Rant: Are Distributors Dinosaurs And Destined To Suffer The Same Fate?

A while back I decided to go with Hikvision for my biggest project to date. As most of you know, the only way to aquire Hikvision USA cameras with their full 3 year warranty is through their "official" distributor network. There started my problems.

Let me preface this rant by stating that I'm a very small company (a one man army actually) and have survived just fine without going through distributors, so this is my first experience.

I immediately knew this was going to be a challenge when I realized that you could not just sign-up over the web and start ordering, even though I just wanted to make my purchases via credit card and was not seeking any credit terms. Fine, I downloaded the pdf credit account application forms for three distributors and faxed them (yes fax) to the respective accounting departments.

One week later, I hadn't heard from anybody, so I called each company. Of course, no one answered their phone, so I was forced to leave messages for all three. A couple days later, I received a return phone call from one. They said that my account had been assigned to a branch office and I should contact them. Called the branch office and had to leave message for person in charge. A couple days later, no return call, so I call again and speak to the person in charge. He said he had no record of my account or my application. I email him my original application form and wait for his call....nothing. I call again a couple days later and he had forgotten to input the information. All in all, it took two weeks from when I first faxed my application to when I was finally able to order my first Hikvision camera. Not sure about you guys, but in todays internet world, that seems a little excessive. By the way, I gave up on the other two distributors since they never bothered to process my application.

My first order was for 12 cameras, 10 being of the same model. A couple of days later, I noticed that the same model went on sale for 50 bucks less a piece which amounts to ~$500 for the ten cameras (nothing to sneeze at). I contacted my rep. and asked him about their price protection policy and of course no go, other than offering some free shipping (~$50).

My second order was for 20 DW Spectrum licenses. Those are sent out electronically, so no physical shipping. The order was placed on 8/22 and after a couple weeks still nothing. I call the distributor, but they know nothing have to get back to me. I finally receive an email with the licenses on 9/16. Not to belabor the point, but that's almost a month after the order date. To make matters worst, the email included the original email from DW which was dated 8/23, a day after I ordered the licenses. So my order sat in someone's inbox for almost a month.

My third order was for 15 cameras and that went smoothly.

However, my fourth order for 4 more cameras is what has sent me over the edge and why I am writing this in the forum. One camera I needed was a panoramic camera which was listed as a special order, so I contact my rep and ask him to check on the lead time for that item. Again, a week goes by and nothing. I call back and find that they had forgotten about my inquiry and nothing had been done. After their call back telling me that this item was in stock, I went ahead and ordered the camera along with three other of a different model. A week later I still had not received the cameras nor had I received a shipping comfirmation email. So yes, I call the distributor once again and inquire. They tell me that there was a billing issue and that the cameras were not sent out. What?! A billing issue and you don't contact me right a way to correct it? Unbelievable. This was the Monday before Thanksgiving. Today, I still have not received my order, so yes, I again call the distributor. He does not know what happened and he is currently "checking on it".

Okay, I realize this has turned into a novel, but I wanted to properly convey my frustration with this seemingly archaic system. Faxing, cash account approvals, calling, waiting. How can this be possible in the 21st century? Especially since we are dealing with hi-tech products, not Gutenberg Bibles. Actually, I bet Gutenberg Bibles are easier & less painful to purchase. ;o)

I understand that Hikvision wants to control & legitamize their products by going through only limited approved distributors, but is it working? What about all the cheap Chinese versions of their models being flooded into the market? Is my experience the norm when dealing with large distributors? Or, am I just too small for both Hikvision and their distributors to care about properly servicing my needs?

Bottom line: The only reason I haven't lost this job over all these delays is that I'm very good at planning ahead and I have a very patient client.

Thanks for reading.

Great description. I think it depends on the distributor.

Yours sounds like an experience with ADI, given other similar reports we have heard.

There are many comments to your topic, but here are my thoughts on improving things with your <forced> distributor relationship:

Find 'your' inside sales person or counter person at the distributor (It may not be the one they assigned, just the one that is most helpful), and always deal with that person. Call in for them by name. Demand things from them. Do not be passive. When they quote you a price, automatically complain about how high it is and tell them you need better. When they 'look into an issue', tell them you're calling the branch manager for answers if you do not hear back. Demand confirmation details on everything.

