ASK THE EXPERT: August 2015
Competing With Vendors
“My biggest challenge is trying to purchase lumber from sources that do not sell direct to contractors. We have a policy that we do not do business with vendors who sell direct, but it is getting harder and harder to stick with it because a lot of large wholesalers are selling direct, or opening other divisions to do so. What’s the answer?”
First, congratulations on staying the course with your current corporate philosophy. Can we all not agree that providing revenue to greedy manufacturers, distributors, and suppliers now wanting greater market share at your expense is a deal-breaker? Business (and politics) is simple. Pick a side. Either you are with us or you are not.
Speaking of politics, before you throw your now-competing supplier out, you have little to lose (and much to gain) by practicing a bit of diplomacy. Call in the violating supplier. Ask what their intentions are today? Tomorrow? Ask what prompted them to decide to compete directly with valued LBM dealers like you. Share with them the conflict you have, and the amount of business they are compromising by their recent behavior. It’s unlikely they’ll change course, but you never know. Plus, by taking the high road, at worst you’ll enhance your image in the industry and possibly gather some important competitive information.
Assuming the guilty supplier(s) don’t change their selling habits, I’d call in every other credible supplier. I’d impress upon them your corporate policy, and more importantly the resulting opportunity they now have to expand their footprint with you. Excite them with the potential increase in the share of your business, and challenge them to expand the breadth of their product offering to address any product voids. Would we all not sell our souls for pro contractors and builders who made us this offer?