Insights · 2026 research · last reviewed Oct 17, 2026
What distributors are up against.
Costs moved faster than prices in 2026, smaller distributors felt it most, freight and rebates leaked quietly, and AI has not paid off for most yet. We read about 113 trade-press, survey and filing sources from 2023–2026 and kept only what we could trace. Every number below links to its source.
Independent first. Surveys, public filings and reported news, each with its date and a link. These are marked Independent.
2
Vendor numbers carry the vendor’s name. A few useful figures come from software companies’ own studies. We show them only with the company named: Vendor · name.
3
What we left out. Vendor marketing claims, paywalled teasers we could not read in full, and anything without a date. Summaries are in our own words.
01
Costs move faster than prices
Where margin leaks
Supplier increases, raw materials and tariffs all moved in 2026. Price books moved more slowly, and the gap came out of margin.
F-01Independent
91%raised prices to cover higher costs (2Q26)
raised prices91%
absorbed part33%
added surcharges24%
Nearly every distributor raised prices this year, and a third still absorbed part of the increase.
In the Baird–NAW distributor survey for the second quarter of 2026, 91% said they raised prices. At the same time, 33% absorbed part of the increase, 37% shared costs with suppliers and 24% added surcharges.
Survey figures from Baird and NAW. The column that reports them is written by the CEO of a pricing-software company.
So what Check whether each supplier increase actually reached your price file, and then your invoices. Run the Margin X-Ray →
Even the largest distributors are losing the race between cost and price.
Fastenal reported that its price/cost was negative by about 40 basis points in Q2 2026, even though price increases added about 290 basis points to sales. Supplier costs rose faster than its prices. (A basis point is one hundredth of a percent.)
So what If a company with Fastenal’s systems lags, measure how long your own reprice takes after a cost change. Replay a 2026 cost shock →
Carbide costs jumped, and surcharges now change faster than most price books.
Cutting Tool Engineering reported tungsten up 550% in 14 months, with carbide makers adding 10–15% base increases plus 60–80% surcharges. More than 80% of the world’s tungsten supply comes from China.
So what Watch cost against price every month, so a surcharge never sits quietly in your margin. See Margin Guard →
81%of fastener distributors saw prices up year over year (Oct 2025)
prices up year over year81%
prices up month over month56%
Fastener prices rose for four out of five fastener distributors.
In Baird’s Fastener Distributor Index for October 2025, a monthly survey of North American fastener distributors run with the FCH Sourcing Network, 81% of participants saw prices higher than a year earlier and 56% saw them rise from the month before. Respondents said their revenue growth was coming from price, much of it tariffs, rather than from volume.
So what When a whole category reprices at once, check that every supplier increase actually reached your price file. Run the Margin X-Ray →
33%of fasteners used in the U.S. are imported (estimate)
tariff on fasteners from China (Feb 2026)47.5%
tariff on fasteners from Taiwan (Feb 2026)20%
share of U.S. fastener use imported33%
About a third of the fasteners used in the U.S. are imported, so tariff swings land in the price book.
Fastener + Fixing Magazine’s February 2026 report on the U.S. market put tariffs on fasteners at around 47.5% from China and 20% from Taiwan, rates that had moved throughout the year, and cited estimates that about a third of the fasteners used in the U.S. are imported. Those rates were reported before the U.S. Supreme Court curbed unilateral tariffs later that month, so today’s rates differ; Section 232 duties are separate.
So what Tag each item’s tariff exposure, so surcharges come off when duties change and refunds reach your cost basis. Replay a 2026 cost shock →
Smaller distributors absorb more of each increase, and more of them are losing pricing power while the largest gain it.
F-06Independent
33%of distributors under $100M say pricing power is weaker
under $100M: pricing power weaker33%
$500M and up: pricing power weaker6%
Smaller distributors are losing pricing power while the largest are gaining it.
In survey data reported in Modern Distribution Management in June 2026, 33% of distributors with under $100 million in sales said their pricing power was weaker than a year earlier. Among distributors with $500 million or more, just 6% said so.
Survey figures from Baird and MDM. The column that reports them is written by the CEO of Intuilize, a pricing-software company.