But don't always be a total jerk. Get to know that person, their kids' names, favorite ball teams, etc. Chit chat stuff. Make a point to call that person back and thank them for doing their job (as trite as that sounds). Call the branch manager and tell them point blank 'your rep' is the best reason for doing business with that distributor. If someone else up the line screws something up, conscript your rep to help you out of a jam.

In summary: Stand out from just being another account they are servicing.

"Stand out from just being another account they are servicing."

Way to blame the victim Brian...

"Get to know that person, their kids' names, favorite ball teams, etc. Chit chat stuff. Make a point to call that person back and thank them for doing their job"

Bring them treats, pat their heads and tell them that they are such a good boy.

This is wild. I can't believe to get basic service, the customer needs to bend over backwards for the sales person.

It's the new 'service economy' where order takers routinely compete with robots.

I'm not saying be happy about it. But I also know that distributors don't really care how outraged you are at the hoops you must jump through. However, there might be (likely is) someone on the ground floor that can help you navigate/avoid the routine BS and improve performance.

Bringing them treats is actually a good suggestion. Just add that one to mine. :)

"But I also know that distributors don't really care how outraged you are at the hoops you must jump through."

And that's a fair point, given the reality of some distributors.

That said, in the long run, it's a recipe for death to treat one's customers like this, especially when one's offering is a commodity.

So getting back to the title of my post: Will clunky beheamouths like this distributor last due to their size and their support from manufacturers? Or, will their inneficient, lumbering ways eventually succumb to a more nimble e-commerce?

Or, is it just a case of scale & both have their place in the world? Distributors serve larger entities and e-commerce serve the small fries of the world like me?

Distributors have two key advantages / barriers to entry: holding inventory and providing financing. Alternatively put, integrators want products to be delivered asap and do not want to pay for a month or two. That is ultimately what keeps them in business and will be hard to replicate by online only companies. That said, if you don't need those two elements, look online.

You guys are too funny...and helful at the same time. ;o)

The funny thing is that I purposely ask for the same guy everytime in the hopes of building a relationship, but I think I might of stumbled upon the wrong guy at the counter to help me.

I'm sort of married to this distributor for this project, but will follow-up with other distributors when I get the chance. There lies the rub in all of this. Since I am a one man army, if I spend all my time in the office filling-out/faxing applications & following-up with these matters, no billable work occurs. Argh!

At the risk of sounding crude, I think John summed-up the situation best when he used the words "bend over"..... I know, that was a cheap, low-brow pun.

When they quote you a price, automatically complain about how high it is and tell them you need better.

I was going to prepare a longer reply to OP's post, maybe I still will later, but this comment caught my eye.

IMO, don't do this. Especially if you're a smaller guy or new account. Don't get me wrong, you *should* be aware of what a fair price is and be able to request and justify that price, but just arbitrarily complaining about pricing or asking for discounts well tend to put you in a category where people are lothe to deal with you.

Part of OP's problem is that the distributors are often under staffed. The sales guys will gravitate towards handling or prioritizing the accounts they like the best. Your other suggestions are good, you said have "a guy" and make your relationship more than simple business, but never forget that guy is still most likely not your "friend", he (or she) is just the friendliest guy at the store.

I "love" the guys that always need an extra 10%. No matter what the job is, what the order is, etc., they just always need 10% "to be competitive on this deal" because "they fought hard to get your product spec'd in". If you need/want a better price it's always best to be prepared with a reason *why* beyond just "because".

This is another problem with this limited distributor business model is that there isn't much competition on Hikvision camera pricing. It gets even more limited when you're a small guy and you can't even get your account reviewed or your phone calls returned.

With my work schedule and "small fry" status, I really don't have many tricks up my sleeve when it comes to pricing, or anything else for that matter when it comes to dealing with this distributor. As Brian puts it, this is a "forced" relationship, so I am forced to massage a bad relationship that I would of axed a long time ago in any other circumstances.

And yet another reason why people are buying Hikvision online, from Alibaba, Aliexpress, etc.

My whole reason for going with the "proper" channels was the HikvisionUSA support/warranty, especially since I am just starting out in the video field and did not want any unforeseen problems.

I still think that was a wise choice for me, but are other (perhaps bigger & more established) integrators going with the cheaper Chinese versions and just replacing them when they go bad? How many of these cameras actually go bad?

Jerome, use what works and who you get good manufacturer support from. I feel that you will learn to navigate distribution channels. It's a temporary issue. Once you have a couple contacts in manufacturing and distribution, it'll go a lot smoother. Don't settle for something you're not proud to install just because you can temporarily get it faster.

