Stepping stones

 

An independent power channel – that’s what BPGI has been referred to in the past. And with 20 dealer groups in 13 countries, comprising over 12,000 individual dealers with combined revenues of almost $12 billion, it’s easy to see why that may be.

 

BPGI’s story is not one of a miraculous rise to power and fame. Instead, it’s been a labour of love on behalf of independent dealers across the globe by a number of inspired and forward-thinking individuals.

 

One of the chief engineers behind the creation of BPGI and a facilitator of many of the programmes and initiatives that ensued was Dave Guernsey, CEO of his own dealership, Guernsey Office Products, and the first chairman of BPGI.

 

Guernsey says: "The original premise was to band together all independents, and therefore all dealer groups, in the US to affect greater cooperation and support with select manufacturers. The quidproquo envisioned would be lower product cost and greater field support of the independent’s selling effort."

 

Global interest

 

It soon became apparent, however, that the interest in this dealer group consortium reached far beyond the US. The final line-up of founding members spanned three continents, comprising seven organisations from the US, Canada, the UK and Australia.

 

With member groups merging and changing in one way or another, BPGI as an entity has evolved with these changes, and so have its ambitions and areas of focus. One of the initial goals was to gather enough critical mass to compete efficiently with the power channel at purchasing level. Another was to give dealers greater visibility.

 

In terms of critical mass, BPGI now has more than enough. The merger between euro buro and BPGI which took effect in 2004 – following the initial severing of ties between the two organisations in 2001 – resulted in the creation of the world’s largest dealer group organisation.

 

The internal set-up of BPGI itself has also changed considerably since the idea of a consortium was first conceived. Ten years ago, BPGI was managed through a committee of volunteers. There was no CEO or staff. Instead, a chairman was elected annually – on a voluntary basis – by the board of managers, with the task of leading the board of managers in setting and monitoring BPGI’s strategy and results.

 

Today, a CEO is in charge of the day-to-day running of BPGI, with three further members of staff looking after vendor programmes, purchasing, benchmarking and best practice issues.

 

Coordinating and leveraging the mass that BPGI has accumulated, however, remains a work in progress. But the goalposts have moved and some of the issues that were once of paramount importance have been replaced by others. Private label is one of them.

 

But the growing threat of private label by the power channel has also had a somewhat positive side effect on dealer/manufacturer relations, according to BPGI CEO Jim Preston. "Many key vendors are finally recognising that the independent dealer has been and continues to be the most loyal customer for their brands. Some are stepping forward now and making the independent more competitive."

 

Collaboration

 

All BPGI member groups have own-brand products and are collaborating within their groups and with the wholesalers to share brands as well as purchasing sources. Preston says: "In areas where brand manufacturers can’t or won’t make us competitive, we are contracting domestically or globally importing our own brand products."

 

A work in progress indeed, with much remodelling and retooling along the way. And of course, the big boxes are not sitting still either while dealers come up with the latest new idea. They step back, analyse, regroup and come at the independents again.

 

The formative years: Dave Guernsey

 

A decade after the emergence of the OP superstores and at a time when consolidation started making the large contract stationers ever more powerful, independent dealers the world over stood at the crossroads. Manufacturers in particular were increasingly focusing on the big boys as a result of their huge purchasing requirements.

 

But, as Dave Guernsey, the catalyst behind BPGI, points out, the idea to band together independent dealer groups to try to gain greater purchasing power with the manufacturing community was certainly not met with unbridled enthusiasm.

 

"There was tremendous resistance from several quarters, among them the manufacturers. They had long recovered margin that they had been forced to give away to the demands of their power channel customers. The formation of an independent dealer ‘super group’ was seen as a mechanism that might remove dealers as a means to take back margin. BPGI’s concept was also ridiculed by many from the power channel. The big boxes benefited from a substantially lower cost of goods and they did not want to see that advantage reduced."

 

After a lot of negotiation, Guernsey and his team convinced vendors, dealers and end-users of the importance of a healthy dealer channel and of how BPGI could help them achieve this.

 

Up until 2002, BPGI’s model contributed greatly to closing the gap between dealers and the big boxes. Says Guernsey: "In the late 1990s we went after the low-hanging fruit and made considerable strides. But as we pushed further, the going got more difficult.

 

"The benefit to manufacturers is not simply rolling up volume. More must be done. The initial deal was based on one price on an agreed-upon unit of measure for all dealers. That’s ok to get started, but for these partnerships to evolve to the next level, dealers needed to accept mandatory compliance and they needed to share key marketing data. Furthermore, there was a need to better match up with the shipping efficiencies, cost-wise, of the manufacturers.

