Continuing our series on supply chain disruption, there is a particular aspect of how dentists purchase dental supplies that is continuing to evolve. When I started working in the dental supply industry (20 years ago) the market was dominated by the big three. Schein, Benco and Patterson made up 80-85% of the market. The sales rep was the dominant form of sales outreach for dental supply companies and prices were relatively stable. Online purchasing was in its infancy or non-existent. It would be an understatement to say things have changed. The big three are still around and doing their thing but the landscape has changed dramatically. The sales rep. is a dying tradition because dentists have so many more resources to compare pricing right at their fingertips. There are online marketplaces that list multiple company’s prices all in one place and even the big companies have redirected their resources to digital and online platforms. 3M/ESPE is advertising on marketplaces that sell gray market dental supplies, 20 years ago this would have been unimaginable!
Then there is the COVID-19 Pandemic which effected the supply chain in ways no one could’ve foreseen. Many of the major dental supply companies were out of stock on the most basic supplies and dentists had to again take to the internet to find supplies they needed to stay open. Some of this has stabilized and the more flexible supply companies that saw major growth during the height of the pandemic have seen their revenues shrink to pre-pandemic levels. Inflation and supply chain issues have made it so dentists did not benefit much from these shifts, but at the very least dentist have come to rely less on one supplier. Also since many of the products they were used to were out of stock dentists have seen the value in alternative brands. Products that are just as good or better than the name brand but at significant savings.
Consolidation is another market condition that is affecting how practices purchase dental supplies. It is changing the market in multiple ways, 1. Group practices or DSO’s are growing and their collective buying power is being leveraged to get the best possible pricing. And 2. Consolidation on the supply side has basically eliminated the “mom and pop” dental supply distributor. Dentists have less choice in the current market then they did 20 years ago but the choices are much more accessible because they are all online.
Market-places for dental supplies are growing and new ones are popping up all the time, during the pandemic these marketplaces were a valuable resource for dentists, but they also create a completely new set of challenges that didn’t exist before. In a market place you sacrifice service for price. Dentists will get the best pricing, because all the dental supply companies on the platform are competing against each other for the same business. I know from first-hand experience supply companies never give priority to market place customers over their “regular” customers. Dental supply companies know that a marketplace customer is the least loyal customer they deal with and is buying only on price. Also when a dentist orders from a marketplace they may end up receiving product from multiple different vendors, this can create another set of problems and in many cases service suffers.
Even though we may be in the end stages of the days when dentists looked forward to their local rep. paying them a visit and dental supply companies transition to a digitally focused marketing strategy, dentists can still receive service. Companies that focus on service as much as they focus on providing the best price will have longevity but they must figure out a way to stay competitive. With the emergence of marketplaces that prioritize only price, the companies that succeed will have to find a balance.