To elaborate on my previous post elsewhere in the thread, I'd contact Hik and talk to them and say hey, I really like your stuff, but XYZ distributor is making it really hard for me to like the process of getting your stuff in a timely manner at a reasonable price. Some of the problems are.... The manufacturer is much more likely to work to keep your business. I suspect they'll call the distributor personally and help work things out.

I second this.

I "love" the guys that always need an extra 10%. No matter what the job is, what the order is, etc., they just always need 10% "to be competitive on this deal" because "they fought hard to get your product spec'd in".

Those guys are the easiest to make happy, you just jack the price up 15%, wait for them to complain about it, tell them you have to check with your manager, post a comment on Facebook about how much you hate your job, and then come back and tell them that your manager didn't want to give you 10% but you fought for them.

Brian, you have a good point. The regional manager for ADI takes me out to lunch a few times a year, stops by my office and I text/call from time to time to see how things are. While ADI service as a whole is not good, anytime I need something done yesterday, he gets is done for me. Writing his christmas card now that has a picture of the wife and kid(s) on it.

[IPVM Mod Note: Commenter is an End-User.]

Yes, they are dinosaurs. This is one of the main reasons we went to AXIS. To not have to deal with all this kind of crap anymore. Just order what we need from whomever has the cheapest price that day. I do not have the time or the patience to jump through ANY hoops let along multiple hoops.


First, I agree with those who have said that you need "your guy." You need someone, you need to know them, they need to know you.

You're a small fish in a big pond. You're competing against people who (one person, not one company) order millions of dollars of parts from one distributor per year. They jump through hoops for people like that. For you, they really want to help you, but keep getting calls from someone with a 200K order that wants it yesterday at reduced price.

You counter that by being interesting, and firm, but easy to work with. At a certain point, if you work at it, you'll have you "guy." You don't cause them a lot of heartache, want a little discount, but always pay on time, and they like talking to you. That's who you want. If you don't have that person, go through the phone tree until you find someone that makes you laugh or you make them laugh.

You also need a person at the manufacturer, who will call the distributor. This is a technique I've used many times, very successfully, when I was still building a relationship with "my person" at the distributor. You want someone from the manufacturer who's going to call the distributor and say, "You guys got my order three hours ago. Where the **** is it? I have the equipment ready to ship now. Get off your ass and send me the order." The manufacturer can be a very good ally. And because a manufacturer has a much smaller piece of the distributor's pie, their people have a lot more interest in a 12 camera order than the distributor does.

"You're competing against people who (one person, not one company) order millions of dollars of parts from one distributor per year."

There are not a lot of integrators ordering millions in parts each year from any one distributor, and in particular ADI, who has more than 1000 employees to deal with this.

Beyond that, what Jerome is describing is customer service failure 101.

Perhaps you don't deal with many large integrators? But the number wasn't the point. It's how to deal with a distributor when you aren't a big fish.

There are just not that many large integrators in total, statistically. For every Tyco / JCI / Convergint, etc., there are literally hundreds of small mom n pop shops. The later is ADI's core customer base.

Gentlemen- Good banter by all. I spent 20 years in distribution and have seen it both ways: a) Great salespeople that get swamped because they are great which leaves little time for others to benefit from and b) New hires that are under a sales quota and have not been taught the value of new account development, therefore that big order pursuit and/or efficient ordering consumes their thinking.

So, what is a new or small account to do? I concur with the collective points of making a verbal connection first and explain what you are looking for primarily, whether it is a technical sounding board, competitive pricing, quick checkout, etc. Each distributor will have someone who is their go-to person for each of these desires and therefore can cater to your first priority among these categories. By establishing someone you can count on to get your order correct and on its way, the rest of distributor value can be requested when needed.

As for pricing, make sure you are on their mailing list, both online and print if applicable to assure you are getting exposure to all opportunities and while it may appear magically items go on sale the day after you purchase it, know that most promotions are in the oven usually 2-3 months in advance and that the local salesperson by design has no clue what is on sale next month until that time period arrives.

I feel your pain, Many times in the past i have placed orders, told orders on the way, waited, waited, then called to verified order, had the incompetant or unknowledged salesman tell me that something was not in order or signed, weeks after order placed and had to just wait.

What I have found in this industry is Order, Verify, Call continuously to verify, Get hard copy confirmation of order, delivery schedule, time frames for delivery.

