Distributor's #1 Challenge
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I love how this industry slams simple installers as trunk slammers, but everyone sure would love seeing anyone else but integrators do the design and integration portion of the install.
So which is it? You just want wire puller, basic labor forces in the field?
Or, would everyone prefer experienced integrators, who are already on site, make the calls on design and integration. Heck, we are the ones who have to support it long term.
In the wise words of Bill Parcells, "If they want you to cook the dinner, at least they ought to let you shop for some of the groceries."
Jon, I've seen this from the manufacturer side mostly. In short, I think manufacturers would prefer that the integrator do the design work, provided two things are met:
- The integrator uses as much of the manufacturers product as possible (ignoring the obvious conflict here in most cases)
- The integrator builds a "proper" design (again, from the manufacturers perspective) and everything works as intended
For manufacturer sales people that are all fighting to hit their targets, one way to ensure as much of your product as possible is used is to do the design yourself, or at least influence the end user heavily to request your products.
But, manufacturer sales people can't do every design, so the next best thing is to influence the distributor to use your products. Various means exist to do this, sales promos, spending marketing money with the distributor, etc.
Personally, I have seen a lot of savvy integrators come up with some solid low-cost solutions to various customer problems. The tech side of me thought they were great, the sales side of me wanted them to solve the same problem with more of my product instead of an alternative option. :)
Heck, we are the ones who have to support it long term.
That is a potentially controversial statement. Some integrators will own the system and provide whatever support is needed, others will try to blame everything (including their own mistakes) on the manufacturer.
For the manufacturer sales people, they mostly end up hearing about the designs that didn't work, and the support issues that blew up. This gives them biased feedback, and leads them to believe integrators in general are not competent, and they need to do more of the design work to ensure that things works as expected and their products don't take the blame for these incompetent integrators.
So, no, nobody just wants basic wire pullers. The want wire pullers with technical skills, product loyalty and tunnel-vision solutions.
We prefer integrators that like to spend other people's money like a government does taxpayer dollars. :) And doesn't matter who is cooking dinner, we can make you a great deal on the groceries!
I'm pretty sure the installers will always have the upperhand in the design and integration. The distributor should have some first hand experience with the products they sell though. Especially if it's a new model.
But don't feel so bad cause we distributors get slammed for being simple box movers. Trunk slamming is way more fun.
Are we talking about gross margin or profit margin?
Grouping distributors into one bucket does not work when making a proper evaluation.
The Large National Distributors (ADI, Tri-Ed) are moving to a Radio Shack like approach to the business (cheap labor, internet accessibility for ordering, and reward plans). They make a large portion of there profits on back end rebates and large end of the quarter orders from factories who cut there prices to make quarter goals.
For the Smaller Distributors to survive, they need to have better talent and become more creative/selective on how they partner with Manufacturer's. They will never be able to compete on margin with factories that are already heavily invested with the big two above ( I exclude large data com manufacturer's in this list as other than Anixter/Tri-Ed they truly do not a real national plan for security). There best bet would be too align themselves Regionally with a few Manufacturers and create long term deals that are beneficial to both organizations with language that gives them some exclusivity and/or price protection.
If they try to play the ADI/Tri-Ed game they will be swallowed up by them or simply go away.
#2, good feedback. As for the two groups, by definition, most of the respondents in our survey, like most distributors, fall in the smaller distributor bucket.
For the Smaller Distributors to survive, they need to have better talent and become more creative/selective on how they partner with Manufacturer's. They will never be able to compete on margin with factories that are already heavily invested with the big two above ( I exclude large data com manufacturer's in this list as other than Anixter/Tri-Ed they truly do not a real national plan for security). There best bet would be too align themselves Regionally with a few Manufacturers and create long term deals that are beneficial to both organizations with language that gives them some exclusivity and/or price protection.
Your recommendations are almost an exact copy of our company. Except we have one additional hurdle. We are new to distributor scene. I know this is a year old discussion, but #2 got any more tips for a small newcomer? Or maybe some distribution veterans would like to give some advice to some small friendly competition.
I won't mention names so that it does not seem I am trying to promote or detract one name from the other, but we willingly pay a slightly higher price (most times) from a particular distributor versus other distributors for a few reasons.
They do not engage in Internet direct sales or bids that would compete with other security integrators.
They provide significant logistics support for some of our major projects. Even warehousing product for us that they don't carry, in the locality of the project.
Provide configuration services for major brand cameras.
They have referred us opportunities before.
We don't expect solution designs since we consider that our job.
Distributors are for logistics, Integrators are for making things work, installing them and suggesting them. Manufactures are for thinking things up and making/selling them.
It's simple. Without having a cultural basis addressing the needs of North American customers, selling against price is a losing proposition. Like GE found out, bending metal is a tough business however, their Airplane Engines do great.
The market goes for intelligence and price not the way things were.
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