.
The quarterly sales study conducted by ASI found that sales growth was strongest among larger distributors (those generating more than $1 million in annual sales), with a 5% year-over-year increase in Q3. Meanwhile, small distributors ($250,000 and under in annual sales) reported a decrease of 1.3% and mid-sized distributors reported no change for the same time period.
“The one true consistence is this is a category [distributor revenue] that is not consistent,” says Forrest Fairley, head of promotional products sales for Top 40 distributor Safeguard Business Systems (asi/316203). “What I mean by that is the distributor who relies on the ‘annuity factor’ will be the distributor who will quickly find dismay when the customer decides not to repeat a promotion. And, thus, a huge shortfall in year-over-year revenue production occurs.”
The report also found that 30% of distributors reported an increase in Q3 sales this year when compared with Q3 of 2015, while 21% reported a decrease and 49% stated that sales remained the same. Meanwhile, the number of distributors reporting an increase in sales from quarter to quarter has rebounded after a downward trend; 27% reported an increase in Q2, 30% reported an increase in Q1 and 36% in the last quarter of 2015.
Fairley says Safeguard has experienced 31% growth this year and is on track to reach a record revenue year by the end of 2016. “With a combination of business growth, acquisition and always creating new ways to solve customer’s challenges, we attempt to set ourselves apart,” Fairley said. “The more we can do that with great consultative solutions, the more our annual increases become a reality.”
Meanwhile, the Counselor Confidence Index, which gauges the health and optimism of distributors, has increased to 113, up from 111 in the second and first quarters of this year. However, the Counselor Confidence Index has remained relatively unchanged over the last three years.
Just four in 10 distributors expect sales to increase in 2016, compared to 20% who expect a decrease.
In July, ASI reported that distributors saw a 3.2% increase in sales in Q2 vs. the last quarter of 2015.