Some Projects are time sensitive and wont put up with the incompetant or Complacent sales force out there.

You must push the issue, no one will follow you around and make sure your order is processed.

I have actually stopped using companys that wont perform or do thier job.

Sorry to say, I see them in the not doing well catagory or sales down listings.

I have an expectation of :

Process, Delivery , Performance, and Verification in process ( Call backs, return callbacks )

Detail, Hand offs if out of office to another sales consultant

And the biggy is ( know what the ( ) your talking about ), especially your product knowledge

Attitude that someone is still in the office working to get the work done.

This does not always work well with holidays, vacations, sick leave, emergencys

I would agree that you should involve the manufacturer, their territory sales person, or manufacturer's representative to help your cause. It's in their best interest that the integrator is taken care of by the distributor.

For those saying to get the manufacturer involved, I'm curious: it doesn't make logical sense that a manufacturer would be of more help than the distributor here. Regional salespeople have more customers to handle than a local branch of a distributor would have, more million dollar orders, more of everything. Why would they be more motivated to spend time on small orders when they have more big fish on the line than the distributor?

They earn a salary or commission based on selling products and if a customer is upset, that can harm sales. Also, if products don't ship, they aren't getting credit for sales either. They probably have similiar numbers of customers to handle (depending on their territory), but it's in their best interest to help to take care of them. There are also usually distribution managers within the manufacturer and also sometimes in the territory for the specific manufacturer that should know when one of their partners isn't being responsive to their shared customer.

One reason would be is that it may indicate a more serious problem. The manufacturer sales person may have multiple reports and it could indicate a trend.

I agree if the manufacturer thinks this is a one off or the customer is a clown, then nothing will happen. But there's a real chance the manufacturer is upset or has other reports of issues with the distributor, allowing them to use this as a stick.


Waited a day and a half for my order update and no phone call. Now I've been on hold with the distributor for over 15 minutes. I did check my account info on their website during my hold time and my order (originally placed on 11/13) has now been split. One portion says it has been shipped (but really hasn't), and the other has been canceled and a new order dated today has been created. So frustrating.

My next contact is Hikvision. I know I'm a small fish, but this is crazy!


Ended up on hold for 30 minutes, but finally got "my guy" on the phone. Basically, got a bunch of B.S. I voiced my discontent, but my complaints rolled off his back like he was wearing a silicone shirt. I quickly saw that no matter what I said, I was not a going concern because in the end it's only 4 cameras.

I'm done with this distributor....and might be done with Hikvision also.....and yes, this distributor is ADI.


Maybe most of you are tired of this story, but I figured I would put the last nail in the coffin.

As it turns out, not only did ADI send out my order too late yesterday for UPS to get it to me today (they promised I would get it today), they did go ahead & split my order, and charged me an additional $20 bucks to ship one camera in a separate box (even though both boxes were shipped at the same time & from the same location). Sure it's only $20, but it's the principle. To top it off, when they split my order they repriced the one camera higher than the quoted price on the other invoice. Really?!

So now, I am forced to spend even more time out of my billable work schedule to deal with this Keystone Cops outfit.

If ADI promised to ship overnight they should not be charging any shipping costs. I work for a major Distributor and expedited shipping charges should only be on your dime is if you requested it that way.

I never asked for overnight shipping, it was their offer to get it to me the next day, which is no big deal since UPS ground can get things to me the next day....that is if the sender meets the deadline.

I actually should of received these cameras two weeks prior, even if they sent them up here via fishing boat.

4th Update:

I think this will probably be the last update for this saga. I did get in touch with the regional manager of ADI and had a very frank conversation. I appreciated his candor on the matter and he agreed that my initial experiences with ADI had been far from acceptable. He immediately rectified the billing issues I experienced and even credited me back some additional shipping. A small gesture, but nevertheless well intentioned and well appreciated. He also, apppointed a new rep for my account which he said is good at following-up.

We'll see how things play out in the future, but I don't think I will have any more issues with ADI. I'm definitely on their radar screen now, and even though I am a small fish, I've made presence known.

If your interested in getting the service you deserve please provide me an email address and I will contact you directly.

D, we frown on direct solicitation.

That said, I will speak with Jerome and if he wants alterntives, I'd be happy to point him to you and a few others.

Please no one post their email addresses in the discussion :)

You should find out who your regional hikvision sales rep is, have him come by the office. Give him some coffee and doughnuts and tell him about your experience.

