Hot Topic Xtra

Exclusively for Digital and Premium subscribers, here's some more from the interviews on this month's Hot Topic about dealer groups.

OPI: Do you think dealer groups are keeping up with the changing market? 

Independent Stationers CEO Mike Gentile: IS had added a significant number of new jan/san, safety, MRO and breakroom suppliers to the group’s portfolio. We have also provided training and operating assistance to interested dealers. IS has streamlined many internal operating processes to make it easier to do business with the group and to reduce expenses.

Synaxon UK Managing Director Derek Jones: Every organisation in the channel must keep pace with the market. We call ourselves a dealer services group, operating in the technology market with strategic partnerships within the OP channel, and that reflects the way things are moving. For most IT resellers, the services business is now more important than products, and most of our members are also managed service providers. We have close partnerships with several managed and ‘as a service’ suppliers and we’re doing some great work in bringing them together and opening up new opportunities for our members. We have to remember that with every new development, there is a learning curve that we all have to go through. Part of our role as a services group is to help members learn about new technologies and the opportunities they present – and then engage with the supplier and exploit the opportunity.

Superstat Managing Director Alex Dunn: I can only speak for Superstat and we are certainly keeping pace. We’ve invested in technology to give dealers innovative CRM, automated targeted email marketing and crucial sales information that identifies the opportunities hidden in their accounts. This puts our members at the forefront of modern sales and marketing technology and way ahead of most of the competition. Moreover, it grows the business for the benefit of everyone in this supply chain.

Office Choice CEO Brad O’Brien: It’s dependent on the group. In the Australian market, we have two major players both of which are very proactive in their provision of services. Our business has focused on driving a trading brand and consumer proposition that supports the work our dealers do at a local level. This is in addition to our focus on dealer operational best practice, enhanced technology platforms/tools and an ongoing shift from an insular focus on office supplies to a broader business solutions mindset.  

ADVEO Corporate Marketing Director Pablo Aranguren: There are some dealer groups, especially the big ones, that are trying to respond to the changing situation in the market and which are thinking about how to face the challenges ahead.

Abacus Stationery & Office Supplies Partner Mark Dilley: Some are better than others. Dealer groups tend to follow each other in introducing new things and are driven by the major wholesalers’ need to diversify to maintain their business model. Dealers/independent businesses are at the sharp end, so dealer groups need to communicate more effectively to understand what issues dealers face rather than preach in a ‘we know best’ way.

TriMega President Mike Maggio: Speaking for TriMega, the answer is an emphatic ‘yes’. Our primary role has always been to enable independent dealers direct access to manufacturers. That role is even more critical today as progressive dealers expand into new categories and opportunities. Reflecting those new categories, in the past few years we have added over 20 new manufacturers and suppliers in cleaning, medical, safety and shipping supplies.

We also continue to work closely with traditional OP and furniture manufacturers so that our members have access to their entire product offering, not just what is stocked and sold by wholesale distributors. We are supporting that access by working with those manufacturers and suppliers in creating and providing dealers with content to be used on their websites.

Last year, we began providing training to our members to help them analyse their cost of goods with the object to buy more effectively, improving gross profit and their bottom line. We routinely meet with senior executives of our exclusive suppliers through top to top meetings and our supplier council. Through those meetings, we can understand the market share and revenue goals of key stakeholders and make sure we are aligned. We also use those meetings to communicate strategic initiatives and receive feedback.

We have been very aggressive in reducing costs through more efficient use of our resources and collaborating with other independent dealer groups, most notably Independent Stationers, where it makes sense. 

AOPD Executive Director Mark Leazer: Some are and some are not as much. I don’t know if any, including our group, are keeping up to the extent they need to. The pace of change continues to accelerate and our dealers need their groups to continue to offer solutions/value. My philosophy has been that if the groups do the things that help their dealers stay relevant, the group relevancy will take care of itself.

Suburban Stationers President Bob Shulman: I do think dealer groups are beginning to adapt to industry needs to keep up with the changing market. This can be seen in a multitude of ways: from opening up new distributors and manufacturers in adjacent product categories and a greater focus on e-commerce, to beginning to redefine themselves in today’s market. Our industry is going through a rapid evolution with new competitive threats, manufacturer and dealer consolidation, expansion into other product categories. Dealers just trying to keep up with the pace themselves and remaining laser-focused can be difficult. However, I have seen a positive shift by dealer groups towards providing more capabilities and resources to their members.