So what Pricing power starts with knowing which of your prices already break your own rules. Check your file before the next increase. Run the Margin X-Ray →
13%of distributors under $100M cannot pass increases through
under $100M absorbed cost increases (Q1 2025)31%
over $100M absorbed cost increases (Q1 2025)18%
under $100M cannot pass increases through at all13%
About one in eight smaller distributors cannot pass increases through at all.
In the first-quarter 2026 Baird–MDM survey of 143 distributors, firms under $100 million named vendor cost increases (28%), competitive pricing (26%) and operating costs (25%) as their biggest margin pressures, and 13% said they could not pass increases through at all. In early 2025, 31% of the smaller firms absorbed cost increases, against 18% of the larger ones.
Survey figures from Baird and MDM (143 respondents). The column that reports them is written by the CEO of Intuilize, a pricing-software company.
So what If you cannot raise prices, find the margin you already give away: stale costs, unbilled freight, rebates never claimed. Estimate your leak →
A supplier increase arrives as a letter. A freight increase arrives on a carrier bill, so pricing often misses it.
F-08Independent
+68%diesel price, year over year (Sept 2026)
Freight got expensive fast, and a freight increase never arrives as a supplier letter.
Diesel reached $6.285 a gallon on September 14, 2026: up 68.1% in a year and the highest since 1994, using EIA data. Grainger’s CFO described “leakage related to fuel costs.”
So what Compare the freight your terms say customers pay with the freight you actually billed. Check freight in the X-Ray →
$43Mtariff refunds at Grainger, partly offset by freight (Q2 2026)
Freight can eat into a windfall, even a tariff refund.
Grainger’s second-quarter 2026 results included $43 million of IEEPA tariff refunds that reduced its cost of goods sold. In its High-Touch segment, the company said that benefit, together with a better mix, was partly offset by unfavorable freight.
So what Track freight paid against freight billed every month, so a carrier increase never hides inside a good quarter. See Margin Guard →
≤100 bpmargin at stake in freight recovery, per SPARXiQ
Freight recovery can be worth up to a full point of margin.
David Bauders of SPARXiQ, a pricing consultancy, writing in NAW’s pricing series, puts freight leakage at up to 30% of freight expense, worth up to 100 basis points of margin. He sizes price optimization at 200–400 basis points and contract and SPA clean-up at 100–200. These are one consultant’s estimates, not a survey.
So what Measure your own freight recovery: freight billed divided by freight paid, by branch and by customer. Check freight in the X-Ray →
Supplier rebates are a real share of distributor profit. They depend on tiers, timing and paperwork, and the paperwork decides what gets paid, on both sides of the counter.
F-11Independent
1.4%of Wesco’s 2025 net sales came back as supplier rebates
Supplier rebates are real profit money, not a rounding error.
Wesco’s annual report for 2025 shows supplier volume rebate income equal to 1.4% of net sales (1.3% in 2024), with $264.0 million of rebate receivables at year end, up from $210.0 million. The rebates are estimated from forecasted purchases over programs that generally run on the calendar year. This is one public company, not an industry average.
So what Put every rebate program’s tiers and deadlines in one list, then check what you earned against what you claimed. See the Rebate & SPA Desk →
44.3%Fastenal gross margin, Q4 2025 (44.8% a year earlier)
Rebate timing alone can move a national distributor’s margin.
Fastenal’s gross margin slipped to 44.3% in the fourth quarter of 2025 from 44.8% a year earlier. Among the reasons it gave: supplier rebates were a negative impact related to timing, price/cost was negative by about 10 basis points, and its sales kept shifting toward larger customers, who buy more at lower gross margins.
So what Forecast each rebate by tier and period, so a timing miss shows up before the quarter closes, not after. See the Rebate & SPA Desk →
Sales forces may leave close to a third of rebate money unclaimed.
David Bauders of SPARXiQ, a pricing consultancy, writing in NAW’s pricing series, says distributor sales forces underclaim rebates by about 30%. It is one consultant’s estimate, not a survey, but no independent study has measured the gap.
So what Find the claims you earned but never filed, by supplier and by month. Try the Rebate Desk demo →
Halfbelong to a co-op or buying group (13% to both)
in a co-op or buying groupHalf
cite supplier co-op marketing as help23%
say suppliers do nothing to ease increases55%
Half of distributors buy through a co-op or a buying group.