Id be curious as to what distributor you worked with....not returning a call is unacceptable.

Yeah i am curiouse as well what ADI branch you were using. I have used ADI and have not had too many problems with it, but I know "My guy" and "My other Guy" is the Branch Manager... perhaps talking to the BM is needed in this situation.

Actually this happens all the time, shipped from multiple locations and no thought as to cost.

You ask too much of the other person, you should have forthought as the what to ask:

  • what cost
  • why so long wait
  • where from
  • When do i expect to recieve
  • how shipped
  • whos shipping it .( really a biggy ) got a package once 2weeks late due to some gypo shipping subcontract who handled my overnite order , just go lost in shipping ( use reputable shippers only )

feel your pain , time lines, deadlines, extectations on deliverables

Nope sorry, shipped by UPS from the exact same location at exactly the same time. I think these folks just couldn't be bothered. They promised me I would have it yesterday, but they shipped it too late for UPS to get it here, so now I'm going to receive my stuff at the end of day today (Friday) which does not do me much good since my clients are closed over the weekend. So this sets me back another week. Remember, this order was placed on 11/13 and have been trying to coordinate with them ever since.

I may be new to the video world, but I didn't just jump off the turnip truck. I was a project manager for large projects in another industry and well versed at coordinating subs, vendors, material, and schedule. One thing I have learned though is that if someone does not care, it does not matter how much you try to coordinate, complain, or yell, it's just impossible to get them to perform. In the end, the only thing you can do is fire them, and that's what I'm going to do. This morning, I'm calling ADI headquarters and, among other things, asking them to switch local branches.

Jerome- Where are you located? I will put you in contact with your local Hikvision rep. Our RSMs certainly want to know when our customers are not being serviced. As was mentioned, there may be a trend of poor service at a specific branch.

As I have mentioned on other threads, steps are being taken to lock the Chinese versions from being updated to English firmware. It is buyer beware.

Contact me at bob.germain@hikvisionusa.com

In 21'st century, distributors serve just one purpose: they control mark-up in the sales channel. They are dinosaurs. That is why you are trying to lock Chinese versions from market.

I really wonder how much Amazon has changed expectations and perceptions about acceptable delivery.

Years ago, sure, one would expect long delays, problems, etc.

Now, Amazon can overnight watermelon bubblegum, PTZ cameras, garden hoses, and a cabbage patch doll and we treat it as normal.

Perhaps Amazon, or some other tech company, can move in and wipe out the ADIs of the world.

Taking orders is easy. Getting good prices is easy. Shipping stuff fast and getting the right stuff to the right place at the right time, for free or cheap- that's the hard part. If you can do it consistently, your customers will keep coming back.

But it can be done, and there are companies out there that can and do move product out. And then the legacy distributors will have to adapt or die.

If the big distributors still exist in ten years from now, they are going to look very different.

Right. All drone delivery!

"Hey, boss, a customer wants a spool of coax. Should I just tie, like, 30 drones to the spool, or...?"

Amazon will overnight 1000' of RG59 cable for Saturday delivery. No need to beg a dude at ADI or buy him candy to get it.

Believe me, if official HikvisionUSA cameras were sold at Amazon, I would of never entered the distributor gauntlet. I've used Amazon & Newegg for years and have only good things to say. A few months with ADI and......well you know the story.

In central KY we get good service from both ADI & CSC out of Cincinnati. Screwups do occur occasionally, but generally the service is excellent and delivery is fast particularly from ADI if the equipment is in their Louisville warehouse or CSC if the equipment is in their Chicago warehouse. We have learned some lessons over the years in how to deal with distributors but also have learned their value in the supply chain:

1) Never order something that is out of stock at the distributor unless you have confirmed stock at a manufacturer's warehouse inside the continental U.S. and they will give you a concrete shipment date. We have had several nightmares ordering Axis equipment in particular that were "in transit" coming from Sweden or wherever and then it gets stuck in customs or something and doesn't get delivered on time. If it is not in the U.S., find a different piece of equipment that will do the job.

2) We have had several cases where our orders have been held up because (we found out afterward) there was a minimum purchase agreement between manufacturer and distributor and the distributor tries to wait until they get more orders before they place our order with the mfr. In my mind that is wrong - the distributor's job is to hold and distribute equipment. If they commit to a shipment date they should stick to it even if it means they get stuck with more inventory than desired. Don't commit to a shipment date if you can't take that risk. Having a good relationship with your distributor sales rep can help avoid or resolve these types of issues.

