Dealerscope: What is it that you have observed, in general, that’s become most helpful in the last year about buying groups, besides getting good pricing on products?
Donnie Boutwell, CEO, Media Systems, Houston, TX: Well, the most helpful is the break on pricing. But second to that would be networking. It’s valuable for us to have relationships with industry people that are not our competition and not our manufacturers. That’s where you get honest answers.
Eddie Maloney, President, Cowboy Maloney’s Electric City, Jackson, MS: The biggest thing for us and our group is we have all the other very successful companies and I can pick up the phone and ask them a question and I’ll get a straight answer, whether it’s good, bad or indifferent. So many times, when you ask people something, they want to blue-sky you about how great things are. With these people, it’s that I can call and ask questions about any particular part of our business. And very seldom does the conversation go to what you pay for anything – that’s not what it is. It’s about how you handle or what you do in this or that situation. We’ve got this group of people whom I can trust to give me the right answer and will tell me what they actually think. That’s its real value.
Robert Zohn, President, Value Electronics, Scarsdale, NY: Adding lighting and motorized window treatments to the product mix, along with training. Integrating a modern member portal to put in advertising claims, damage claims, and ad resources, e.g., pictures, text and complete pre-made ads. Another nice change is having easy access to the manufacturers that have recently embraced the CI channel buying groups so we have the ability to speak directly with a manufacturer’s specialist as needed. Finally, the manufacturers, buying groups and distributors are focused on stronger enforcement of the UPP… [which] has helped the smaller dealers to offer the same prices for TVs and all A/V equipment.
Simon Sedek, Senior Buyer, Electronic Express, Nashville, TN: In the last year, what has been most helpful is that they help us get better programs on top of great pricing. Of course, there’s help with marketing – and the ability to be able to get additional volume rebates and to be able to make better margins. They also help us get products with more features for similar pricing to models without as many features, especially with appliances and PCs, for example. That really helps us maintain our margins.
How about for distributors: what’s become most helpful, in general, about distributors, in the last year besides getting timely delivery and good pricing on products?
Boutwell: We’ve been around since 1980, and part of our business model is to be direct with the main brands that we sell. We feel like we are able to provide better support when we have a relationship with the manufacturer. That being said, we get all of our consumables through distribution. Connectors, trim-out accessories, structured wiring and anything related to that we have always purchased through [distribution]… In addition to consumables, we are not always able to get items that we are dealers for in time for the installation. It’s always our goal to palletize our projects so that on the day of the install, we have everything ready to go. Inevitably, the pile gets robbed on occasion for another job and we’re left at the last minute scrambling for a product. That’s where distributors save the day for us. We’d be in bad shape without them. Since we are in business of custom work, our regular brands don’t always offer just the right solution. That’s again when we reach out to distributors to find just the right product for the application.
Distributors also offer you exposure to products that you wouldn’t normally sell. I can call on the phone and explain my problem and they just might recommend something to me that I’ve never heard of before.
Zohn: Availability to see inventory in all of the warehouse locations, and getting our reps to allocate the inventory for our orders.
Sedek: In some cases, we go through them to be able to get inventory to be able to hit manufacturers’ minimum quantities. It’s important for us in certain categories, like PCs and accessories, especially. That’s when distributors come into the picture for us. Also, with certain manufacturers coming into the U.S. with products, you might be kind of hesitant to jump onboard with them because there is still some uncertainty about their staying power. That, for us, is when a distributor really comes through, to be a buffer, in a way. You can bring the product in and test it, and there is less risk.
Maloney: Distributors can do a lot for you, especially on fill-ins and smaller quantities. Cowboy Maloney’s is a smaller dealer, and sometimes, it’s beneficial for us to go through distributors.
What has changed most in the last year in terms of the services a buying group feels are important to provide its members? (It seems that digital marketing help, for instance, has become more of an educational priority for 2019. Would you agree on that point and what specifically are they doing to help dealers with that?)
Boutwell: I’d recommend that they offer more training on new products. Every time the manufacturer updates a product, something changes. We need to know, and the manufacturers aren’t always good at communicating those changes. They won’t tell you the bugs. But a buying group or distributor is going to hear about it. They should be support groups, not just buying groups.
Maloney: We’re getting up to speed on [digital marketing], and that’s a focus for them – and it’s where we need to go.
Sedek: With the buying group, a great focus for us is their efforts in helping us market ourselves better.
Zohn: [Ours has] a vendor partner that specializes in website development and another partner that helps with search results optimization.
What about distributors – What has changed most in the last year in terms of the services a distributor feels are important to emphasize with its dealer customers? Are their initiatives becoming more educational in nature, would you say, and in what areas?
Boutwell: I know that [my distributor] calls me on the phone about once a week to invite me to a training. This is fantastic and needs to be encouraged.
Zohn: Distributors are also jumping into educational seminars, small vendor exhibit shows, and easy access to advertising assets and technical support.
Where do buying groups need to aim their focus for the future, to help dealers counter “the Amazon effect?”
Zohn: Negotiate with the manufacturers for the same launch date of new products so the CI channel is not delayed in having access to new hot items.
Boutwell: Enforce sales policies that keep products off of Amazon and respect the MAP pricing. Punish dealers that don’t respect MAP pricing by kicking them out of groups.
Sedek: We all speak the same language in the group and have the same agenda, so that helps us go to manufacturers to express what our concerns are with the Amazons of the world – and also about unauthorized resellers who are disrupting the market. And they are listening, and it has helped with manufacturers in the past few months.
Maloney: You know, people bring in consultants all the time to look at their businesses and tell them what to do. We don’t need to bring in consultants, because [my fellow] members are my consultants. I can call them and ask them anything. That’s the benefit of our group. They have the same problems and issues we have – they’re just bigger than we are. Salespeople, deliveries, consumers, warehousing – just everything having to do with the business. They’re very good at sharing information about best practices – how to run your business.
Same question about distributors, and how they can help dealers to counter “the Amazon effect.”
Zohn: Number One: Maintaining adequate inventory levels so we are not backordered on any SKU. Number Two: Shipping same day. Number Three: Double-boxing every order to ensure safe travel and protect against damage.
Boutwell: Improve the e-commerce experience.