Challenging Market Conditions Call for Unconventional and Non-Traditional Business Strategies
Petroleum Trends International, Inc. – Publishers of JobbersWorld
April 29, 2025
Lubricant distributors are confronting a complex landscape of challenges that are constraining growth and profitability. Among the most pressing issues are intensifying competition, declining demand, and narrowing profit margins. In parallel, distributors must navigate workforce transitions, including leadership succession and the retention of critical institutional knowledge as experienced talent retires. Persistent labor shortages, economic uncertainty, and supply chain disruptions further compound operational risks. Additionally, buyer purchasing behavior is evolving rapidly, with a marked shift toward brand-agnostic, data-driven, and transactional decision-making. These dynamics underscore the need for adaptive strategies, operational resilience, and innovation across the value chain.
This article explores some of the unconventional strategies helping lubricant distributors succeed in the highly competitive and ever-changing world of lubricant distribution. The insights come from meaningful conversations with people across the industry, combined with what I’ve learned over 46 years of working in this space.
In the current fast-paced and competitive landscape, distributors must evolve beyond traditional approaches to achieve sustainable growth. Adopting innovative and non-traditional operational, marketing, and sales strategies can offer a considerable edge in differentiation, market expansion, and long-term success. While a number of distributors are seizing these transitional opportunities, others are struggling; they either fail to recognize the necessity for change or, despite understanding it, do not have the resources to make the necessary adjustments.
Responding to shifting market trends is crucial for a lubricant distributor’s sustainability and long-term growth. Innovation and agility are critical to preserving relevance, enhancing competitiveness, and meeting customer expectations. In contrast, sticking to old practices can limit potential, impede growth, and weaken market presence.
While emerging digital technologies and innovative business models can drive competitive advantage in today’s dynamic lubricant industry, it is crucial to recognize that they are not essential for every organization. In mature or relationship-centric segments—particularly those serving niche, local, or highly loyal customers—traditional practices continue to deliver strong results. Trust, consistency, and service often carry greater weight than technological advancement. For such businesses, reinforcing core capabilities and deepening customer relationships can yield significant performance gains without disruptive change. However, these segments offer limited growth potential, and strategic misalignment with evolving customer expectations can lead to missed opportunities and loss of market relevance. Distributors must ensure that resources are allocated based on a clear understanding of customer needs, leveraging insights to develop targeted, scalable strategies that protect market position and support long-term growth.
Adopting and optimizing digital platforms is a clear opportunity to establish a competitive advantage.
Today’s consumers expect more: immediate access to information, smooth digital transactions, personalized solutions, and quantifiable value. In the current competitive landscape, traditional relationship-based selling and standard product offerings alone are no longer sufficient; they must be reinforced with value-driven solutions and continuous innovation to sustain effectiveness and relevance.
Integrating data analytics and understanding customer insights can transform business strategies and greatly assist in fulfilling evolving customer expectations. By gathering and examining data on customer buying behaviors, equipment utilization, and product effectiveness, distributors can customize their offerings, predict demand with greater precision, and develop targeted marketing initiatives that align closely with specific customer requirements. Distributors that have adopted e-commerce, direct-to-business, and consumer channels, along with advanced analytics, are redefining customer expectations and attaining business success. Those who invest in such technologies also have the opportunity to offer a broader range of products and value-added services to a more diverse customer base.
Leading lubricant distributors in the industry leverage integrated systems built on advanced technological infrastructures, incorporating customized software, real-time fleet tracking, tank monitoring, telematics, and cellular communications. These platforms also utilize artificial intelligence (AI) to proactively analyze customer behavior and purchasing patterns. Through sophisticated algorithms, AI enhances product delivery scheduling, optimizes inventory management, elevates customer service, improves driver safety, and supports a range of other operational efficiencies.
Enhancing collaboration and strategic partnerships with major suppliers is another non-traditional yet effective approach to business expansion in the challenging market environment.
