Anixter End User Sales Troubles

By: John Honovich, Published on Oct 23, 2017

End user sales have and continue to be a major problem for Anixter's physical security business.

Every year, according to various Anixter people, end user sales have stopped.

And they do not.

In this note, we examine Anixter's recent issues with end user sales and their attempts to deal with the problem.

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Comments (53)

Good...their nonsense is coming back to bite them in the butt. If an enduser comes for help, hit them in the wallet.

Happening right now on a large school project we are working on.  We introduced the customer to the product, then they went to Anixter to buy demo gear.  Now we are competing against them directly on $300,000 worth of gear.  They stated the customer said they did not have an integrator working on the account, even though Anixter knows we work with the district and never called us to ask. And of course the school is going to say this.  I hope they have fun hiring installers to go put it in. If we sold it now (after they sold it and their normal markup from their wholesale price), we would make less than 7%.  The least they could have done is sold the demo at MSRP. This forces me to sell competing products so the manufacturer that doesn't have a backbone to call them out and fix it will lose all the sales we have with our other customers in the future.  

If direct sales are such a small percentage, why would Anixter cause themselves so much heartache with integrators over this practice? Integrators tell stories frequently about not dealing with Anixter because of this issue, they must be losing more than they are gaining if the percentage of end user sales is so small.

Or, end user sales is really a much bigger number, and they are trying to downplay it.

 

They have been lying about the numbers for years.  I also think there are certain offices that are worse than others as well.  

FYI, Buddy is a distributor and an integrator. 

FYI, Buddy is a distributor and an integrator.

A disintegrator?

98% of the business is through the channel.  They don't mention how much of the 2% represents in revenue.  For example, they sell to 98 small, regional integrators and then direct to Target and Walmart (not saying they do, example only) his statement is still true.

If, hypothetically, their direct sales ARE only 2%, the only logical reason for continuing direct sales is to grow that segment of their business, so the 2% claim, while possibly true, is disingenuous.

Interesting comments about Anixter selling direct.  I have a relationship with a former Anixter regional sales manager who has a sterling reputation, and he has told me on many occasions that there is a strict edict in place against selling direct. 

I was also told by one of their outside sale staff that he lost a major order for an industrial customer who wanted to buy security products directly from Anixter, but who was told they had to buy through an integrator. 

I am not questioning the posted comments, but perhaps there are some loose policies that allow some Anixter personnel to bend the rules on occasion.  

I was also told by one of their outside sale staff that he lost a major order for an industrial customer who wanted to buy security products directly from Anixter, but who was told they had to buy through an integrator.

I think "lost" could be argued here. If the end user called up Anixter not knowing the proper sales channels/contacts and Anixter actually pointed them to an appropriate contact, they never really "had" the order to begin with. What they had was a person interested in purchasing something they could not technically sell them.

But, I do understand the Anixter guy's perspective on it.

 

I have a relationship with a former Anixter regional sales manager who has a sterling reputation, and he has told me on many occasions that there is a strict edict in place against selling direct.

I believe you. From our discussions with people close to the company, it seems like Anixter is more torn over selling to end users rather than maniacally obsessed with selling to every end user they see. This results in some Anixter sales people never selling direct but because Anixter is so big and evidently undisciplined, there are clearly many other Anixter people who do sell direct.

Manufactures can put controls in place to prevent this by reducing Anixter's (Distributors) margins on products sold through unauthorized partners/directly to the end-user.  It is very time consuming, and expensive to implement, and does not completely solve the problem.  But, it is an effective deterrent that protects the manufactures integration partners and shows a manufactures commitment to the same. 

I understand why this is a big deal to distributors.  I get that.  However, as an end user I find Anixter's prices to be well above what I can find elsewhere online.  Only when absolutely necessary do we buy from them, normally when we need something fast and normally just for wire.  So are they giving that big of a discount to distributors (comparable to what I find online elsewhere) or what?

Another question is whether this is really an Anixter "thing" or an end user buying for themselves "thing"?

It is not clear if that 98% number is based on Anixter tracking and measuring how much they sell to end users or if it was simply to make the point that, relatively speaking, Anixter does not sell much to end users.

