Focus on profit
The more people I talk to in every type of dealer/distribution business believe the distribution model is ripe for major changes. And as you probably suspect I agree with them. Companies still need the products we sell but what they really need is equipment utilization using a fleet of equipment optimized for their needs.
It’s hard to disagree with that premise.
With this premise in mind I was scanning my latest issue of Forbes and came across their comments regarding AmazonSupply (AS). In case you didn’t see the article it will be in your best interest to read it because whether you believe it or not AS is going impact your business.
I couldn’t leave this alone and pulled up the AS site and all I could say is Holy _ _ _ _ ! It took me 15 minutes to quickly scroll through the product offering on the AS site. …..all with the great Amazon service, delivery etc.
I then went to look for material handling equipment but didn’t find much ….but I did find a forklift section. Bottom line is some OEM’s are going to list their units on AS along with parts and accessories you normally sell as part of your product support efforts. Maybe not everything you sell but a good portion of what you carry would be reasonable to assume.
The gist of the article was that AS cannot compete with the big boys but can certainly compete with the rest of the distribution channel. This will be especially true for the “general line” secondary brands and those manufacturing and selling generic parts. In the end, every privately owned company in the dealer business will be impacted by AS one way or another.
I can personally relate to this topic because my wife worked her butt off to build a children’s clothing store in a small resort town in Wisconsin but fell on her sword after the town council allowed Walmart to open a store on the outside of town. You know the story, they promise not to harm local merchants but put most out of business in 12-18 months. In my wife’s case she went out to find unique medium prices children’s wear and did a lot with the residents in terms of fashion shows etc. It was working. But after Walmart got going they set up racks and racks of children’s clothing and before long business slipped and slipped until we had to close the doors and the town winds up with an empty store and building.
Now we all know Amazon does a heck of a job managing your data, keeping a history of what you buy, contacting you with deals and reminders of what you bought in the past. Can a local dealer compete with AS’s computers and thousands of marketing and programmer personnel and pricing. Kind of doubt it.
Now I can see OEM’s selling direct and compensating the dealer in some way to make it work. It has been discussed before and will continue to be discussed in the future. AS only makes selling direct more feasible.
BUT THERE IS ONE THING THEY NEED FROM US AND WILL CONTINUE TO NEED FROM US……AND THAT IS SERVICE!
NO DOUBT ABOUT IT!
In addition customers will need fleet management to maximize their ROI on the equipment investment.
If I am not mistaken John Walker is writing the cover story for this month’s issue of MHW. If that is correct make sure to listen to what he has to say about product support and the importance of product support to your business. John knows how to set up and manage a product support program using product support sales personnel. If any of the AS threat is real, and I believe it is, your product support team of techs will wind up being the cornerstone of your operation; your main profit generator and means to customer relationships.
After you do your homework regarding AS, I would like to hear from you on where you see AS going as far as the material handling business in concerned. Give me a call or send an e mail. I welcome the comments.
Garry Bartecki is a CPA MBA with GB Financial Services LLC. E-mail [email protected] to contact Garry.
