By Mr Retail
One of the most popular things talked about in the inner circles of car audio is whether to buy a brand from a distributor or direct from the vendor. Let’s explore the plusses and minuses, along with other decisions, like how do you decide what distributor is your first, second or third call.
One common thing many reps talk about is “directitus.” That is a sickness caused by pride or ego where a dealer assumes they HAVE to buy direct in order to keep their standing in the industry. To be blunt, that is a bunch of crap.
The decision to go direct vs buying from a distributor should be based on numbers and programs, not a feeling. You are going to find that sometimes the decision will be easy and sometimes you will have to roll the dice, as the differences will be minimal.
Say you are doing more and more business in motorcycle audio and have interest in a well known brand. The distributor will give you 5 percent off dealer cost and pay freight starting at $500 in orders. All defects go back to the vendor directly for exchange or repair.
So you start with them and see your numbers becoming significant. That vendor’s direct program can get you 10 percent off sheet, a 5 percent payment term and a $1,000 minimum in freight. They will also give you field destroy on speakers and amps exchanged in the first year. If you end up doing $30k with that vendor, the extra 10 percent is $3,000 in your pocket and the extra $500 in freight probably means nothing.
Example two. You talk to both the distributor and vendor and start negotiating. The distributor agrees to give you 3 percent off sheet and the direct program is 5 percent off sheet. The distributor is one day away and the vendor is 5 days away. The freight program is twice as high from the vendor.
Unless I am doing LOADS of business with this brand, I am surely going to choose the distributor. And when you add in the fact that the distributor lets you buy anything from them to hit that magical $500 freight level, you may find that this brand lets you have a freight qualified order ship a lot more often, lowering your overall freight costs.
Another topic is how to choose which distributor is your first call, second call, and so on. Some brands are only available from certain distributors, so always keep that in mind when making decisions. I like to negotiate freight programs, ask how often I will see a rep and question if they can take my returns back so I don’t have return freight.
I also ask how late in the day may I order something and have it still ship the same day. Do they agree to price A and then seem to give you a worse price often enough that it is a pain to deal with them? How well do they handle issues when they come up? Do they have online ordering, and how well does their website work?
All of these things have to be evaluated when making decisions as to who is the first call. In short, make business decisions, not friend decisions. Friends don’t buy you that nice car or addition on your house, business decisions do. Never lose sight of that.
As you digest all of this info, you will probably have some new conversations with your vendors and distributors. If you stay cool, calm, and collected, these conversations will go well and you AND your business partners will be better off. I wish you well.
About Mr Retail
Mr Retail offers opinions and information on car audio retailing for CEoutlook. He wishes to remain anonymous. He has owned a retail store in this country for over 20 years now. Mr Retail loves what he does and loves the 12 volt industry and is happy to share his hard won expertise.
Get the news before your competitors do. CEoutlook is the daily brief read by over 6,500 dealers, reps and manufacturers across the mobile electronics industry. Subscribe free.
