Anixter / Bosch Sells Direct to Amazon

Interesting as I thought Amazon was using Arecont/Exacq and/or Cisco end to end.  

Do we all remember when the lumber/hardware stores open up to consumers?  In the beginning all trades were up in arms with what that will do to their trade and take away business from them.   How could they survive? when they can’t sell the material and the labour, I remember this quite well being in the construction industry 20 + years ago. They survived, actually they adapted and overcame all the negatives.  New companies sprouted, catering to a consumer buying material and hiring an expert to install it.  Your forgetting, the intellectual property that we as integrators have- it’s the smarts to keep the IP camera connected and installed, and sending video over an ever-changing IT network that is usually installed on a foundation of quicksand.  This, in my mind, is where we will always add value, its providing the solution and working with the end user on their sales journey.

18 years ago, end users couldn’t shop our prices and we were the matter experts, not anymore- you can find whatever you need on the internet. The end user now has the tools to be able to provide comment and suggestions, we as integrators can still provide guidance and recommendations during the sales and installation of the project.  If the end user has taken the time to investigate these products, that good thing.  It means that they are more invested in the overall project, and they will take the time and invest more in your company, providing you long term service contracts.  It’s time for our industry to adapt, unfortunately manufacturers are always looking to keep their numbers up and that means more creative (and uncomfortable) direct selling through other channels. Those integrators that don’t adapt, may be left with dwindling sales and loss of business in future years.

Good read.  I remember about 10 years ago when ADI sold Honeywell Video products direct to Menards (midwest big box company) and it upset many integrators. 

I don't fault either ADI or Anixter for doing so (voted "yes" on the first question) that is capitalism, a buyer and a seller being willing participants in commerce in a way that they wish.  However, I don't agree with Anixter (or ADI) in those situations and feel they could have explained to the potential customer their position about selling to end users and directed them towards a local or national integrator. 

Just add it to the list.  If you spend your money with Anixter, Tri-Ed, Accu-Tech, Clark, or any of their other brands, you are literally giving money to your competitor.  

It's just bad business.

I think Amazon uses more product that can be distributed through Anixter than most of us here combined. 

That being said, I voted no they shouldn't sell direct, but that's just me looking at it from the outside in. I don't fault them for selling direct to a customer such as Amazon who's primary and/or secondary business are automated packaging lines and data centers around the world. The last thing Amazon wants to do is deal with middle men slowing the flow of our data. I even doubt its price related. 

However Anixter selling to healthcare companies and other unrelated data and automation centric businesses is a different story. 

What gets me is that some reps aren't honest about it. In our 25 year history we have seen both types, but I have not received a response from any that flat out say no we dont sell direct to end users. It mostly some propaganda around some strategic account that has a long history with blah blah and they just want to work direct with us.....

Anyway, we buy from Anixter and companies but we don't buy from "them" we buy from our dedicated reps that take great care of us and provide us an extension of our logistics operation. 

Now consider this, if a manufacturer offered to sell direct to you for less cutting out distribution would you? I'll be honest Anixter, Unfortunately for you I would on allot of items. Not all but the core, probably. 

Another thing to think of is that with the size of Amazon it is not unlikely that their internal IT or facilities maintenance dept at distribution locations has the know how and technical capabilities to perform their own install and system programming. In this case why would they need an integrator? It is as simple as one of us buying from ADI and self installing the system in our home or business. Why out source it when you can do it yourself?

I'm curious to know what the mimimum margin percentage an integrator would be willing to earn on hardware, in order to get the installation and service business, in a situation where a manufacturer handed them a deal like this (pulled through distribution).

NOTICE: This comment has been moved to its own discussion: What Is The Minimum Margin Percentage An Integrator Would Take For a Deal a Manufacturer Handed To Them?

Anixter is doing this to us right now.  We turned a school district (that we have done over 2 million with) on to a product and since the school wanted to try it out and not involve us at this time they purchased the product from Anixter at a very low price.  I called the manager and he stated that they sell direct on all products except for security, which this is a paging/clock product.  Never heard that one before.  So we had the talk again about when the proof of concept is done and they are ready to spend the bond money ($1,000,000) to secure the product for 45 buildings "installed" how was Anixter going to handle it?  Two issues here is that Anixter chooses to not have relationships with the main integrators in town because it makes them feel better about selling direct to end users.  The other issue is when they get caught and or called out on it the real pricing they gave the end user surfaces and there is zero margin left for the integrator.  They buy at wholesale, mark up to us typically what they would sell to the end user.  When I called the manager he said there should be plenty of margin for us, at least around 15 points.  Obviously they have never ran an integration company, you cannot survive on that margin to the end user. It has been over three weeks and still not another call to tell me what they can do for me price wise to try to make it right...and I have left message.  I called the manufacturer who is pretty new with Anixter and over a long conversation they said they will talk to upper management with Anixter to see how this happens.  Let me just say they don't give a crap how they sell their product until integrators like us go to our customer and change it to a different product, which sometimes we have to do to make any money.  But of course the customer already knows what he should be paying for a speaker/clock. 