In Industrial Distribution’s 78th Survey of Distributor Operations, half of respondents belonged to a co-op or a buying group, and 13% to both. Co-op marketing was the supplier help cited most (23%), while 55% said their suppliers do nothing to ease price increases.
So what Reconcile the group’s rebate statement to your own receipts, by supplier and account. A branch never linked to your member number is the classic miss. See the Rebate & SPA Desk →
+42%accrued customer program incentives at one public manufacturer (2025)
On the manufacturer’s side, what is owed to distributors is large, growing and an estimate.
Hubbell’s annual report for 2025 shows its accrued customer program incentives up 42% in a year. The company estimates them at the time of sale from history, customer agreements and expected trends. This is one public company, not an industry average.
So what Read every distributor claim against the agreement as written before it is paid, and know the programs you fund before the auditor asks. See the maker’s side of the Rebate Desk →
6–15%of claims failed basic validation, per ProfitOptics
Some of the claims manufacturers pay would fail basic checks.
Greg Colizzi of ProfitOptics reports that in its manufacturer rebate audits, 6–15% of claims failed basic validation checks, and nearly 1 in 5 at one manufacturer, with eligibility rules scattered across contracts, side letters and e-mails. These are one firm’s audit findings, not a survey.
National distributors, private-equity roll-ups and online sellers compete hard on price and service. Smaller distributors feel it first.
F-17Independent
A warning, not a number
National distributors are winning accounts with prebates and free vending machines.
Distributors quoted in Modern Distribution Management’s June 2026 survey coverage described national competitors using “ultra-aggressive pricing, prebates, and free vending machines” to win customers. A prebate is a rebate paid up front to secure the business.
A survey respondent’s words, reported in a column by the CEO of Intuilize, a pricing-software company.
So what Know each account’s real margin before you match a national’s offer, so you defend the right customers. Run the Margin X-Ray →
52%losing business to online competitors (56 distributors)
losing business to online competitors52%
say rivals compete mainly on price81%
Half the distributors in one fall survey say they are losing business online.
In the American Supply Association’s quarterly market survey of 56 plumbing, heating, cooling and pipe-valve-fitting distributors, reported in October 2026, 52% said they are losing business to online competitors, the most for any type of competitor, and 81% said competitors compete mainly on price. It is a small sample from one supply channel.
So what Online sellers win on clean, findable product data and clear prices. See how yours reads to a buyer, or to an AI agent. Score your product data →
Distribution Strategy Group reported in July 2026 that Amazon Business’s annualized gross sales had reached $60 billion, citing the company’s own disclosure.
So what Compete where a marketplace cannot: rules for your accounts, contracts and service, applied the same way every time. See Decision Cards →
Salespeople are the hardest people for distributors to hire and to keep.
Industrial Distribution’s 78th Survey of Distributor Operations found salespeople were the hardest role both to recruit and to retain. Only 39% of distributors added staff, down from 54% the year before.
So what Get your veterans’ pricing know-how out of their heads and into rules anyone can use. See Tenure Capital →
Most pricing leaders say a price change takes weeks or months to put through.
In a June 2025 survey of 1,500 senior pricing leaders in the US, UK and German-speaking Europe, nearly 60% said price changes take weeks or months to implement, and 84% planned increases. The survey was commissioned by Enable, a pricing and rebate software company, and run by Censuswide.
So what Measure your own days-to-reprice: from the supplier’s letter to the new price on an invoice. Run the Margin X-Ray →
Costs keyed by hand and rebates tracked in spreadsheets turn small errors into steady leaks.
F-23Vendor · Intuilize
7–14 daysto load a supplier cost change by hand
Cost updates keyed by hand are slow, and the errors add up.
Writing in Modern Distribution Management, Nelson Valderrama, CEO of the pricing-software company Intuilize, estimates that manual cost updates take 7–14 days to load, carry a 2–5% keying error rate, and can leave up to 30% of SKUs mispriced.
So what Compare every item cost with the supplier’s latest price file before the next increase lands. Run the Margin X-Ray →
Most manufacturers and distributors do not trust their own rebate data.
Enable’s 2025 State of Volume Rebates report, from the rebate-software company, found 60% of manufacturers and distributors do not trust their rebate data, 31% of distributors are unsure the rebates they receive are accurate, and 53% still manage rebates in spreadsheets.
