There’s a lot of talk about how the economy, consumer attitudes and the Internet have put added pressure on industry professionals.
Before the economic crash, customers’ expectations were already rising. And when the market slow-down hit, those same consumers also became price-obsessed.
These consumer trends have been felt up the chain to distributors, who also are being pushed by a need for more competitive pricing and added value.
“With the economy starting to uptick a little bit, we’ve been challenged on the margin side, and I think that we’ve been expected to play the pricing game for a long time, and it’s hard to get out of that rat race,” says Darren Goldstein, vice president of sales with HornerXpress in Fort Lauderdale, Fla. “So you’re always looking for the value-added sale.”
To meet that demand, distributors are offering new products and services to make their own customers’ lives easier.
Value in stock
This recession has been particularly unpredictable — nobody can tell how much things will pick up, or when. This makes dealers unwilling to invest in inventory that may not move quickly.
“If we’ve got a distributor willing to warehouse it and deliver it where we need it, when we need it, we’re going to be more loyal,” says Brian Quint, president with Aqua Quip, a suburban Seattle retailer.
“Three, four or five years ago, we would write larger early-buy orders and then just work out of our own inventory,” he adds. “Now we’re taking a more conservative approach of writing smaller opening orders and then relying on distribution to warehouse and deliver product when we need it rather than us stockpiling it in advance.”
In response to this trend, distributors have been lowering the minimum purchases that dealers must make to receive early-buy benefits. “Since the economy turned, dealers don’t take in as much as they used to, so we’ve accommodated that,” says Chuck Arakelian, president of Baystate Pool Supplies in Cambridge, Mass.
Distributors have found other creative ways to reduce inventory for their customers. New Rochelle, N.Y.-based Bel-Aqua Pool Supply, for instance, developed what it calls the Easy Buy program, which allows dealers to enjoy lower early-buy thresholds. Additionally, if they make the minimum purchase by a March deadline, they can continue buying certain products at the same prices through early June.
The distributor figured that dealers could carry smaller staple items such as o-rings and fittings, which will definitely be used. But for larger items, such as heaters, the company thought it was best that dealers order them on an as-needed basis. “I didn’t want to deliver 10 heaters only to find they need a natural and they’ve only got propane,” says Mark Warshaw, Bel-Aqua’s vice president of sales and marketing. “I didn’t want that inventory to sit in their warehouse when I can manage it better. We did this so they wouldn’t have to load up on inventory, and they would be able to get the right product mix as needed without any penalties.”
Quint’s suppliers offer him a similar arrangement. With certain SKUs, they will accept smaller early-buy orders, yet guarantee availability when he runs out — if he satisfies certain requirements. For instance, he must meet a certain early-buy threshold and predict how many of the select products, such as robotic pool cleaners, he will sell throughout the season. The distributors then guarantee that Quint’s predicted quantity will be available.
To simplify the process of placing orders and locating hard-to-find product, distributors have been taking advantage of digital technology.
Boca Raton, Fla.-based ProLine Distributors, for example, recently rolled out a program by which it provides “VIP” customers computer tablets that are pre-loaded with links and information that will quickly help dealers locate specific products sold by the distributor. “The idea is to get them more information faster while they’re in the field,” says Proline Marketing Director Danielle Lockwood. Pre-loaded manufacturer links will take dealers specifically to the products Proline offers, so users don’t have to sift through those SKUs the distributor chooses not to sell. Pricing specific to the dealer also can be located.
“This saves them time, calling and price checking,” Lockwood says. “It’s a tool to hopefully make dealers more efficient and give them a selling tool in the field.”
Another push has made it easier for dealers to check on product availability — even while working on a site. “In my part of the industry, I think the three questions the dealer really wants to know are: Do you have the part, how much is it, and when can I get it?” says Eric Goode, senior vice president of Memphis-based parts distributor Optimus, LLC.
To provide those answers more quickly, Optimus recently unveiled a phone app whereby service technicians can access that information instantly. The supplier carries many parts for discontinued products, so when a tech must fix a piece of equipment with which he or she is less familiar, such as an antiquated automatic cleaner, the professional can easily obtain a diagram of the cleaner and identify the problem part and its number, availability and prices, both wholesale and suggested retail.
“He can be standing in front of a homeowner saying, ‘This is your price,’ without having to do any calculations,” Goode says. “The order can be bundled and shipped to him, and it would be there the next morning.”
A similar feature is offered on a PoolCorp program called Pool 360. In addition to accessing information about the needed part, professionals can learn if it’s available at their local branch and, if not, where it can be found.
Pool 360 allows dealers to place orders in advance, but suspend the actual purchase until they actually need the product. “It’s gotten significant traction,” says Manuel Perez de la Mesa, CEO of the Covington, La.-based firm. “Our online transactions last year were up almost 100 percent vs. the previous year.”
Services such as these require a significant commitment on the part of distributors. “It took us years and years to build this library of information, because in many cases the manufacturers themselves didn’t have it,” Perez de la Mesa says.
Getting the word out
In addition to making it easier for dealers to get the right product, some distributors are acting as silent business partners, providing services aimed at helping builders, retailers and service companies market their businesses.
Dealers who purchase established minimums, for instance, are listed free of charge on certain PoolCorp Websites. If a consumer is looking for a solution to a cloudy-water problem, he or she may land on an informational page produced by PoolCorp. “That URL will have various things on it … [and] enable a consumer to connect with a local retailer that is part of our network,” Perez de la Mesa says.
Additionally, PoolCorp has further developed its direct-mail program to more narrowly target a dealer’s specific market.
The ability to compete with Internet retailers weighs heavily on the minds of many smaller outfits, causing some distributors to find ways to help. HornerXpress, for instance, will offer fulfillment services to those brick-and-mortar customers who maintain an e-commerce site.
“Retailers can use our [online] catalog as their own,” Goldstein says. “They control pricing and marketing, and we handle the back-end fulfillment.” Moreover, the online catalog and shipping labels are customized and bear the dealer’s name.
“Most distributors are handling the big Internet companies anyway, so this is a way for the brick-and-mortar retailers to compete,” Goldstein says.
As a side benefit, such service helps retailers reduce inventory. “If they have a kiosk of our catalog on their counter, they can expand their business without adding inventory,” Goldstein says. “They don’t have to allow a sale to walk out of their store simply because they didn’t have the product on the shelf. They could take the order in the store and have the material delivered to the consumer.”
There is a nominal fee for this service, which also includes the choice of several templates to aid in Website design.
Other suppliers are finding ways to help dealers provide end users with the information they need on the spot, whether it be on a sales or service call, or at the store counter. On its Website, Horizon Spa& Pool Parts, for instance, has a function that allows dealers to input the percentage mark-up they want so that, when products are displayed on the screen, they come with the retail price rather than wholesale.
“It’s not just for the service tech but for the retail store as well,” says Raymond Thibault, general manager of the Tucson, Ariz.-based distributor.
“You have parts counters in retail stores all over the U.S., so a computer on the parts counter can be used to display the retail price.”
The educational arena is another in which distributors find themselves offering more help than ever, with more suppliers presenting programs of their own.
Baystate offers two large educational programs each year in conjunction with their buyers’ events. Held in two casinos in the Northeast, they have grown to include approximately 20 manufacturer-taught seminars each. “We’ve had some on salt generation, some on how to measure a liner properly, how to measure safety covers properly — all kinds of technical seminars,” Arakelian says.