“We have to sell our service and what we do. Our direct sell vendor is selling at a lower price but with no service. The truck shows up and customers have to get it off the truck and stocked on the job. We know that the corporate directive of one vendor is to go direct to builders, GC’s and installers, cutting out their distribution partner.”
“Here’s our three-step process: First, we complain directly and explain that they’re not making an additional sale, but only selling the same amount to more customers. Second, we demand the profit we lost from not selling the vendor’s product through our normal vendor/dealer channel as a commission or ‘finders fee.’ Third, when all else fails, quit buying from that vendor and either buy around them directly or from another vendor that respects the vendor/dealer relationship.”
“We try to persuade the vendor to run it through a lumberyard—whether it’s us or another yard that’s closer. When this doesn’t work (it often doesn’t), we try to buy as little as possible from the vendors that won’t respect our territory. Our goal is to buy as much direct as possible through our co-op, Do it Best Corp. And yes, it does make us feel good when we know we took an order from a vendor.”
Make them understand that they will no longer be getting your business if they continue selling to your customer base directly. It doesn’t take a math major to understand a LBM dealer will sell more in a year than a builder will buy.
“Point out that this practices is bad for everyone’s business. There are many reasons why it makes more sense for vendors to sell to dealers than direct to builders. 1) We can expedite orders, providing special services they can’t or are aren’t willing to do. 2) We pay them expediently, and take the A/R risk with our customers. 3) We take ‘returns,’ something vendors won’t do. 4) We schedule special runs with our trucks, unless trucks are full. Suppliers won’t do that! 5) We buy larger quantities than individual builders, filling their trucks, minimizing their trucking and hassle costs.”
“Unless there is a published suggested retail/contractor price, the vendor should only be quoting a range of prices in the first place. The vendor should be promoting the merits of the product to the builder—not trying to sell them directly. The LBM dealer maybe needs to remind them sometimes.”
“Make them understand that they will no longer be getting your business if they continue selling to your customer base directly. It doesn’t take a math major to understand a LBM dealer will sell more in a year than a builder will buy.”
“Take the problem to the vendor’s competitor and try to figure out a way to compete.”
“Stop using them and put potatoes in their tailpipes when they are not looking.”
“Most vendors will not compete when they know they’re going head-to-head with a long-time customer.”
Have a Real Issue? Contact me at Rick@LBMJournal.com.
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