If simply making a point, the correct usage is “99%” ;)

It's one thing for a distributor to sell direct but a whole other thing when a mfg does it.  Take for instance AXIS, they claim to have a clean channel but that is as far from the truth as you can get.  You just have to look at one of their largest accounts, Target (180K+ cameras) Target is buying the cameras from Anixter and not an SI. This was not Anixter's but AXIS arrangement with Target. They may list a so called reseller somewhere but thats just good old smoke and mirrors.     Also, don't forget all of the other avenues which AXIS and other mfg's turn a blind eye to...B&H Photo, Amazon...the list is huge! If they need to cough up better margins to win a deal, they will, and without any hesitation.

How is an SI supposed to make a buck when the distributors and manufacturers keep cutting us out of the business.

How is an SI supposed to make a buck when the distributors and manufacturers keep cutting us out of the business.

The most common answer to that is to sell services. Of course, Integrators Oppose Labor Only Sales.

Maybe the answer from a SI's perspective is to not support (or lead with when having influence) products which are sold through Anixter ? Genetec, Avigilon, Qognify,S2 and many other Tier 1 products are not sold through Anixter. If one truly has the ability to drive product selection, one should make sure that they do their best to think through scenarios where a distributor such as Anixter could undercut them. Comments ? 

Maybe the answer from a SI's perspective is to not support

Well, recall Boycott Anixter, Says 82% Integrators. Your idea is somewhat in line with that, at least since many integrators do prefer protected protects, i.e., the same products that are typically sold at Anixter are also broadly available for sale on-line. To that end, picking manufacturers, like on your list, helps to counterbalance that issue.

Integrators need to stand together and stop supporting distribution that sells directly to our end users.  Our buying power collectively can make an impact.  

Here in Seattle, every "big" distributor sells direct to end users.  They all have a "Demand Creation Group," and I get it, they can't just rely on integrators for business.  I've met with all of their sales people and most are just fine, and admit it has and will continue to happen with certain inside sales people because the end user just "doesn't need an integrator."  So they think.

Then there's Anixter.  Who quote the highest prices to the integrator AND sell direct to end users, LOL.  We've caught them with direct Anixter shipments at the end user offices.  "It won't happen again."  "It was a rogue."  But it still continues.

Complete snakes, without a disciplined, unified approach as a company.

All you can do is choose the lesser of evils.  For Seattle, that means don't bother with Anixter.

After three years of running the Tri-Ed and Anixter businesses separately, 2018 will be a year of consolidation that is already starting. I believe that they will finally have Tri-Ed brass run all security products and consolidate call centers and distribution teams and separate Data com from Security. No company of this size will double pay for too much longer. I believe this will slow down the direct business as the Tri-Ed brass has been getting there butts handed to them due to these Anixter practices.

In the interim, here are some practices that integrators can use to keep distributors from infiltrating your accounts.

1. Never give your contact the name of the project you are working on. (Call every project warehouse)

2. Never drop ship product directly to the site. (Distributors pack there boxes with sales flyers).

3. Make the distributor sign an NDA for any information on your account. 

#9, good feedback, thanks.

Question on this:

3. Make the distributor sign an NDA for any information on your account.

How would an NDA help here? If the risk is that the distributor would sell direct to that account, the real concern would be non-compete, yes/no? But would a distributor sign a non-compete with an integrator? Theoretically, if they were really committed to not selling to end users, that should not be a problem.

Call the legal document what you want. It makes the contact know that he could possible get in trouble by opening his mouth about anything you discuss. Even if it is not worth the paper it is written on it gives the distributor pause. 

Make no mistake. The manufacturers who do business with Anixter are equally complicit. In the 21st Century "quarter to quarter" business world we live in - the manufacturers are well aware of what's going on. Understand the landscape and work around it. Use products not available thru Anixter, join PSA - and compete. Compete and win with Service, experience, and your knowledge. 

"Compete and win with Service, experience, and your knowledge."

Easy to say that but very hard to do when end users are also in that "quarter to quarter" business world and keeping their expenses as low as possible is incredibly important.  Which is part of the reason buying from distributors/manufacturers directly is necessary for end users.    

Use products not available thru Anixter...

Let’s see the list...

From what I understand PSA is just a middle man between distribution and the integrator. You may pay more for PSA.

1. PSA is a true buying group. They purchase many products direct from MFG’s. 

2. Certain products may come from distributors. I would say that number is less rather than “more”. 

Finally, the one certainty is that PSA as an organization will never compete with their members. I suppose if the question is “ you might pay more” , than one really doesnt really have a principaled argument against Anixter and their enduser sales. 

