Understanding the Five Critical Pillars Dominating B2B Distribution

In B2B distribution, staying ahead means more than just selling product—it means mastering complexity, navigating chaos, and capitalizing on emerging opportunities. As 25-year industry veteran John Gunderson emphasized during his recent session at Catalyze 2025, this is perhaps the most exciting (and challenging) time to be in distribution.

Why? Because the fundamental rules are being rewritten. Tariffs, economic uncertainty, and supply chain pressures have turned the playing field into a battlefield. But for distributors who are agile, data-savvy, and strategically aligned, it’s also a moment to seize massive opportunity and outpace the competition.

Gunderson distilled this moment into critical pillars that dominate distribution today. These pillars aren't theoretical—they’re tactical levers that can drive profitable growth and long-term success. Let’s dive in.

1. Sales Excellence and Share Capture

At the top of Gunderson’s list is sales excellence. But not all sales are created equal. The real goal isn’t just growth—it’s profitable share gain.

Today’s distributors must focus on two things:

1. Growing share of wallet with existing customers

2. Targeting larger, high-value customers with the ability to shift spend

Gunderson likens customers to oranges and distributors to orange juice manufacturers: "You don’t just want more oranges—you want to squeeze more juice from the ones you have." That means applying pricing intelligence, operational rigor, and aggressive pursuit of must-have accounts.

As he pointed out, even a small increase in share from your top accounts can make a dramatic impact. But to make that happen, you need data, focus, and a deep understanding of customer potential. And once you win that business, you need to lock it in.

2. Integrating Pricing and Rebates

One of Gunderson’s most provocative statements: Price is a weapon—and this is the year to use it.

In a volatile cost environment driven by tariffs and supply chain shifts, those who control pricing strategy with discipline and agility will win. The key is understanding both buy-side and sell-side economics. Distributors too often separate their pricing and purchasing teams—Gunderson challenges that thinking. If you’re setting sell prices based on buy costs, these teams must be aligned.

Also critical is the use of rebates. Rebate programs aren't just backend sweeteners—they’re front-line tools to secure share, increase margin, and deepen supplier relationships. In fact, many distributors report that rebates now account for up to 40% (or more) of their annual profitability.

When integrated with pricing strategy, rebates can:

• Fuel profitable pricing models

• Fund growth initiatives

• Secure better supplier terms

• Enable investment in inventory or services

Tariffs may drive costs up, but savvy distributors will use pricing and rebates in tandem to protect margin while staying competitive.

3. Operational Excellence = Margin Protection

Growth without operational excellence is like filling a leaky bucket. The smartest distributors are squeezing more out of every transaction by reducing waste, eliminating friction, and improving service.

Key areas include:

• Inventory optimization: Understand which SKUs need to be local, which can be regional, and which can come from manufacturers. Overlay inventory strategy with customer segmentation.

• Customer-specific pricing agreements (CSPs): These are critical tools for creating barriers to entry and exit. A well-structured CSP locks in a customer, reduces pricing friction, and frees up sales and operations teams to focus on growth rather than transactional headaches.

• Same-day vs. next-day fulfillment: Understand your customer base and adjust service levels accordingly. Construction accounts may demand local stock, while industrial customers may tolerate longer lead times.

Done well, these tactics combine to increase margin, improve fill rates, reduce churn, and protect the share that distributors have worked so hard to win.

4. Customer Segmentation and the 90/10 Rule

Not every customer is worth the same attention. Gunderson stresses the importance of focusing on the top 10% of your customers—because they often account for 88–90% of sales and an even higher percentage of margin.

Distributors that take a maniacal approach to identifying and nurturing their “must-have” accounts—those high-share customers with more to give—will be the ones who thrive.  

This includes:

• Deep account planning

• Regular business reviews

• Targeted pricing and rebate structures

• Customized service and inventory strategies

Don’t just treat your top 10 as another group in the CRM—treat them as a strategic portfolio and over-invest accordingly.

5. Stronger Supplier Alignment

Strategic suppliers should get strategic treatment. This is a year to be more important to fewer people. That means:

• Ranking suppliers based on profitability, growth opportunity, and support

• Moving business up the ladder to those who offer better terms

• Demanding better rebate programs tied to real performance

• Providing visibility into your growth plans and executing on them

Suppliers are under pressure too. If you’re showing up with data, a plan, and results, you’ll be the trading partner they bet on.

What’s Next for B2B Distribution?

Tariffs, inflation, uncertainty—they’re not just headwinds, they’re ladders. The future of B2B distribution belongs to those who treat disruption not as a threat, but as a catalyst. Gunderson urges distributors to view this year’s chaos as a rare opportunity. It’s a chance to:

• Take share from distracted or unprepared competitors

• Use pre-tariff inventory as a cost weapon

• Re-negotiate supplier terms

• Expand relationships with must-have customers

• Build CSPs that protect your position when the market stabilizes

The most successful distributors in the years ahead will be those who break down internal silos, unify pricing, purchasing, sales, and rebate strategies, and relentlessly focus on creating value for both customers and suppliers.

Growth won’t come from playing defense. It will come from bold moves—targeting must-have accounts, using pricing and rebates with precision, and building operational muscle that turns volatility into competitive advantage.

The playbook has changed. Those who execute on these critical pillars will not only gain share in 2025, they’ll redefine what long-term success looks like in the industry.

As Gunderson put it best: “Chaos is an opportunity—and the time to act is now.”

Want to leverage rebates and pricing to respond to tariffs with agility and confidence? Download our tariff survival guide.