Recent invoices indicate that one of our distributors is charging us 24.5% of the sales price of the item, whether it is shipped to a local address or across the country.
Seems we're being overcharged so do we cut the distributor out and shift our purchases to their competitor?
Yeah that seems seriously excessive. A lot of distributors will give you free shipping on most orders (some as low as a few hundred bucks). Odds are your current distributor is placing a mark up on all freight to help pad their margins. A reasonable mark up would be understandable if they were running a razor thin margin but this does not sound reasonable (unless we are talking $5 shipping on a $20 item or something like that... or you are ordering batteries/wire/metal cabinets/etc super heavy high freight low margin items)
#1, have you asked them to explain or clarify that? If so, what did they say? What they say would definitely be helpful in making a decision to cut them.
Shop around, try someone else. Done.
Am asking the questions now...
ADI charges me zero freight.
One supplier tried. I don't give them any business anymore.
I requested a quote for 30 junction boxes. No freight was mentioned. I was told on the quote they were in stock at the distribution center 90 miles away. $6.00 each. I pulled the trigger and they transferred them to the local branch on their feeder truck and charged me 100.00 freight.
Anixter gives us free freight on most orders. I think over $200?
Most of our other vendors charge standard shipping. I am not sure I could stomach paying 25%. So on $4,000 worth of cameras, you would pay $1000 in shipping? That is absurd.
I think passing along shipping costs is fair.
ADI: Free over $50 order
Anixter: Used to be free on everything but not sure now:
CSC: Free over $100
Scansource: Free over $100
Jenne: none but minimum $100 order
A distributor offering free freight is the same as an integrator offering free installation.
By itself, it says nothing.
You need to look at the whole deal.
That said, a distributor charging 25% across-the-board better have some pretty amazing prices to compensate.
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