ASI's Q2 report is a study in averages hiding a split. Industry sales grew 2.5% year over year, an improvement on Q1's 1.8%. Under that average, distributors under $1 million in annual sales were essentially flat, and distributors over $1 million grew about 4%. Only 38% of distributors reported an increase at all; 37% reported a decline.
This continues the pattern from the record year before it, when extra-large distributors grew 9.3% in Q4 and the smallest grew 3.6%. Scale is pulling away, and it is doing so in a year where inflation reached 4.2% and shipping container rates hit three-year highs.
Why scale wins in a year like this
It is tempting to say the large firms have better customers. They mostly have the same customers, buying the same tote bags and quarter-zips. What they have is a lower cost of handling each order.
A large distributor has a dedicated order-entry team, a purchasing function, an AR clerk and, increasingly, automation across the lot. A small distributor has three people who each do all of it. When the market adds friction, slower buyers, more re-quotes, smaller and more frequent orders, the large firm absorbs it with capacity. The small firm absorbs it with evenings.
The gap between flat and 4% is not a sales gap. It is the number of orders one person can carry before the next one waits.
The industry's own diagnosis
PPAI's outlook for the year said efficiency would become a firm's most important advantage. Counselor's 2026 report found the same thing in its AI section: distributors have adopted AI for creative work and barely at all for operations, and suppliers, who are ahead on operational AI, are outgrowing them. One supplier in that report has 97% of its order entry running on AI.
That is the capacity advantage, described from the other side.
What a small distributor can actually do
The traditional answer to capacity is hiring, and the same Counselor report shows why that is slow: half of distributors are worried about finding qualified people, and the hiring rate across the economy sits at downturn levels.
The other answer is to give the three people the capacity of six without adding the seats. That is what operational AI does when it is pointed at the right work. A three-person distributor that hands off order entry, status replies, proof chasing and invoice matching is no longer flat because its people ran out of hours. It grows with the market, because each order costs a fraction of the labor it used to.
How AltOps fits the small-distributor case
AltOps was built for exactly this size of business. There is no engineering project, because the agent learns from a screen recording of the person who does the work today. There is no integration, because the agent runs on its own computer across the same ERP and portals. And there is no waiting on a supplier to expose an endpoint.
A small distributor that automates the repetitive layer in a quarter is competing on the same cost per order as the firm ten times its size. In a year where the whole difference between flat and growing is operational, that is the lever that matters.
Sources: ASI, "Industry Sales Grow 2.5% in Q2 as Business Pressures Persist," July 2026; ASI, "Strong Q4 Lifts Promo Industry to Record $27.7 Billion in 2025 Sales," January 2026; PPAI Research, 2026 sales volume estimate and small-order research; ASI, "Counselor State of the Industry 2026: Addressing Labor Concerns," July 2026.
Written by Kavish Soningra, teaching agents to run the back office at AltOps.