 

"Increasingly, this is being done now and this collaboration over the past decade has far exceeded the initial goal of facilitating better purchasing prices for dealers worldwide.

 

"BPGI has united the dealer brain trust across the planet with the end result of engaging some of the best innovative minds to address dealer challenges as they compete against the most formidable resellers this industry has ever seen," says Guernsey. "I hope we continue down this path and recognise that it is a marathon that will never end."

 

The core issues: Jim Preston

 

At the heart of BPGI’s success lies a healthy and mutually beneficial relationship between independent dealers and the OP manufacturing community. Much time was spent in the early years to establish and foster these partnerships and CEO Jim Preston now describes relations with its vendors as "for the most part very good".

 

In the BPGI hot seat since 2002, Preston has seen firsthand how consolidation has concentrated purchases through the evolution of the power channel. "But," he says, "most vendors have recognised that they need a healthy independent dealer channel to get their products to the mid-market."

 

And it’s a good thing that they have, particularly at this time of growing private label penetration. Says Preston: "The power channel has moved dramatically in the private label direction to increase awareness of their own brands and improve their margins through cost reduction. One of the key questions now is: How does the vendor community intend to support their own brands?

 

"Independents have traditionally been the greatest supporters of manufacturers’ brands. If vendors don’t step up and support independent dealers’ initiatives to sell their brands in a competitive marketplace, their last supporters will move on."

 

The second core issue for BPGI at present and going forward is pan-European pricing, says Preston. "The variation in prices charged by vendors for the same products in different European countries is huge and unsupportable. Differences of 45-60 percent are not uncommon.

 

"When Europe was a series of independent markets, this strategy allowed vendors to profitably support separate organisations and overhead structures in each country. These days are gone with the creation of the European Union and a pan-European power channel. Independents cannot continue to provide an ongoing source of profit for this pricing model."

 

BPGI now has some 30 preferred vendor programmes. Preston explains: "We are awarding contracts for manufacturer-branded contracts as well as private label and import initiatives. Importing provides purchasing opportunities and benchmarking that can be used to determine where pricing should be for manufacturers’ brands."

 

From an internal BPGI point of view, Preston’s challenge is to get all members to work together in a coordinated way. He says: "Our members understand the difficulties of a group such as BPGI and have committed to the ongoing measurement of their compliance and performance with penalties imposed where they fail to live up to the commitments. But we rarely need to use these measurements as members are 100 percent committed to BPGI and the task at hand."

 

The European angle: Ben Wensing

 

Europe has played a crucial role in BPGI’s development from the early days. UK purchasing organisation Europa was in fact one of the consortium’s founding members.

 

But BPGI’s status as a working, truly pan-European consortium effectively took shape following the merger in January 2004 with euro buro, BPGI’s European equivalent. Shortly after, former euro buro president Ben Wensing took over the reins as non-executive chairman of BPGI – and remains in this post today.

 

His efforts have included integrating all the various groups in BPGI and making sure they are all pulling in the same direction. Not an easy task, as Wensing admits. "A lot of work had to be done after the merger. The differences between groups in BPGI are big and the most important task was to make one group out of so many different organisations. This is still going on, but most groups are now really becoming a part of an international organisation."

 

With so many different cultures, languages and even currencies, any pan-European cooperation can be an uphill struggle. However, says Wensing, the power channel is facing the same fragmentation – the trials and tribulations of the OP big boxes in Europe have been well documented. But, he adds: "By nature we are more ‘present’ in the market with our local dealers. Still, quick gains are very difficult to achieve for dealer groups. We do not have the big capital to buy and decision-making is often carried out at dealer level or just above.

 

"But small gains turn out to be big," Wensing asserts. "Our knowledge of the local market combined with the spirit of cooperation put dealers in a position whereby they can compete on a national level. And BPGI can give those extra tools needed.

 

"Sharing best practice, comparing pricing, buying together in Asia – all these things matter and we are much further forward than we were, say, three years ago. We have a long way to go, but we also know that the power channel in Europe often faces the same problems. The advantage we have is that we can build on the entrepreneurship of independent dealers."

 

So what are the goals for a future BPGI – in Europe and beyond? It’s quite simple, says Wensing. "More cooperation, searching for what unites us rather than what divides us, playing our own game and not trying to copy others. There should be more bilateral cooperation in adjacent countries under the flag of BPGI, we should expand our continental deals and share best practices and other vital information so we can be the best partner for dealers all over the world."