We have been boycotting Anixter for many years (15+) and we purchase over $5M annually from Anixter's competitors. Over the last 10 years, our purchases are well in excess of $50M! These are sales orders/revenue that Anixter has lost over stupid decisions like this one, for what is described as a $10M opportunity.

And we are only one (1) Integrator. 

Of the 75 IPVM members who voted above on Boycotting Anixter, 87% (=65) of the responses say yes "Boycott" so take 20% of our volume = $1M annually x 65 and look at a $65M annual loss from just your responders!

Our company policy is and will remain; any employee who buys as much as a single connector from Anixter, will be subject to disciplinary action including termination.

The excuses that "we don't do that anymore" or "we have stopped selling direct" is an old song that honestly, we have heard before.  Anixter must think that the Integrators are not smart enough to find an alternative.

Unless Anixter is greasing the palms of Integrator's employees... who is make decisions to purchase from them and, why would anyone do business with any company that is willing to go behind your back and, cut your throat?

Non Anixter Integrator -

I almost never comment on these strings, but am going to chime in here.  There is a basic principle that needs to be considered, and that is every business' right to make the best decisions for their customers, and ultimately their shareholders.  That is what Bosch/Anixter are doing here.  Now I get the sensitivity knowing that distribution typically gets better pricing and operates off lower margins on hardware that integrator, and that should be considered by the manufacturer when pricing a project like this. But the bottom line comes down to this:

1.  Manufacturers have an obligation to grow and protect their market share.  Time and time again the integrator community (with many exceptions) have shown a willingness to create many partnerships, drop manufacturers and more, so why shouldn't they develop end user relationships, and even sell directly?

2.  Integrator are highly skilled, and have an obligation to their shareholders/employees to grow and protect their market share (I love Cliff's example of the lumber industry).  As I said in point #1, integrator will often have multiple partnerships and will mandate that companies compete for their business.  This is their right - and a smart business practice.

3.  Distribution...... etc, etc, etc.  See points above.

I love the movie Moneyball.  If you are passionate about selling, watch it again but with your sales hat on.  There is a great line that Cliff is illustrating.  Brad Pitt says "adapt or die".  Respectfully these message boards often illustrate that integrator are most resistant to adapting in our business.  These types of posts and deals are not going away, so I say to all of my friends - "adapt or die"

| When I hear people in our industry cheerfully announcing their willingness to "adapt" to this, my head wants to explode.

Ditto.... my head also wants to explode when I hear someone say "we must adapt"!

We chart our own course, make our own decisions and, we choose not to adapt doing business with manufacturers and distributers who have your back. Not those who would stab you in it!

Integrators can choose; Are we to be known as a Leader or a Follower?

Followers choose to be like Lemmings who are widely known for their tendency to run en masse off of cliffs to their deaths. Integrators who's behavior of adapting, mimics others and mindlessly follow the crowd, despite the obvious consequences, will all succumb to the same fate!

Lemmings shall continue to pile up in the Race to the Bottom, along with manufacturers and distributors who cut their own throats over short term thinking.

Some "think" loyalty is dead. It isn't! 

Adaptation is not succumbing to pressure or mindlessly following the crowd.  Adaptation should include forward thinking, innovation, and a willingness to change. 

If you are assuming we are only trying survive, maybe! There is a BIG difference however between mere survival and profitable business growth!

When those who have been in this industry for a long time think that this its "just the way it is or the way it has to be" they are adapting to what they perceive to be the norm and thinking there is nothing they can do about it! We (especially the collective we) have more power and control than you think.

Definition or not. NO, I don't believe that we have to succumbing to external forces in order to "just" survive. 

Integrators who take these so called "labor only" projects are in fact, facilitating and supporting the practice of direct end-user sales by manufacturers and distributors. As they make their expertise available for hire, they have lost the foundation of why they exist and why they are known as an Integrators, and not Installers.

Thank God that ethical manufacturers still exist that will not, under any circumstances, sell direct to end users. While these manufacturers continue to promote their brand among end-users and target industries, they always engage a Certified Integrator to quote the technology, infrastructure, installation labor and sell the value in their expertise!

Integrators should refuse to support this direct to end-user sales, thus making it impossible to hire professional video surveillance expertise for installation, commissioning, and training.

Under the true letter of the law, wouldn't some of these distributors and manufacturers be violating various state licensing requirements, by selling security technology direct without the proper security license required? Most states do not simply require technicians and installers to be licensed, but the sales staff also, correct?

Do you also facilitate and support this violation of the law, when legitimate Integrators must always comply?

Unfortunately, many Integrators are exactly like the manufactures and distributers who engage in this cut-throat practice...

...Their greed is more powerful than their character or standards!