The rise of dealer services initiatives in the UK, such as nectere, Cadabra, Office Power and Pi has been well documented in the pages of OPI (See the Hot Topic from November 2013), but – with the possible exception Florida-based America’s Office Source – the concept has found little traction in North America. That may be about to change following the announcement at SP Richards’ (SPR) recent ABC event of a dealer services programme called Next Major. One of the main messages at ABC was that dealers should be seriously looking at the structure and organisation of their businesses,weeding out bits that don’t add value and looking to outsource areas that someone else can do better and in a more cost-effective way.
Full services model
Wrapped up in all that – and something that will be defined more clearly when SPR officially introduces a ‘full services’ model early next year – is the idea of shared services, which is where Next Major comes in. Just to be clear, Next Major is not an SPR company nor does the wholesaler have an equity stake in it. The venture is owned by former TOPS President Matt Gresge and technology specialist Jennifer Stagner. SPR, however, has been designated as a ‘preferred partner’. There certainly appear to be similarities between Next Major and initiatives in the UK such as nectere, and Gresge admitted that his model was inspired by some of nectere’s broad concepts including improving the competitiveness and profitability of independent dealers and injecting new efficiencies into the independent channel.
Nectere’s Managing Director Paul Musgrove told OPI that he believed the number of potential entrants to the dealer aggregation market both in the UK and the US, “in which nectere was the first”, was good for the independent industry. “The Next Major model is not the same as the nectere model,” he said. “I believe there is potential for our model in the American market and would certainly be interested in initiating discussions.” Gresge – in tandem with SPR’s SVP Marketing Jim O’Brien – presented Next Major at an eagerly anticipated and well-attended session on the Saturday morning of the ABC that was billed as ‘Eliminating Goliath’s Advantage’, a reference to the ability of Next Major to provide dealers with world-class systems, analytics and e-commerce tools.
“There are four main components to the Next Major platform: ERP, e-commerce, marketing and analytics,” Gresge explained to OPI after the ABC show, adding that two other important pieces were a VOIP phone system to connect with dealers and a sales tax part for US dealers, whereby the ERP system is integrated with the Avalara sales tax compliance software In terms of making dealers more profitable, Gresge pointed to two broad areas where he believes NextMajor will make a difference. The first is actually helping dealers to grow their top lines. “Revenue growth is possible because we start to give time backto the dealer principal and the sales management of their dealership,” he argued. “We are taking away some of the administrative tasks, so dealers spend more time on selling, customer relationships and prospecting. Then there are three things we do onhe analytics side of things – lead generation, share of wallet and customer retention – that have a direct positive impact on sales.”
The second area is profitability. Again, analytics play a part in this with pricing tools that will help dealers to potentially achieve better gross margins. Then there is the question of staffing levels and the potential for dealers to reduce employee overheads – although this is obviously an emotive subject for some dealers. “It’s possible for the same amount of work to be done with fewer people,” stated Gresge. “Some dealers may choose not to let go of staff – they may choose to redeploy those staff in other activities – but we have given them that option.”
Next Major is certainly not a carbon copy of nectere, although it does run on the same ECi Progress ERP platform and uses ECi’s EasyOrder e-commerce tool. Two of the main differences are that Next Major does not require a dealer to rebrand its business, nor does it get involved in collecting receivables or paying suppliers. Gresge said that Next Major has the ability to “get in the middle of cash” but that the resounding message from dealers during testing was “Don’t touch my cash!”. That may change at some point, admitted Gresge, but for the time being it will be the status quo from a cash standpoint.
Nectere has also enjoyed success with its ‘hub’ model, whereby dealers in the same or neighbouring markets consolidate distribution facilities and delivery vehicles. Again, this is not something that is baked into the Next Major model, but which Gresge didn’t rule out as a possibility in the future. In terms of the ‘preferred partner’ status with SPR, the Next Major e-commerce system is based on an SPR catalogue and it is envisaged that the majority of the wholesale spend will flow through SPR. The Next Major analytics tool also uses SPR’s MyAnalystPro – as well as other industry sources such as Acsellerate – and SPR is currently looking at costing options for this, though it will be part of the Next Major service. “We would really like to push the efficiencies of a relationship with one large wholesaler – it’s more efficient to consolidate spend and effort,”noted Gresge, although he added that Next Major was open to all dealers, not just SPR first-call customers. Next Major is currently in an initial implementation phase with four SPR ‘beta’ dealers. “We’ve had great feedback from these dealers which has helped us to make adjustments in order to meet their needs,” said Gresge. “We’re in the early stages and there is a lot of detailed system work that needs to be worked through.”
This initial phase is likely to continue for the next three or four months before a second wave of test dealers comes on board, with a full introduction into the market pencilled in for the first quarter of 2015. Dealers that OPI spoke to after the ABC presentation certainly saw the sense in the concept, and many were keen to find out more. How many then take that leap of faith, of course, remains to be seen.