Integrators, How Often Do You Buy Product From Online Retailers For Resale?

Every day, week, month, year, never?

Pass-thru or mark-up?

Do you ever have to pay sales tax?


We buy all of our HDMI cables and HDDs online.

We offer both wholesale and retail accounts, you would be surprised the number of installers who purchase equipment on the retail side. I also know many CCTV, IT, and WISP installers who buy their gear on Amazon. That is why amazon is launching a new b2b program and I personally think it will put many distributors out of business.

I usually purchase a good amount of project material from retailers, mainly hardened switches, power supplies, etc.

I've found that I save hundreds if not into the thousands by buying from retailers instead of your Anixter's and CSC's. They tend to charge more than the retailers on items they don't push very often. Either that or my inside sales people don't like me. :-\

Do you eat the sales tax, or try to setup with amazon your resale certificate, or just keep part of the tax you charge the customer?

I'm not the one that deals with billing (luckily), but I believe we pay sales tax on the material that ends up being used on the project..but we do that under our own accord. Newegg, Amazon, etc...don't charge sales tax, so we have to keep up with it per project.

Morning

Way back when — there was a pressing need for the distributors when the dealer was trying to cut cost by outsourcing they're stocking needs, but in 2015 due to time, higher markup's and greater stocking fees the need has diminished greatly. Besides manufacturers can drop ship just as well if not better.

It's my feeling that in the coming years the personal relationship between an integrator and an independent manufactures' representative agent/agency will take off and will once again become the go-to-guy for both the best deal but more importantly a resource for the agent's expertise and support (before, during and after the sell). In fact, I sell more "turnkey solutions" to integrators these days than I do to my dealer base.

Just a through or two...

Anyone else run into issues with online retailers prohibiting reselling of the some or all products?

Michael,

I have never faced an issue like that before... is that something you have encountered?

One example

we started buying ethernet switches via retail a while back, the prices we paid "wholesale" were a bit more than what we were paying retail... the main draw for us to purchase through a retail was same day shipping and faster delivery at a much lower S&H cost... mark up is mainly non-existent... sales tax is paid at the purchase...

We are both a distributor and reseller, and we get installers buying from us do fast checkout, free shipping and decent pricing. Margins are so low these days our pricing is comparible to the big guys. It depends on the product and customer,I would say we sell to integrators who are not primarily in cctv, and use us for quick purchase and our remote configuration services. The reseller/ distribution differencial is slowly going away and. merging together thanks to online sales.

The reseller/ distribution differencial is slowly going away and. merging together thanks to online sales.

dis-integrating?

there are many, many cross channel Cisco distributors. We get vendors doing the same telling us no dealer sales or what price we have to sell/ advertise at. We pretty much ignore the requests as they are illegal pretty much. The most egregious ones we forward to the state AG, and they get investigated and sometimes fined.

That's interesting, Josh. So CDW and other similar online retailers, telling us they will no longer sell us Cisco equipment, SMB or otherwise, when they find out we are reselling it, is actually illegal?

For the Pricing, a manufacturer or distributor can not tell you what price you sell the item for or bid it for. I have seen many try to do this and its illegal in most states. If they try to do this for a government or other public bid its borderline criminal.

Many MFG's try to set MAP pricing for advertising or online and this is very hard to do legally and most do it wrong. The only way to do it is to cut off MDF or marketing funds for companies that dont participate.

For example if Vendor A tells us to raise our pricing on our website or they will contact Distributor B and tell them not to sell to us if we dont, thats illegal. We would be able to sue for discrimination and report them for price fixing. What usually bothers me is when a MFG contacts us about a MAP program and complains about the pricing and:

(A) The info to even know there was a MAP program is hard to find and not given out.

(B) The MAP price is the same pricing the MFG charges end users directly on their own website.

(C) They only police MAP on smaller distributors / resellers as most likely they are getting pressured by their large integrators/ resellers who are having their margins pressured.

I am not a lawyer, but for stopping resale, that is pretty much unenforceable. First sale doctrine basically says that once you own an item, you are free to use or sell it at your whim. The only thing thats not applicable is software and licenses.

Its amazing how bad the channel strategies of MFG are and how many problems in the market are caused by a few distributors.

Josh, if it as you describe it, how does Avigilon so thoroughly stop online sales of its products?

Simple, they have a 1 tier distribution model and sell direct to dealers. So the only way to sell online would be to become a dealer, purchase a large amount of product at once to fill your inventory needs for when they stop selling to you. Most if not all other brands sell through 2 tier or larger distribution models with master distributors, regional distributors, resellers/dealers.

1 tier provides a MFG with full control but they are limited in expansion beyond their own sales efforts, have to handle fully the credit facilitites and support. Avigilon leads based on perception and their strict channel. I think of them as the AVON or AMWAY of the market. They create value for the installers solely by limiting the channel.

( I personally hate closed channel or integrator only products like them or LUXUL. Often they are an inferior product and customers/end users who trust the installers end up paying way to much money for items as there is no market pressure to keep pricing affordable as competition is hampered.)

2 tier allows for larger reach, takes inventory off their books and puts in on the Distributor, and allows the credit to be handled by someone else. Also many MFG do not have large US operations and they rely on distribution to handle logistics. The downside is you lose control of the channel, you rely on distributor sales reps to push or know the product (often not the case unless spiffed).

For the future of the channel, Amazon with their new b2b play is the biggest threat. The end result will depend mostly on the MFG's as they need to create effective channel management strategies to give some benefit for VAR's and Distributors in order for the items to have any margins. Otherwise it will just become commodity driven.

Always pay tax when purchase products, always complete transaction as work order , not sale of products, always attach a service to sale for tax purposes.

purchase online if the competition locally cannot meet the price and adjust theres to meet it.

Morning All

That is a really good question!

As an independent manufacturers' representative agent I'm looking forward to the forthcoming intercourse generated by this question.

As a rep these days, we generally focus more on the real/true integrators as opposed to the typical dealer/provider. The through being that the latter generally buys from the more retail based channels whereas the integrator seeks out the best solution possible thus the agencies.

I have through for sometime that the distributor model has out lived there usefulness and its just a matter of time. Of course, I started out in the late 70's when rep agencies were the thing — so what do I know! Then again, I've always through that reps offered more band for the buck in both expertise and support.

A true integrator is going to have in-house engineering and a strong will and the time to seek out the best solution and cost will be only one of the factors is there buying decisions.

Generally, systems and solutions require a p2p personal touch, whereas, those items that are more commodity based i.e. wire and cable may will be sold over the internet once a b2b relationship has been established by an agent or agency.

Just a through or two...