This approach is considered nontraditional, as distributors were historically reluctant to forge robust partnerships and provide majors with a clear line of sight into their business. They fear a loss of independence, reduced negotiating leverage, customer poaching, and increased vulnerability to contract cancellations or non-renewal. Historically, they favored a diversified approach and confidentiality in partnerships to safeguard their autonomy and flexibility.
However, as competition intensifies and industry consolidation reduces the number of distributors, supply chains have grown increasingly vital. In response, the need for greater efficiency has driven distributors to seek deeper collaboration with their key suppliers. This shift has fostered trust-based relationships, where mutual growth and innovation are prioritized. These distributors progressively aim to strengthen their partnerships with their major suppliers. They recognize that it is less about traditional independence and more about creating synergistic value, ensuring both parties remain competitive and responsive to rapidly changing market demands.
For lubricant distributors, aligning strategically with major oil companies presents a powerful pathway to market expansion and sales acceleration. The majors’ global brands possess deep-rooted customer relationships, strong reputations, and extensive market intelligence—assets that, when leveraged thoughtfully, can significantly enhance a distributor’s growth.
The focus is on positioning the distributor as an essential strategic partner within the ecosystem of its major supplier. In today’s competitive business climate, the struggle goes beyond individual lubricant distributors vying against one another. Distributors are now integral to larger networks established by major suppliers, who compete globally. These networks are strategically designed to optimize reach, efficiency, and responsiveness to market demands. As a result, competition is increasingly determined by the strength and flexibility of entire supply chains rather than isolated competitors. Success is dependent on collaboration, the exchange of information, and effective coordination across the network. In this environment, a lubricant distributor’s success is directly linked to the supply chain’s competitiveness, to which they contribute.
This involves more than simply supplying products; it requires embodying the brand’s values, delivering exceptional technical expertise, and offering integrated solutions reinforcing the oil company’s market promises. By doing so, distributors can capitalize on the trust and loyalty major oil companies have cultivated over decades.
Additionally, as a vital strategic partner within the ecosystem of their major suppliers, distributors can leverage the connections of these suppliers by tapping into established customer networks where the major has a strong presence. Although the distributor may not currently handle certain products, it could still be well-suited and strategically positioned to deliver them efficiently to the major’s customers. By broadening their product range to encompass these products and services, distributors can enhance their value to both the supplier and the customer, generate additional revenue, and reinforce their position within the supplier’s comprehensive distribution strategy. However, this also requires the major supplier to be open to adopting non-traditional and innovative business practices and enhancing collaboration and strategic partnerships with its distributors.
Ultimately, distributors who approach these partnerships strategically — treating them as long-term growth enablers rather than transactional relationships — can accelerate market penetration, enhance profitability, and secure a stronger, more sustainable competitive position within the lubricants industry.
Another area where the conventional business model gains from modifications is the system distributors employ to incentivize sales.
Traditionally, the lubricants industry has operated on a volume-based sales incentive model, where higher sales volume drives increased commissions and potential rewards like trips to Bora Bora. However, this approach conflicts with the current market focus on extending the oil’s usable life through longer drain intervals. While this benefits customers, it reduces the salesperson’s volume. By transitioning sales incentives from volume to value-oriented metrics such as revenue, profit margins, and customer adoption, companies can better align with the rising demand for high-performance lubricants. Implementing tiered commissions, strategic bonuses, and comprehensive training can encourage sales teams to advocate for premium products, enhancing profitability and customer satisfaction.
It is important to note that although many distributors continue to utilize the conventional volume-based sales incentive model, several leading majors employ incentive programs to encourage their distributors to boost sales of synthetic lubricants. This is in light of the expectation that the value proposition for customers to invest in a premium product frequently leads to extended drains and ultimately a drop in the total volume of lubricant sold.
Although these initiatives motivate the distributor’s sales force to increase sales of premium products tied to the major’s brand, distributors often default to a model focused on volume for other brands that they sell.
It is essential for the financial incentives aimed at promoting higher-value lubricants to be both transparent and motivating for the sales team. Additionally, sustained support could be essential for long-serving sales representatives to modify their sales approach.