3) As John mentioned, one of the major functions of the distributor is to provide credit terms. This is crucial for building your business. If you're using a credit card to order normal equipment that you install every day it is unlikely you're going to grow much beyond the one-man band stage. Credit card companies and banks are sharks. They don't give a damn about you, your business, or your customers. They will lower your credit at will and won't give you additional credit when you need it. They don't care how long it takes your customers to pay. If your business grows you will rapidly exceed the limit of unsecured credit that your credit card company offers and then a bank is going to want everything and your left nut for collateral on any loan they are willing to offer. If the IRS screws up some paperwork your bank will gladly hand over to them any cash in your account without even thinking twice about it (yes I have had this happen and it took a week and a half for the IRS to return the cash). Distributors at least have a vested interest in helping their integrator customers grow their business and will, if you demonstrate good faith in your relationship, tailor their terms to help you satisfy certain customers with long payment cycles. If you want to grow your business, you need to grow your relationship with distributors. When the banking & credit organized crime system in this country fails (and it will fail, it is only a matter of time), if you don't have good personal relationships with vendors you are going to have serious problems running a business.

4) Returns/defective equipment/warranty claims - if you think you are going to get a better deal with the latest online google price-shopped vendor-of-the-day when something goes wrong - I hate to be the bearer of bad news but you're going to get screwed. I would much rather be calling my ADI or CSC rep when in this situation rather than waiting on hold with some foreign agent who barely speaks English trying to get an RMA number. And that's if you can even find a customer service phone number to call.

Conclusion: although there are some lessons to learn in dealing with distributors I believe they are an important part of the supply chain for integrators and would much rather do business with them rather than faceless online organizations who only take credit cards.

They will lower your credit at will

Only if you're not paying your bills on time. Otherwise a credit card company has no reason to lower your credit limit.

and then a bank is going to want everything and your left nut for collateral on any loan they are willing to offer

If you have a stable business, there are lots of ways to secure a line of credit that has reasonable terms and rates. Many local banks cater very much to small business loans with reasonable policies, but of course your business has to be at least somewhat healthy.

They don't care how long it takes your customers to pay.

Nor should they, or anyone else. How long it takes your customers to pay is YOUR problem, not your upstream suppliers problem. If YOU can't pay your bills until you collect from your customer, then you're a rinky-dink installer with poor cash management practices.

if you think you are going to get a better deal with the latest online google price-shopped vendor-of-the-day

Except that it's generally not a "vendor of the day". Amazon and other online outlets offer a stable back-end, and will handle returns and stuff in a timely manner. If I return something to Amazon, I get the return credit as soon as UPS scans the outbound package label about 80% of the time. Most installers aren't looking to save $2 on a $400 camera, but they ARE looking for easy ordering, predictable stock/shipping, and reliable service.

I would much rather be calling my ADI or CSC rep

You're far better off establishing a relationship with the manufacturer. 99% of the time all the rep can do is call the manufactuer and try and ask for an exception if there are some kind of extenuating circumstanes. Most distribution agreements spell out return policies and stuff like that. ADI isn't going to take back a bunch of equipment that they end up getting stuck with just because they like you.

Undisclosed A, you have several mistaken notions.

On the credit card issue, a good payment history is only part of what goes into figuring one's credit score. They also look at other factors such as debt utilization. The credit bureaus know when you are maxing out your other cards and that can get your limit lowered and certainly prevent you from getting an increase in credit. When you really need the credit, you won't be able to get it. I learned that in 2009 when I tried unsuccessfully to get an increase in credit card limit during the recession. The credit card companies were no help surviving the recession. We survived because our traditional distributors gave us credit. Distributors will give project terms for big jobs to allow you to exceed your normal credit limit as long as they know what is going on (because they have the security of putting a lien on the project property if necessary). Good luck getting a credit card company to do that.

On small business loans, you seem to be rather naive. The banks want assets that they can foreclose on in the event of default. For small startup companies, that generally means the Owner or founding shareholders have to put their personal assets on the line. Using financing from distributors avoids this risk. I'm sure it gets easier when a given business has accumulated a lot of assets, but the question at hand here is whether a small startup business should rely on a credit card/bank loan or distributor financing. I vote for the latter as there is much less risk.

