REAL ISSUES. REAL ANSWERS: Competing With Vendors
THIS MONTH’S QUESTION came from Kim Wild at Carter Lumber, Luddington, Mich., who wrote: “Our issue involves dealing with two-steppers that partnered with us through the downturn, and are now aggressively seeking our customers with low pricing.”
As always, we reached out to our opt-in list of readers for their insights on this tough question, and we got another healthy response to our brief survey. A big thank you to the readers who took time to share their insights into this issue. If you’d like to participate in future surveys, please drop me a note at Rick@LBMJournal.com, and I’ll make sure we add your name to our list.
How common is it in your market to have to compete for business with your supplier vendors?
While this topic comes up occasionally, this month’s survey is the first time we’ve ever delved into it. So we wanted to begin by gauging how common it is for our dealer-readers to compete with vendors. As it turns out, it’s far more common that we expected. Only about 12% of respondents to our survey report that it doesn’t happen in their market, while more than 30% state that it’s very common. The remaining 57% of respondents report that it happens occasionally.
What’s the best way for a LBM dealer to deal with vendors who are aggressively marketing to your builder customers with lower pricing?
“The ones we deal with don’t sell to contractors for less than they charge us for the same product, but they don’t leave much margin in it for us if we do get the sale. Also, if vendors want to chase after collecting their money, have at it. That is why retail is called retail.”
“Offer pricing to me at a level that I can make a fair margin. Don’t lowball my customer. I know all of us are truly trying to make a profit. I would love for my vendors to work with me, and to make sales calls with my sales force.”
“Vendors who sell to our customers are no longer our vendors.”
“I have found that if you stop buying from them your area will become a desert for them. They will have to deliver with half-full trucks. You have to protect your flanks as best you can.”
“Advise them it does not encourage a longterm relationship, and may limit the amount of business conducted with them.”