Reflecting on my experiences as a sales representative for Texaco in the 1980s, I remember the valuable lessons learned during that period. Texaco sought to redefine itself as a ‘lubrication company’ rather than just a lubricant supplier. This strategy aimed to transition from being a mere supplier of lubricants to a provider of comprehensive lubricant solutions, which encompassed a more valuable mix of products and services. While this strategy initially showed promise, it ultimately fell short of fostering a meaningful shift from a volume-driven to a value-oriented mindset, as sales representatives remained skeptical about the tangible benefits they would see from adopting a more complex sales approach.
Since then, however, several leading lubricant distributors have evolved into authentic lubricant solution providers within the commercial and industrial markets, backed by a sales team that understands and appreciates the financial advantages of value-based selling.
Lessons can be learned from these distributors and distributors in other business sectors that have effectively transitioned from prioritizing volume to promoting value-oriented results, including revenue, profitability, customer satisfaction, and the uptake of premium products. This shift is evident with distributors in sectors such as automotive aftermarket parts, agricultural products and services, industrial equipment and tools, and maintenance, repair, and operations (MRO).
Private label lubricants
Private label presents a significant opportunity for lubricant distributors seeking to expand their business and differentiate themselves in an increasingly competitive market. By offering private label products, distributors have the opportunity to build their own brand equity and capture higher margins. In addition, private labeling enables distributors to respond more flexibly to market demands and supply chain interruptions and gain greater negotiating power with the majors they do business with. As price sensitivity rises, private label lubricants are also a strong tool for distributors to foster enduring business growth and sustainability.
While private label lubricants are now recognized as a conventional growth opportunity, distributors are taking bold steps and making substantial investments to boost their private label sales.
A prominent example is RelaDyne, which has entered a market traditionally dominated by major oil companies representing the lubricant space. RelaDyne’s Duramax and Drydene brands now participate in NASCAR Cup Series events, including the notable DuraMAX Drydene 400, presented by RelaDyne at Dover Motor Speedway, as well as other competitions like the IndyCar series and sprint car races.
To advance their private label business, lubricant distributors are moving beyond conventional methods by partnering, investing in professional branding and superior packaging, expanding their services to include tailored blends, technical support, and training programs, and implementing comprehensive digital marketing strategies. As a result of these and other strategic initiatives, several private-label brands owned by leading lubricant distributors have now established a national presence.
While private-label lubricants present compelling opportunities for distributors, they also pose an increasing threat to the market share of major oil companies—an impact that warrants careful consideration. Distributors are increasingly caught in a strategic conflict, as the private-label products they market often compete directly with the branded lubricants of the major oil companies with whom they are aligned. This dynamic cultivates a complex relationship in which aligned distributors function simultaneously as strategic partners and growing rivals to the majors, potentially eroding strategic coherence and mutual loyalty.
For this reason, private label opportunities are addressed toward the end of this article. In order to strengthen collaboration and establish strategic partnerships with key majors—also identified as a potential growth avenue—both parties must devise innovative and unconventional approaches to navigate the opportunities and threats associated with private label products.
In closing, lubricant distributors are exploring and adopting a wide range of non-traditional and unconventional operational, marketing, and sales strategies to adapt to market conditions and enhance their business growth.
Beyond the strategies already discussed, additional opportunities include implementing subscription-based or performance-driven contracts, offering real-time technical support via digital platforms, utilizing advanced key performance indicators (KPIs), and providing value-added services such as inventory management solutions. Distributors are also finding success by expanding into equipment sales, maintenance, and other adjacent sectors where they hold strong relationships and domain expertise. These represent just a few more evident possibilities—the greatest value, however, will come from innovative ideas yet to be uncovered.
One market leader in the lubricants business sums it up well when he says, “I wake up every day thinking about new ways to grow our business with non-traditional, unconventional strategies. Because standing still in today’s rapidly changing market is not an option, and companies that fail to innovate risk becoming irrelevant, losing market share, and ultimately failing.”
By embracing change and fostering a culture of ongoing innovation, organizations not only ensure their future but also open up new avenues for growth, leadership, and enduring success in the highly competitive and rapidly changing lubricants business.