The pluses and minuses of buying from a retailer.
A retailer, just by definition, would seem to be set up to serve the end user — or putting it another way, is set up with the non-professional in mind. The retailer is designed to present a wide variety of popular merchandise in a self-serve environment and most commonly uses price, eye-catching marketing and highly visible displays to attract customers. Whoever screams the loudest makes the sale. Most typically, we exchange industry knowledge and professionalism for price and convenience.
At first glance, a wholesaler would seem the easy choice: They have the benefits of knowledge and experience, plus the ability to bend with need or demand. With the average repair shop in the U.S. posting less than 10 percent net operating profit, however, we are not in a position to dismiss opportunities to buy smarter without real thought and consideration. We cannot afford to just say no to the more cost-effective resource.
It would be very difficult to find an industry that has undergone more drastic change than the auto parts industry during the past 25 years. The days of small independent jobbers vying and competing for your business are nearly gone. Not to talk about them as "the good old days," because they weren't all that good, but at the very least they were less complicated. There seemed to be a true partnership between manufacturers and the distributors, and there were opportunities at all levels to be profitable.With the emergence of the mass merchandisers and retail outlets, that three-step distribution chain has often been reduced to two or even one. And though there is still plenty of opportunity to be profitable in the parts world, these ain't your daddy's parts. You're going to work very hard for that return.
Twenty years ago, the factory reps were lined up, happy and anxious to assist you with field work and with changeovers. This was typically a local guy whom you saw on a regular basis. These days, it is not unusual to see factory reps covering several large states — and forget about that changeover. If you want it done, you had better do it yourself.
Day to day, the greatest asset we can have with any other human being is an open relationship. Don't worry, this isn't where we have a group hug and sing "Kumbaya." But how we interact with our customers and vendors will determine how successful we are.
That is, with the exception of our retail vendors.
They are set up for speed. They typically do not discount or deliver. Get it and go. And if you want something special or want a broader choice by quality or manufacturer, you might want to double-check the address. The retailer is typically set up for the rule, not the exception.
It is just like engine performance. Day after day, you work to optimize your operation. Over the years, you have fine-tuned the process, have a great relationship with your wholesale suppliers, and most days things run great. Once in a great while, you just need a tune-up. A retailer can occasionally provide that extra spark.
I often talk about an expensive restaurant that my wife and I frequent. It is a long way out of the way for us, but we go there whenever we can. The point I try to make in this analogy is that often our relationships, not our wallet, will determine where we go to buy the things we need — and typically a retailer, having only price and convenience to offer, will be at a disadvantage. It would seem that somebody has forgotten to tell them this, though, and so they survive and even flourish.In too many cases, the wholesalers have failed to recognize the importance of customer relationships and have given the retailers opportunities they probably shouldn't have. Still, excellent customer service will always trump price.
In comparing a retailer to a wholesaler, it is truly a discussion of price and convenience versus relationship, professionalism, knowledge, experience, flexibility, a broader approach to inventory and customer service. Though you might be surprised, your customers will almost always see the value in your pricing, and all that goes with your operation, and will willingly beat a path to your door. This, though you insist on charging a reasonable price.
Who knew?
Brian Canning has more than 25 years in the automotive service, tire and parts industries. After his discharge from the U.S. Army, he has run multi-state, multi-location automotive operations across the mid Atlantic. He is currently employed as a management and leadership coach at the Automotive Training Institute (ATI) in Baltimore, Md.
