The distribution chain in the fiber optics industry has been generally characterized by low profit margins. Increasingly, profit has normally depended on large volume sales, which is driving much of the industry consolidation and motivating some distributors to require minimum purchases from installers. At the same time, end users are demanding more in terms of performance and reliability of their fiber optic networks. Consequently, installers are increasing their demands on the distribution chain, as distributors are now expected to produce parts overnight and back their products with longer warranties due to the cost.

As the fiber optic market environment becomes more competitive, manufacturers have been expanding their product availability to not just large volume distributors and suppliers but your small businesses as well. You obviously want to target the larger businesses in order to make a substantial profit in one hit but if you have the resources to manufacturer and design your own fiber optic products then why not offer them to the small fiber optic businesses. These sales will definitely add up. Plus, you never know what contacts can derive from doing business with smaller fiber optic companies. They could spread to the word to another company involved in a different industry or they could become successful, expand and become a larger, more dominant player in the fiber optic market.

Distributors that are also manufacturers have the advantage of offering product customization , and these companies have the ability to be more responsive regarding individual client needs with issues such as repair and calibration. As consolidation takes hold in the fiber optic industry, relationships between manufacturers, installation companies, and distributors also change. Partnerships between distributors and installers, where leads are exchanged and complex subcontracting relationships drive much of the installation work are becoming a common place. While distributors generally do not install, they will often bid on jobs and act as project manager, designing the cable network and farming out the installation work to selected installers - usually the ones that buy the most material. By the same token, installers often reciprocate and frequently find installation jobs and ensure that the distributor's product is used.

There is some indication that installers keep the consolidation activity of the largest distributors in check. There have been instances where distributors have sought to enter the installation arena, either through acquisition or expanding their own operations. In some of these cases, installation companies have objected causing distributors to preserve client relationships and back off from installation endeavors. Companies that have executed successful vertical integration of the supply chain have done so in a way that avoids conflict of interest.

The key factors to having a successful company within the fiber optic market are to get high quality, cost-effective products and components, being not just a distributor but a manufacturer as well, so you can build custom products for your customers and provide them with the upmost customer services. Lastly, don't be afraid to do business with the smaller fiber optic companies especially if you have affordable fiber optic products .