Why don't you carry all types of products and equipment?

There are a lot of manufacturers that do not support their dealers. Surprised?

As far as equipment and laps or whatever I will not carry them unless I can make my overhead cost plus at least 10% to 20%... It is called making a living. Sound like a lot? Well I still have to pay taxes and so on.

In quite a few cases I am carrying things in stock as almost a service to my customers, not because I am making much money on them. But there is a limit to what I will and can afford to do.

I have stock that I paid more for at my cost than the manufacture is currently selling it direct to my customers for. How is that for support? It happens all the time. When it does I do not sell that manufacturer's product or support it in any way... ever again (and I tell all my friends in business about it).

If a manufacturer does not support his honest dealers trying to make a fair living, then ultimately they will fail, at least as far as that product is concerned. So will the manufacturer.

Here are some of the issues involved.

Quite a few manufacturers sell direct to their dealers' customers at the same price or below what they sold to the dealer for.

Manufactures also often sell to a discounter that goes out and sells their product at a few percent above cost and destroys the market (in actuality loosing money, yes it is happening right now).

There are several cases right now on the internet where a dicounter is selling a product for below what most of the manufacturer's dealers have to buy it for. That is a fact. I know one dealer that has carried a product for over 30 years and the dicounter is selling below what my friend has to pay to get the product.

In the old days this was not as damaging because it was isolated to some extent, but in today's market with the Internet. Well the discounted price is known everywhere.

Here is a hypothetical example. This is not meant to represent anybody or thing, it is just an example.

How would you feel if you were paying a manufacturer say $50 per lap wholesale and had to buy 20 of them at a time to get 20% off. Laps are heavy and the shipping is around $4-5 for each lap. That comes to $1000.00 investment plus the $100.00 for the shipping. So with shipping the laps cost you $55.00 each.

With a suggested retail of 20%, your selling price would be $63.95 (50 x .8%, not counting the shipping)... So you would make a grand total of $8.95 per lap (subtracting the shipping) , not counting any hard costs, like rent, water, electricity and so on.

Barely doable really. But now lets say a discounter comes in and sells the very same lap for $56.95. What do you do? Remember your hard cost is $55.00. The gas to take the lap to the post office is more than you will make if you sell the lap at that price.

The discounter may be getting a better volume price, he may not be. He may be just a moron and will hopefully go out of business. He may have other means of income, you fill in the blank.

But the reality is that there is no profit in that product any more and you have $1100.00 invested in that product you will probably have to take a loss on to sell them.

Keep in mind that while my example is completely made up. I have had this very same thing happen to me on products repeatedly. This is not an isolated incident, it is quite common.

How would you feel? Be a little irritated? Would you carry the products? I doubt it.

I personally will boycott that manufacturer and their products. I think other dealers should too. If enough people did that then the manufacturers would be forced to support their dealers or sell direct. Not both.

The excuse I hear a lot is "we cannot enforce a price..." To some extent that is true (it is called price fixing and I am not suggesting that), but they can choose to not do business with that type of person (heavy discounters). They can have "authorized" dealers, dealer "territories", or all types of other arrangements that would help minimize these problems and establish and support a good dealer network. The facts are, a lot of manufacturers are just after the sales and really do not care what the other side of the equation looks like.

This ruins the market, and while in the short run the customers get the cost advantage in the long run there will not be any product support or availability.

Manufacturers have nobody to blame but themselves. They really will lose in the long run. I have actually had manufacturers with the gall to tell me I should carry their products and loose money on them because "they will sell other products..."

Well my answer to that is the other manufacturers are saying the same thing. How about I just not carry any of those products and not loose money on any of them??? Now there is a concept.

Manufacturer's are losing product support and customers in the long run. I have customers who bought things from a discounter, then come to me for help all the time, because the discounters told them they were too busy to answer their questions.

I am a nice guy and usually try to help, but frankly I am getting the short dirty end of the deal. I would like to tell these customers that I think they should get help from the guy they bought it from, or the manufacturer.

You wanted a cheaper price, you got it. Now live with the service.

Depending on the situation I will be forced to do that in the future, I have to make a living and other things to do.

That is one reason there have been some changes recently in how some of the manufacturers are selling their products. Some manufacturers have done the math and realized that they as manufacturers would be better off having a dealer network that supports their products and helps their customers.

A supporting dealer network (of say 200 dealers) is much better and will sell more product than one or two discounters that are too busy to do either customet service or product support and demanding a lower price. Which the manufacturer can only do by lowering the quality of their product.

The manufacturers have another choice, they can go direct... But then they have to do all the work themselves and it will limit what they can actually produce and make. If they want to go direct it is fine with me, but they should do it and not pretend that they are wholesale, and selling to dealers and then not supporting those dealers.

I have had this discussion with a lot more than one manufacturer, most of them do not care and do not support their dealers. They want the money, bottom line and do not care if their dealers make a living or not... This a poor way to do business and really, and I do think it will eventually catch most of them. But be aware that there are a lot of forces at work out there in the market that most people may not realize.

There are reasons you cannot get service, product support, and some products. Think about that the next time you buy.

But in general the market sets the price of about anything, and I know some people will not believe me but the customer is usually getting an honest fair price.

If the customer wants a product I do not carry, I point them in the right direction to find it... But I will not carry it, if I cannot make a living and get support from the manufacturer.

Return to Just Ask Jeff Index