Distrigo's Surprising Expansion in UK
A study case of a company you might not know today, but tomorrow you will
“If you see it in the news, it’s already late.”
Most of the time we become aware of the important things a tiny bit too late. Having worked in the automotive field for 25 years now, I’ve noticed that usually if I read it in the news it means that it’s already a done deal and I’m probably late to the party. In our case, Distrigo might be that party.
This article is a case study in which I would like us to dive into a bit of data that we have about Distrigo’s approach in the UK, and then I’ll share my extensive analysis on it - hoping that in the end, I will have made a compelling case for you to not let this new “kid on the block” fly under your radar.
As an introduction to this study case, the company overview down below will help you get a high-level view of everything you need to know about Distrigo.
How Distrigo UK started
DISTRIGO UK represents the inaugural significant venture in Stellantis' car parts distribution following its formation from the merger of FCA and PSA in 2021. In this merger, PSA had a larger stake, leading the French conglomerate to mandate the continuation of projects initiated prior to 2021. Through DISTRIGO, the PSA Group establishes itself as a comprehensive source for multi-brand replacement parts, and aims to provide repairers with access to the premier multi-brand product.1
From its inception in UK, the Distrigo project was marked by its ambitious nature. If in France, Belgium, and Luxembourg, Distrigo was centered around:
3 OEM brands and
1 corresponding private brand
Meanwhile, in the UK, DISTRIGO brought together:
14 OEM brands under the MOPAR name for Stellantis vehicles
private brands associated with OEM inventories/sales (EUROREPAR)
also, for the first time, IAM Premium Aftermarket brands such as BOSCH, Schaeffler, Delphi, Valeo, Mahle, TOTAL, among others:
Remanufactured, repaired and recycled parts under the SUSTAINera circular economy brand2
Based on available information, DISTRIGO e-commerce platform offers three Levels of membership: from FREE access for Vehicle Lookup and Parts Information to QUOTE level and REPAIR level. The available content categories are:
Part Catalogue
Technical documentation
Electrical schematic
Diagnostic information
Repair methods3
Titi`s take:
I am genuinely impressed by what Distrigo UK managed to accomplish in such a short time. Even though there hasn’t been much innovation in the field for a while (at least I haven't managed to find that glimmer of innovation in my readings yet), we have to appreciate that Distrigo has implemented one of the best performing business models currently available.
A very similar business model proved to be successful and was implemented by Inter Cars in Poland (as a side note, Inter Cars just entered the UK market, being very aggressive in terms of expansion and marketing). Distrigo implemented in UK the same segregation between central and local operations, and between the parent company Distrigo and the local distributors.
I noticed that these local Distrigo distributors are either car representatives of the Peugeot & Citroen brands, or local traders. The latter sell the entire Distrigo range, as opposed to legacy car dealerships that only offer a part of the range, usually OEM in their segment. However, I believe that a customer assigned to a Citroen car distributor can receive any kind of product from a national hub the next day.
Circling back to the business model, Distrigo has assumed the development of the company in terms of:
the inventory stock at the central level
online parts catalogue
technical & repair data
repair times
the marketing part.
In particular, Distrigo’s Perks campaign “1 £ spent = 1 point” is looking very good and I'm sure it will catch on very well. Almost all companies have tried this campaign at some point in time, looking to stimulate the sales and by co-interesting buyers from independent garages.
Let’s go ahead and analyze each, in turn. First up, the inventory stock:
Inventory Stock of Distrigo UK: “Stockist” vs “Waiters”
The activity of a national distributor in the automotive field can be described by a single word: “stockist”. Therefore, the stock is always the part that consumes the most resources and gives the biggest headaches to the profile companies.
Maintaining an efficient stock has been a problem for over 100 years in our field:
If it's too small, we won't be able to satisfy our customers and their needs
If it's too big, it becomes a millstone around the company's neck.
On the other hand, the OEM suppliers adopt a “on-demand” approach. I call them “waiters”, as in the person that serves at a restaurant. They do not own the food, but they help connect demand with offer by being an intermediary between the hungry clients and busy chefs.