Been there, done that, been burned. I won't use Anixter unless its an emergency that bails my customer out. The Northern Video > Tri-Ed > Anixter mix is a nasty one.

I've lost business to ADI with a school district :(

 

We buy from Anixter.  We also buy from ADI and Scansource.  The main reason we buy from Anixter is the 90 payment terms we were able to negotiate. As their prices are slightly higher then ADI or Scansource.  Regarding the direct selling.   They definitely do.   There posture is if you are an integrator who actively does business with them they won't sell direct to your customers or potential customers who are in need of an integrator (usually I get the referral from them), however, if its a customer that has an integrator, but that integrator doesn't buy or is unwilling to buy from Anixter then they will aggressively sell direct.  I don't think this model has negatively impacted my business.

We buy from Anixter. We also buy from ADI and Scansource. ....[Their] posture is if you are an integrator who actively does business with them they won't sell direct to your customers or potential customers .... however, if its a customer that has an integrator, but that integrator doesn't buy or is unwilling to buy from Anixter then they will .... sell direct. I don't think this model has negatively impacted my business.

So maybe it hasn't until now, as you just admitted to Anixter you don't buy all your materials from them.

There posture is if you are an integrator who actively does business with them they won't sell direct to your customers or potential customers who are in need of an integrator

That sounds like a mob tactic. A huge publicly traded corporation says they won't go after your customers as long as you buy from them....

I am certainly not saying this is Anixter's general position but anyone inside of Anixter making such representations is in a seriously grey ethical position.

That sounds like a mob tactic. A huge publicly traded corporation says they won't go after your customers as long as you buy from them....

Is it really that heavy handed of a position in business in general?

What ethical principle requires one to abstain from selling to a non-customers customer?

Our branch wines and dines the end user with golf games, lunches, etc.

It must be assumed now that all distributors will sell direct to end users, just as it must be assumed that most manufacturers will sell direct to Amazon.  The margins are too small in 2 step distribution and the race to the bottom and the sheer number of products with little differentiation make this the case.  I work CCTV on the side now as I currently have a day job at a non security manufacturer and its my entire role to sell products directly to consumers, and to Amazon and to make sure the impact to the distribution channel is minimal or at a distance.  Amazon alone represents over 12 million dollars in direct sales and gets us an additional 25points margin. How can a company say no to that?  

You should take a look at ecommerce Industry trade news and the main push now is Omnichannel.  Manufacturers and brand owners selling to distributors, retailers,  end users, amazon, in stores, online, everywhere.   Sorry to say to the detriment of dealers,  the 2 step distribution model is slowly fading away.  Manufacturers were once really bad at parcel and small orders, are now adding whole teams and facilities to manage things.  The end of things will not be tomorrow but its coming fast. 

This is nothing new. Distributors and manufacturers have been selling direct to end users for decades. They will do what they have to to make the quotas and commissions with impunity; dealers just get in the way. In many projects over the years, I've specified the product, demoed the product, proposed the solution only to have the customer sold direct. Sometimes those (ex) customers have the balls to ask us to install the system they just purchased!. Needless to say, I have become that brands worst outside salesman and 'voted with my pocketbook' on subsequent projects. No manufacturer can afford to be a prima donna any more--their brand and product just ain't that "special". Only two manufacturers in my 65 years of doing this stand out as reputable. Dolby and the old Eventide. Either one would place a dealer on "permanent backorder" if they got a hint of slimy behavior. Sadly, those times are past as well.

Either one would place a dealer on "permanent backorder"...

We used “DKO, Drop Kick Only” :)

When Ben Cornett was running Intellisense, a dealer told him to either sell direct or he would use a different manufacturer. Ben asked if he could help him find some of the other manufacturer's phone numbers. Solid ethics in that man.

That's because a lot of integrators rip off their customers. I've seen it so many times when they add 50% to the product cost. I'm not surprised that customers want to save some money

What would be an reasonable margin for an integrator or value added reseller make on the sale of a product these days?

I usually check the prices online (as most of the customers do) and just calculate my margin to be in-line with a market or even a little bit cheaper. So I still make my 10-20% and a customer sees that he has got a good deal.

You are either only into high volume box sales with little to no service or support, or you enjoy being in business and poor.

