Editor’s Word: Welcome to “The Hidden Majority” — a brand new column collection from MDM authored by one in all our high contributing writers, Nelson Valderrama. This collection is all about offering thought management and {industry} evaluation geared for small- to mid-sized distributors — which comprise the overwhelming majority of the wholesale distribution panorama. Leveraging the quarterly Baird-MDM survey information and different MDM analysis information, Nelson dives into the numbers and commentary to determine developments and takeaways that apply to SMBs within the {industry}.
You’ve heard the pitch: “AI is remodeling distribution.” You’ve seen the case research. They function billion-dollar corporations with devoted information science groups and implementation timelines measured in years. Business convention conferences showcase dashboards you’ll by no means construct and outcomes that assume assets you don’t have.
In the event you run a $30 million or $60 million distribution operation, you’ve in all probability requested your self, “Does any of this really apply to my enterprise?”
That query lastly has a solution — and it comes from information, not vendor guarantees.
The place This Information Comes From
Two main analysis efforts lately centered on how distributors are literally utilizing AI:
- The Baird-MDM Industrial Distribution Survey, a quarterly examine, has tracked distributor sentiment and habits for 14+ years. Every survey features a set of 4 rotating questions, and in 2025, greater than 200 distributors responded to every quarter’s survey questions on AI adoption, succession planning, and expertise funding with each quantitative and qualitative suggestions. Whenever you isolate the sub-$100M phase (distributors with annual income beneath $100 million), patterns emerge that aren’t seen within the printed aggregated outcomes.
- NAW and MDM’s “In Pursuit of Worth” analysis, launched in April 2026, surveyed 426 distribution leaders, 80% at VP degree or increased, particularly about AI priorities, investments, and outcomes. It requested the questions that matter: The place are distributors placing their AI bets? What outcomes are they really seeing?
Collectively, these research reveal a transparent image. And for sub-$100M distributors, that image is each shocking and actionable.
The Hole Between Expectations and Outcomes
Let’s begin with the uncomfortable discovering from the NAW/MDM analysis.
Pricing emerged because the top-ranked AI precedence. 27% of distributors ranked pricing and margin optimization as their #1 AI funding space — increased than stock, customer support, gross sales or logistics. Practically three-quarters (74%) stated pricing AI is on their roadmap.
The anticipated returns are important: 73% of distributors count on pricing AI to ship margin enchancment of two% or extra.
However right here’s what’s really occurring: solely 16% have achieved these outcomes. Sixty-five p.c report no measurable enchancment but.
In the event you’ve been skeptical about AI guarantees, you have been paying consideration. Most distributors who’ve invested haven’t seen the payoff. However the issue isn’t that AI doesn’t work. The issue is the place it’s being utilized.
What Distributors Your Dimension Are Really Doing
Right here’s the quantity that reframes the dialog: 64% of sub-$100M distributors already use AI in some kind. That’s practically two-thirds. So, you see, the information doesn’t assist the “small distributors are behind.”
However take a look at what they’re utilizing AI for.
When the MDM/Baird Q2 2025 survey (performed July 2025) requested sub-$100M distributors to explain their AI initiatives, right here’s what they stated:
- “Two of us only in the near past opted for a Copilot license to help with Excel paperwork.” — $10-$25M distributor
- “We’ve discovered it helpful to exchange some authorized replies to numerous clients, distributors and workers.” — $26-$50M distributor
- “It’s all on the advertising aspect of issues. We’re utilizing some AI to assist our advertising crew with their artistic endeavors.” — $51-$100M distributor
- “Using AI Chatbot on an internet site to reply buyer inquiries.” — $10-$25M distributor
Excel help. Authorized replies. Advertising content material. Chatbots. Web site code. These aren’t inappropriate makes use of. However they’re not the place the margin lies.
Out of 62 sub-$100M distributors who described their AI initiatives within the July 2025 survey, just one talked about pricing. One.
In the meantime, the NAW/MDM analysis reveals that 46% of all distributors are already exploring dynamic pricing, the best adoption of any particular pricing use case. The {industry} is aware of the place the chance is. Sub-$100M distributors simply aren’t going there.
What’s Holding Them Again
The distributors who haven’t began but are clear about what’s holding them again:
- “Nonetheless attempting to get a transparent image as to the way it might help the enterprise.” — $10-$25M distributor
- “Attempting to find out the world that would supply the best ROI.” — $51-$100M distributor
- “We use it for advertising content material creation. We’re ready for function-specific brokers’ or options (like stock administration) to hit the market as we shouldn’t have the assets to create them ourselves.” — $10-$25M distributor
These aren’t resistance statements. They’re useful resource constraints. Restricted bandwidth to judge choices. No clear sign on what delivers ROI. A way that the instruments constructed for billion-dollar enterprises don’t match a $40M operation.