So what List every rebate you earned against every claim you filed, then chase the gap. See the Rebate & SPA Desk →
AI adoption is rising, but few distributors have turned it into margin yet. Meanwhile, buyers are starting to shop through AI agents.
F-25Independent
16%have achieved a 2%+ margin gain from pricing AI
expect a 2%+ gain73%
have achieved it16%
Most distributors expect AI to lift margins. Few have seen it yet.
In the NAW and MDM study “In Pursuit of Value” (426 respondents, April 2026), 27% rank pricing as their top AI investment and 73% expect a margin gain of 2% or more. Only 16% have achieved it, and 65% see no measurable improvement. In a separate Baird–MDM survey, just 1 of 62 smaller distributors using AI described a pricing use.
Survey figures from NAW, MDM and Baird. The column that reports them is written by the CEO of a pricing-software company.
So what Clean the item master and the pricing rules first; AI is only as good as the data it reads. See why data comes first →
Our answerWhy most see nothing: findings without rulings, rulings without guards. We measure, you rule, a check keeps it fixed. See how rulings work →
AI use among distributors is climbing steadily, not exploding.
In Industrial Distribution’s 79th Survey of Distributor Operations, 34% of distributors said they use AI today, up 5 points from 2025, and another 34% expect to adopt it within two years. More than 90% regularly use business-intelligence or analytics tools.
So what Before you join the next wave, check the data AI will read: items, attributes and prices. Score your product data →
AI buying agents can pass over suppliers whose data is stale or blank.
Distribution Strategy Group warns that as purchasing moves to AI agents, a distributor with stale prices, missing lead times or blank product attributes can be skipped before a person ever sees the order.
So what See how a simulated AI buying agent reads a catalog, and what makes it move on. Try the AI-Ready audit →
Distributors had a better year than many expected. Tariffs dropped down the worry list, but their costs did not disappear, and consolidation is knocking.
F-28Independent
82%expect higher sales next year
sales up71%
profits up69%
expect growth82%
Most distributors had a good year, and most expect another.
In Industrial Distribution’s 79th survey (April 2026), 71% reported higher sales over the past 12 months and 69% higher profits. 82% expect sales to rise next year, up from 63% in 2025. More than a third of respondents run distributors with under $20 million in sales.
So what A good year is the cheapest time to fix pricing: check margin while volume is up. Run the Margin X-Ray →
Tariffs fell down the worry list, but their costs are still on the books.
Tariffs as a top-three concern fell to about 1 in 5 distributors, from 56% in 2025, after the U.S. Supreme Court curbed unilateral tariffs (Section 232 duties remain). Still, 57% said tariffs raised their costs, 55% raised prices and 43% re-evaluated suppliers.
So what Make sure tariff surcharges come off when tariffs do, and that refunds reach your cost basis. Run the Margin X-Ray →
Most distributors added product lines, and every new line brings a new price file.
In Industrial Distribution’s 79th survey (April 2026), 72% of distributors said they expanded their product lines over the past year, and 90% expanded or held steady, against 95% in 2025. Hand tools, power tools, PPE, safety products and electrical supplies led the categories.
So what Each new line adds costs, price breaks and rebate terms. Load them against written rules, not habits. See why data comes first →
37%were approached about a merger or sale that did not go through
approached, no deal37%
merged or were acquired28%
pursued deals themselves11%
Consolidation is knocking: more than a third of distributors were approached about a deal.
In the same survey, 37% said their company was approached about a merger or acquisition that did not go through, 28% merged with or were acquired by another company, and 11% pursued deals themselves. Just under 6 in 10 respondents run family-owned businesses, down from 7 in 10 a year earlier.
So what Buyers and lenders ask for margin by customer, product and line. Have the answer, and the rules behind it, before they ask. See Tenure Capital →
The 26 sources behind the findings above. We are not affiliated with any of them. If a source changes or a better one appears, we update the finding and the review date.
Last reviewed against the original sources on . Research window 2023–2026; newest source Oct 2026.
Next step
Industry numbers are averages. Your file is not.
The Margin X-Ray runs the same kinds of checks on your own price file: supplier increases that never reached the price, freight your terms say the customer pays, contracts past their date, rebates never claimed. It runs entirely inside your browser, and your file is never sent anywhere.