OPI: What are/should dealer groups be doing to retain members? 

Independent Stationers CEO Mike Gentile: Create undisputable value within a low-cost operating model.

Synaxon UK Managing Director Derek Jones: They should, quite simply, be delivering great service and value. Broadline distributors and vendors are increasingly focused on the top of the pyramid – on the handful of very large resellers that spend the most money. Smaller resellers and dealers need someone else that will partner with them and give them the business development support and services they need.

Suburban Stationers President Bob Shulman: I’ve always felt that retention in a dealer group is related to relevance. A dealer group must still be relevant to its dealers (and suppliers). The definition of what is a dealer group and what it means to be a dealer member may be something completely different in the future from what it is today, and the ‘one-size-fits-all’ mentality is beginning to change. 

The traditional OP dealer group will eventually evolve and no longer be an OP buying group, but a business product dealer group. This doesn’t mean that the traditional OP suppliers aren’t just as important as they always have been, it just means that there will be that many more categories, suppliers, and more strategic initiatives dealers will need to focus on. 

For the dealer to effectively execute upon these strategic initiatives, the dealer group will become ever more important. The perception that members have of their dealer group will be more of a strategic component to their growth strategy.  

Office Friendly Sales Manager Keely Shepherd: Dealer groups should be working alongside dealers with dynamic sales and marketing tools. Fundamentally, this means listening to their concerns and understanding where they want their business to be three years down the line. The execution should be to the highest possible standard, otherwise you simply don’t deserve to retain the member. 

OPI: There is an assertion that dealer groups do not provide a decent ROI for dealers, or are at least not transparent enough in this regard – comments on this? 

Independent Stationers CEO Mike Gentile: IS is fully transparent with all our dealers –small, medium and large – and we publicly send an audited annual financial report to every shareholder.

Synaxon UK Managing Director Derek Jones: The return on investment should be clear enough, but it has to extend beyond simply being able to get a better price.

TriMega President Mike Maggio: I cannot speak for other groups, but we take transparency and a member’s ROI – we call it ROM (Return on Membership) – very seriously. TriMega pays out to its members 100% of the rebates and programme dollars they have earned each year. In 2016, that payout was over $26 million. We distribute those rebates four times a year and with each distribution a member receives a complete accounting of who paid the rebates and how they were calculated. Once a year we provide dealers with a comprehensive report that shows them what their return on membership was for the previous year.

OPI: What does the future hold for dealer groups?

Independent Stationers CEO Mike Gentile: What’s extremely important is that the current redundancies from the many groups must be mitigated and a sincere attempt must be taken to create an ‘umbrella’ low-cost streamlined operating model to meet the needs of all dealers in the US independent dealer channel. A ‘one-size-fits-all’ group is not advisable or even feasible, rather a group of groups that offers programmes and services that dealers value and are willing to support based upon their respective needs.

ADVEO Corporate Marketing Director Pablo Aranguren: There is a future for dealer groups if they reach the right scale and/or the right partnerships to still be competitive, responding to challenges in the times ahead.

AOPD Executive Director Mark Leazer: I believe there will be more specialisation and consolidation of functions. Perhaps there will be a shift to groups focusing on more of what they are best suited for. Dealers will always gravitate to groups that enable them to do better with the group than they can do on their own. If groups can achieve that, they will continue to be relevant.

Avery UK Sales Director Stuart Login: If I were a dealer group principal I would be looking at segmenting my dealers into levels of required support – if a dealer doesn’t want to engage then let the vendors know which ones are worth focusing on as opposed to pretending they all are. The groups need to focus on helping dealers differentiate themselves in an ever more competitive marketplace and then selling that differentiation. Local can win more than we realise…

Soennecken Business Unit Manager Wholesale Jens Melzer: The future of dealer groups lies within the challenge to handle future trends like digitisation or modern forms of working together. The question of how to create benefits from these then has to be transferred into a strategy. Moreover, dealer groups and their members have to work closely together in order to stress their individuality in the market while at the same time achieving economies of scale by centralising basic functions such as warehousing and logistics.

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