The NAW/MDM analysis straight addresses this notion: “A $20 million distributor at this time can entry the identical AI-powered pricing instruments, demand forecasting algorithms, and customer support brokers as a billion-dollar enterprise.”
The expertise hole has closed. The applying hole hasn’t.
Right here’s The Funding Hesitation Sample
The MDM/Baird information reveals one other sample: sub-$100M distributors plan to take a position, however at decrease charges than bigger friends.
When requested about 2026 IT funding plans within the This fall 2025 survey (performed January 2026):
- 5% of sub-$100M distributors deliberate to extend IT funding.
- 5% of over-$100M distributors deliberate to extend.
That 17-point hole compounds over time. And it seems even amongst distributors who say they’re growth-oriented.
Actually, the Q3 2025 information (collected October 2025) confirmed a paradox: Whereas small distributors ($25-100M) had the best share of internet growth-oriented respondents (40.4%), additionally they had the best share who decreased capital expenditures (34.8%). They wish to develop, however they’re not investing to do it.
One distributor captured the strain saying,
“Durations of financial weak point current an awesome alternative to arrange for progress throughout a possible rebound.”
The notice is there. The motion simply doesn’t match.
Why Pricing Is Totally different
The NAW/MDM analysis makes the case straight: “Pricing is without doubt one of the quickest methods to impression the underside line. AI-driven dynamic pricing, smarter discounting, and contract leakage prevention straight enhance margin with out rising quantity.”
Logistics optimization or demand forecasting require complicated information infrastructure and lengthy validation cycles. Nonetheless, pricing connects on to what you management. You’ve got pricing information.
You make pricing selections day by day. The query is whether or not these selections are systematically optimized or left to instinct and spreadsheets.
Amongst distributors pursuing pricing AI, roughly 60% count on to realize scale inside 12 months. That’s a sooner timeline than another AI class. It displays the maturity of obtainable options and the direct visibility that pricing enhancements present.
The 16% who’ve achieved 2%+ margin enchancment aren’t those with the biggest IT budgets. They’re those who focus.
What Bigger Distributors Are Doing (And Not Doing)
Right here’s what shocked me within the information: distributors over $100M aren’t speaking about pricing AI both.
When 30 bigger distributors described their AI initiatives within the July 2025 survey:
- “We use AI for advertising (photographs and textual content), content material and communication creation and assessment, information parsing and revisions, analysis of {industry} developments and competitor exercise…” — $101-$250M distributor
- “The most important use to this point has been taking assembly notes (Copilot) and serving to with advertising supplies.” — $101-$250M distributor
- “Targeted on inner operations, largely pilots. Being very cautious about information governance and privateness issues.” — $3B+ distributor
Not a single one in all these 30 talked about pricing.
The applying hole isn’t a small-distributor downside. It’s an industry-wide blind spot. The distinction is that smaller distributors can transfer sooner to fill it.
Your Constraint Is Your Benefit
Your bigger opponents have extra assets, however additionally they have extra complexity. Have a look at what they’re saying:
- “We battle with adoption however see the advantages and might want to drive deeper within the group to appreciate advantages.” — $101-$250M distributor
- “We wish to, I’d say it’s someplace between an absence of a very good use case and an absence of training of our workers to ‘discover’ these use circumstances.” — $101-$250M distributor
They’re operating parallel initiatives throughout a number of enterprise items with competing priorities. A $400M distributor spreading AI funding throughout six initiatives will transfer slower than a $40M distributor who commits to 1.
The constraint you assume is holding you again—restricted bandwidth, no devoted IT crew, stress to indicate outcomes rapidly — drives focus. And in AI, focus beats assets.
The Alternative Is Nonetheless Open
The 73%/16% hole isn’t an issue for you. It’s a window.
Most distributors who’ve invested in AI haven’t captured the worth but. The market hasn’t been picked clear. The distributors who give attention to pricing now, whereas their opponents nonetheless experiment with chatbots and advertising content material, will seize the margin that’s sitting untouched.
The NAW/MDM analysis discovered that 41% of distributors who’ve invested $0 in AI are nonetheless actively exploring or piloting in at the least one class. They haven’t dedicated. They’re searching for a sign.
For the sub-$100M distributor, the AI dialog is lastly together with you. The query is whether or not you’ll use that opening for Excel help or for the margin that’s been sitting in your information all alongside.
Information sources: MDM/Baird Industrial Distribution Survey Q1-This fall 2025 (n=577 throughout 4 quarters); NAW/MDM “In Pursuit of Worth: The place 400+ Distributors Are Investing in AI” (April 2026, n=426).
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