I do the system design, installation, configuration, and support. But I charge for labor, it's not a part of the equiupment cost.

If you charge more than $14 a hour, you're ripping off your customers.

I charge average market rate which is $40-60 for that kind of work for the end user in my area. What are you trying to prove?

That is a crock of shit. Experienced technicians in my area make

40-70 grand a year.

Tom....varies. I see lower margins for public bid versus negotiated direct sales.  As low as 15% on bid work to 40% on direct sales.  Don't know if there are any industry guidelines....perhaps IPVM has done a recent survey?


That sounds about right to me...........but what margin do you think a customer is willing to pay this day and age "over cost" on product from a company furnishing and installing the product.....what is reasonable in the mind of the consumer......

If you are providing value added services and expertise you shouldn’t have to Match online prices.  What vertical markets are you selling into ? 

I charge customers for the installation and logistics. I sell to residential and small business.

7-12% margin on items will put in the ballpark we have seen.  Customers will price shop amazon and google and expect it to be in the same ballpark.  Most will pay a little more then online pricing but anything more then 10% and they will cause a headache.  Products are a commodity now, and the only thing you can sell is the service.  Its harsh, not good for the industry but its the new reality. 

Below you will find the NYS Office of General Services Security Solution contract number and the list of all the Security Manufacturers that Axinter has position to sale direct to all NYS & NYC Agencies and also position themselves whereas no one can voucher or qualify there Security contract direct sales.

 

BELOW IS ANIXTER NYS SECURITY CONTRACT NUMBER AND THE STATE SECURITY CONTRACT WEBSITE THAT VALIDATES ANIXTER SECURITY CONTRACT:

 https://www.ogs.ny.gov/purchase/snt/awardnotes/7720120191can.HTM

NYS Contract #PT63201

Anixter, Inc.

325 Washington Avenue

Albany, NY 12205

Fed ID #: 36-1361285

NYS Vendor ID #: 1000004825

Administrator Daniel Olguin

Tel: 480-293-2359

Mob: 480-240-8337

daniel.olguin@anixter.com

www.anixter.com

 

 

 

 

The products below are listed on Anixter NYS Security Solution contract that allows every NYC and NYS "END USERS" to purchase in huge quantities DIRECTLY.

2N Telecom, Addco, Alpha Tech, Altronix, APC, Apollo Vid, Arecon VI, Arrow Lock, Assa, Axis, Belden, Blonder Tongue, Bogen, Bosch, Burgess CD, Ceeco, Code Blue, CohuHD Costar, Commscope Uniprise, Comnet, Compu-link, Corbin Rus, Corning, CPI, Cyberdata, Dedicated B, Digital Watchdog, Ditek, Dotworkz, Eastern Wire, Erico, Exacq Tech, Firetide, FLIR, Fluidmesh, Gaitronics, Gallagher, Garretcom, Genetec, Glynn-Johnson, HES, HID, Hudson Video, Immersion, Imron, Infinera, Infinias, Inova, Interlogix, Iomnis, Ipconfigure, IQINVISION, Kaba Accss, KBC Network, Keyscan, LCN Closer, Lifesafe PW, Lynn Electric, Medeco HIG, Microsem, Milestone, Mobotix, Norton, NVT, ONSSI, Optelecom, Orion, Panasonic, Panduit, Pelco, Pixel Velocity, Raytec, Rf Codein, Rixon Doo, Safepoint, Samsung, Sargent, Securitron, Sensys, Sony, Speco Tech, Systimax, Talk-A-Phone, Tappan Wire, Tote Vision, Transition, Uinversal Electric, Valcom, Veracity, Verint, Viavi Solutions, VideoIQ, Viking Ele, Vivotek, Von Duprin, West Penn, Wheelock, Wire Mold,
Wrightline, Xtralis, Yale Security

This is a contract that many System Integrators like myself are up against with Anixter and I still can't understand the logistic as to why Anixter would position themselves to sell directly to the "END USER" and put us integrators in a position where we can't be competitive with and another way that they position themselves to sale directly to your end-user is when you provide your customers information via any project registration, so unless I really have to purchase from them, that would be the only reason they get my business.

 

 

#16, thanks for sharing and confirming your own experience. We asked Anixer about this a few weeks ago but did not get a definitive reply. I've forwarded your comment to them just a moment ago and asked them for feedback. Either way, we will respond to this next week. Thanks again.

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