With respect to cash management, my problems become my upstream suppliers' problems even if you don't think that's the way it should work. It's easy for someone undisclosed to preach about how the way the world should be and how I should have access to unlimited capital to pay everyone on time all the time and if I don't then I'm a rinky-dink installer. But the facts are that my business (and any other business) does have limited capital and if our customers payments come in late (particularly on large jobs) than our suppliers are at risk for getting paid late. Where this is most prevalent is on large public bid jobs where we're working as a 2nd or 3rd tier sub and everyone is on a pay-when-paid contract and 10% retainage is being withheld. Either our suppliers accept the fact that they are going to have to wait longer than normal to get paid or they lose the sale. I'm not going to a bank for a loan (and have to deal with posting collateral, etc) as long as there's a distributor willing to accept long payment terms on a large project.

With respect to establishing a relationship with the manufacturer for warranty returns, I agree that is a good thing, but that is not an argument for using an online credit-card only vendor rather than a traditional distributor with terms account. That's just an argument for going straight to the manufacturer for purchasing. We do that with certain manufacturers (such as VMS software) because those manufacturers offer the benefits that distributors otherwise offer (i.e. quick delivery and financing). I have no problem with manufacturers cutting out the middle-man. I suspect they don't do it because they can't handle the credit risk of thousands of customers and can't handle the logistics of inventory and delivery which is why distributors are still relevant. And, that being the case, if it's a choice between a faceless online distributor who doesn't care about the success of my business and a traditional distributor who does tailor their service to help my business than I'm buying from the traditional distributor.

"Distributors will give project terms for big jobs to allow you to exceed your normal credit limit as long as they know what is going on (because they have the security of putting a lien on the project property if necessary)."

Ben, have you seen this happen? What does it take to allow / enable distributors to do this?

Yes, we do this all the time with several of our distributors - Graybar, CSC, etc.

Our normal credit limit with the distributor may be $100k unsecured and at any given time there may be 50 to 75k outstanding on the account. If we win a big job and need to purchase $70k of equipment then I just call our account rep with the distributor, give them the address of the job, and they set up a separate "project" account with new account number to be used for purchasing any equipment to be installed on that particular project and this doesn't affect the credit limit on our normal account. So in effect we get a $170k credit limit until that project is completed. I assumed this was normal practice...surprised you aren't familiar with it. Basically by having the equipment for a given job site allocated in one account with the Owner's address then the distributor has all the documentation they need to secure a lien in the event of non-payment.

"Basically by having the equipment for a given job site allocated in one account with the Owner's address then the distributor has all the documentation they need to secure a lien in the event of non-payment."

I am familiar with banks doing it. I am also familiar with other financial organizations doing it with a sign off / co-sign from the end user.

What you are describing is a great service but it does expose the distributor to quite a lot of risk / expense.

I started a new discussion to talk more about this: What Distributors Offer Extended Credit With Potential End User Lien?

The only time your credit card limit is going to be lowered is when you're essentially over-extending yourself anyway. In that case, the root-cause issue is not the credit card company...

I didn't mean to turn this into a business finance 101 course, but maybe I should have elaborated on a couple of things. In regards to your collections issues becoming your upstream suppliers problems, you can solve this with receivables financing (factoring), ex: http://www.rtsfinancial.com/guides/what-factoring.

But the facts are that my business (and any other business) does have limited capital

Your access to capital is really only limited by your ability to *sell* and generate interest in your services. Your cash flows are more under your control than you think.

Undisclosed A, you have several mistaken notions.

Not really, but I think I probably have a lot more experience with various forms of business financing than you do.

Seriously, you are proposing factoring as a preferred alternative of financing rather than using distributor credit? Have you done the math on what factoring companies charge? It is more than the net profit margin of a typical systems integrator. Brilliant advice for someone trying to start up and grow a business.


I've enjoyed your debate and I respect both views in regards to distributors. However, in regards to the advice offered to a micro small business just starting-out like mine, I think the conversation is a little misguided. The issue here is economies of scale. I don't have the luxury of throwing around words like "big jobs" & "70k of equipment". My biggest job to date is under 30k and that's everything included. Which means I have plenty of capital to purchase the material I need for my jobs. Additionally, at my level, it is not difficult to get an initial deposit towards materials and/or get regular progress payments to keep me moving financially. So no, credit terms is not what I need from a distributor to make my business grow, good ol' fashion customer service is what I need. Again, I'm not saying your statements are incorrect, I just think they are ill-advised for a small startup.