Independent repairer <-> National Distributor (stockist) <-> OEM supplier (waiter)
To be honest, I find it rather hard to believe that Distrigo makes this difference between being a stockist vs waiter, and they threw themselves into an endless supply that would put the company's money on the shelves.
I would be curious to find out more about the algorithm used in their supply. Is it different than the ones used by established IAM Distributors? The math behind the algorithm says that I must have a piece in stock if I had a sale in three different weeks in the last year - or in the last 52 weeks.
My bet would be that their algorithm is closer to that of Inter Cars, which has a harder time bringing products to the shelves of local distributors and withdraws them much faster in the absence of sales.
IT & Online Department of Distrigo UK
As I mentioned in the company overview, I am impressed by how good the Distrigo’s online platform is and how many features they are offering. Even though I did not get the chance to test its speed, the outlook is very promising.
The available data is of high quality. I do hope though that the car repair manuals & repair times will be more accurate for all car brands, not just for the Stellantis ones.
I also spotted a couple small issues with the identification part of a nearby distributor, “error 404” becoming pretty annoying at some point.
The product presentation is on point, with quality pictures and without obvious shortcomings; the campaigns are presented in a separate section very clearly and concisely.
My intuition says that the prices shown to an owner of a car looking for a Eurorepar Centre are different from those offered to the Eurorepar Centre. I really hope it is so.
In short, everything about their online system looks and feels very polished, but, as I mentioned, there is nothing innovative here either.
Marketing activities of Distrigo UK
Here lies the power of Distrigo! Large marketing budget, many campaigns, incentives for employees and customers. Campaigns like: “everything is in our offer today!” or “Everybody will win something!”
I really liked the idea of Distrigo Perks4, which is promoted in a section separate from that of the offers. This is a real campaign, which puts buyers in a big dilemma: “Aren't the slightly higher prices - but with the earned Distrigo points - more advantageous than a slightly cheaper direct purchase?”
I appreciated the possibility for customers to use these points not only in the Distrigo network but also on Amazon or Snap-on, for tools, equipment and much more. Plus, the customers get to participate in various competitions to win more and more prizes. Good job here!
Local activities.
I don't have much information about the company's local activity, but here too I noticed that there is not much innovation going on. It is the business model applied by Inter Cars Poland in all the countries where it operates. Not having visibility over the contractual agreements between Distrigo UK and the local distributors, the appearances tell me this is a franchise model.
Contingent to how Distrigo respects its partners, everything so far indicates to me a business success story. Now, if the history of Poland is any guide, where the two partners from the Inter Cars franchise share the margin equally but do not share the year-end bonuses (which have become very large recently) then the business will prove profitable only for Distrigo and the partners will leave to other opportunities.
Twenty years ago, the discount granted to an IAM distributor by a car parts manufacturer was a significant one: around 25%. At the end of the year, a maximum bonus of 3% was received for the purchases of that year.
Now the situation is reversed: the discount on purchases is much smaller and the year-end bonus can reach around 15%.
The moral here is that if the benefits are not shared, business can’t work out.
Final thoughts
I think that at this moment Distrigo UK needs professionals in the distribution of auto parts to take this project where it belongs.
Within the networks of car manufacturers, there are too few who understand the car parts market as a whole. The most difficult concept to understand is that the MARKET REGULATES EVERYTHING. The regulation can’t come from just one player in the market, let alone the market leader, nor from two players that become allies. Only the market will know and prove whether a project is successful or not.
The Distrigo idea seems phenomenal to me, its implementation will make the difference between failure and success. The idea sounds innovative, but its details show that there is absolutely nothing new under the sun!
We see the same mistakes related to inventory stock, the company's relationship with salespeople, and the company's relationship with local distributors.
Humbleness does not guarantee your success, but it proves to be a very good guide. Unfortunately, the OEM people don't really know what humility means...
“History doesn't repeat itself, but it often rhymes.” Mark Twain
Best regards,
Titi
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