A recent series of entertaining tv commercials highlight parents and their kids talking about the fees and the lack of guarantees investment firms offer to their clients. One exchange highlights the message:

Kid: “So if your investments lose money do you still have to pay the fees?”

Dumbstruck Father: “yes”

Kid: “that doesn’t sound fair”

The look on the father’s face shows he agrees and also that he never really thought about it that way before—as if saying to himself “Why should I have to pay a fee for them to lose my money?”

What’s so striking about it is that there are some purchases we make where we wouldn’t dream of making them without a guarantee or warranty—like a new car. But there are others like investing, where we don’t even think to ask for such assurances because almost no one in the industry is willing to provide them.

Distributors supplying to businesses are one of these industries. They  may guarantee the physical products, accepting returns of faulty goods and replacing them, but its virtually unheard of for them to guarantee their service itself.

Which is odd because all a distributor really does is provide a service, the goods are made by someone else. “That doesn’t sound fair.”

A distributors job is buy and hold goods so that you, the customer will always have what you need, when you need it. The service they provide is the availability of those goods, just like a retail store.

If a store doesn’t have what you need you won’t go back to the store any more. But the damage of running out is even greater to a business. When you don’t have something you need to run your business everything stops, you pay people to stand around and even worse your customers don’t get their orders and you threaten the whole business.

So why don’t distributors guarantee you will never run out?

While there are many answers you might hear if you ask them, they all boil down to one thing:

They don’t feel confident enough that they can deliver on it to give you a guarantee.

They simply don’t feel their businesses are reliable enough to allow it. Providing a guarantee is too risky, too expensive or simply unworkable for them. They may tout their reliability, but as soon as you ask them for the guarantee they get evasive.

Fortunately for most distributors, like most investment managers, almost no one demands a guarantee.  It’s not very comforting and it definitely “doesn’t sound fair”.

For more information on Shippers Supply and our penalty guarantee for clients, contact us at 502.634.2800.