I will agree that relationship building is paramount, but for me, it appears that only half of the relationship building team has showed-up to the meeting. It has become painfully obvious to me that no matter what I do, other than putting an order for 70k of equipment, I will never be a growing concern for ADI, at least at that branch. But there lies the problem, if they will not properly service a small business so it can grow, how does that company grow to give them more business? This why the Amazons and Neweggs of the internet flourish. Because they are excellent at handling large amounts of small orders (front end and back end of the transaction). I guess both have their place and geared towards servicing different needs.

In truth, the most important relationship building actually occurs with the client. Client loyalty is everything for a small business in a smaller market. If you form a strong, trusting bond with your clients, treat them fairly, and provide quality services, they will do just about anything for you including paying regular progress invoices to keep you moving financially. They will also stay patient while you try to wrestle product from an uncooperative distributor.

Smaller jobs, quality full-serve operation, lots of hand holding, which in turn leads to very high margins. Not because I am gouging them, but because they want the extra care and willing to pay for it. This is how I role, this is my business formula. I truly believe that many small businesses fail because they forget to put the horse before the cart. Do many owners stagnate due to being too myopic with their business models? Of course. But, although it is beneficial to have a clear vision, visions of grandeur can ultimately be the kiss of death.

But there lies the problem, if they will not properly service a small business so it can grow, how does that company grow to give them more business?

I would attribute this more to the lack of skill and commitment on the part of an individual salesperson (or possibly a branch). It is foolish not to work to grow those smaller businesses/customers no matter what part of the industry we work within (End-user who begans as a craft brewer and then expands to 900,000 barrels a year, Integrator who begins with his own personal pickup truck and grows to become a regional player, manufacturer with a niche product that gains momentum and expands to become significant player). If your sales pipeline isn't pulling in smaller, newer, customers and helping them to grow, then your pipeline will someday be empty. Short-sitedness seems to rule the day much more often today than in the past.

Too many in sales (this industry or others) begin to grow their customer base and quickly forget those that helped them become the high-dollar salesperson they may now be--many of us in this business for some time could read you a laundry list of "National Sales Managers" (for example) who have fallen into the mindset of not having to return phone calls or emails from anyone other than those they consider their counterparts or "major players." Until they fall from grace, they don't see the errors of their ways........if ever.

Reliable, and relatively cheap, national overnight (with sameday capabilities increasing everyday) delivery services have taken away the one of the most compelling incentives of distribution: The ability to put product in your hand quickly and cheaply. Distributors who lumber on as if this is not the case will soon go the way of the Do do bird.

Morning All

In the beginning (way back when) there was something called a "manufactures representative (rep)" (independent or factory based) usually an agency (one-man or group) who was your go to guy when you needed information,a solution, or god forbid you needed to buy something and your company couldn't supply the answer, information or had no direct link the the product needed.

The rep gained market share by being all things to all who ask, generally with just a phone call, a nod of the head and a hand shake on the deal

And the system worked!

Then alone came the Distributors/Wholesaler who offered to stock locally/regionally any and every thing a person could ever want or need for just a small percentage (%). Thus the local providers were taken in because they didn't have to stock much on site and the manufacturers were equally taken in because they could reduce those hight and low sales cycles.

Never you mind that the personal touch was over time lost, that the information and know how resource was lover time lost and that the direct link between manufacturers and the provider was over time lost. Also about this time the contract and the corportation came about> And over time that small percentage (%) grow and grew and before long the industy found itself trapped.

I don't know or remember how many independent providers who built there companies on the hand shake are boiling mad (just below the surface) because of Distributors/Wholesaler and more recently corportate involement from outside the industry.

But like all things, trents are little more that a business cycle and over time that wheel does turn and today the trend is starting to favor the independent manufactures representative one again and yes I'm one of them.

The smaller manufacters (those you don't hear about generally because that choose not to pay to play in the trade magazines - you know the ones who claim to be informative) who are also for the most part the one who are cuting age and pushing the industry forward and in many cases found outside of America are finding the personal touch a better way to do business while saving on the cost of haveing a in-house sale force.

Sorry if ths has become a rant while explaying my vote - but its really just a through or two!

Thanks guys

Rick Ramsowr

GenesisFusion Marketing

Thank you for validating that Hikvision has a certain (and in my view outdated and painful) view of how to set up channels to sell cameras.