Space is at a premium for any electrical wholesaler and any product that occupies that space has got to prove its worth and establish its right to be there. But what combination of features should make a distributor opt for one product or product type over another? And what kind of incentive should they expect from manufacturers to stock specific lines? Here’s what Phil Swales, Sales and Marketing Director of Electrak has to say on the matter.
The industry is increasingly demanding fast fit, plug and play products because turnaround times are often extremely tight and skilled electricians are in such short supply. There’s not much point in specifying a fast fit system, however, if the contractor then has to wait three days for components to be delivered. That’s why the ability to buy products from stock at a local distributor is so important to contractors.
We’ve certainly worked hard to develop our distributor network for key lines. We sell the advantages to the wholesaler market on the basis of cost, customer development opportunities and the benefits of building a close relationship with a key supplier. For us, the distributor is an extension of our sales team but a supplier/distributor relationship can only work if the supplier can give the distributor a tangible answer to the inevitable ‘what’s in it for me?’ question.
For starters, the supplier must factor in the need to maximise shelf space at design stage. For example, all our systems are modular which means that by stocking just a small amount of catalogue numbers, a distributor can supply its customers with everything required for a wide variety of installation needs. The packaging also needs to be designed to ensure that everything fits neatly and efficiently on the shelf. Suppliers can also take steps to help the distributor with order fulfilment and stock management by making it easy to recognise different products by their packaging.
Of course nobody expects distributors to stock a supplier’s entire range, but suppliers develop products in response to an industry demand so they can advise their stockists which products it is viable to keep on the shelves. In essence that should be fast moving products, and, once again, that means those that offer a fast fit solution. Why? Because, for the distributor, this translates to increased footfall from contractors and a rapid product turnover to justify the shelf space.
Close Relationships
One of the major advantages to stocking high sales volume lines is that contractors get into the habit of visiting their local distributor for items they need on site. In these days of next day delivery and rationalising the supply chain, the relationship between contractors and wholesalers can slip. If the wholesaler can supply fast fit products from stock, however, the contractor will come back for more of the same and will take note of what else is available through the distributor whilst on site.
It’s not just about the relationship between the wholesaler and their customer, however, relationship building between the supplier and the distributor also has an important role to play in maximising the benefits of keeping products in stock for both parties.
The reality is that suppliers are competing against each other for shelf space at distributors so they need to support their stockists to nurture their loyalty and help them generate sales for the benefit of both parties. For us, the relationship with a distributor is very much one-to-one. Our account manager gets to know an individual within the distributor and, through that relationship, gets under the skin of their business, knows what kind of trade they do, where they need to develop the business and, importantly, what we can do to help them achieve their business development goals. We bring that person into our factory so that they can really understand our products and the features and benefits we offer to the contractor. They meet the team and we train them, on an ongoing basis, so that the distributor always has a member of staff that can offer the level of expert advice on our products that we would provide ourselves.
This method of handpicking a member of each distributor’s staff to be our ‘team member’ on the shop floor may seem to hark back to good old fashioned ‘you scratch my back and I’ll scratch yours’ business practice, but the advantages are clear. The distributor not only gets their person trained up for free, it also then has product expertise in-house that can be passed on to other members of the team. Moreover, such a close relationship ensures the supplier will always go the extra mile if a distributor has a technical query that needs sorting out, or needs a product in a hurry.
Taking Stock
Of course, beyond the first name terms and willingness to pull out all the stops if a distributor needs a helping hand, the relationship is about commercial returns, so it must be managed. Checking exactly what each distributor has on its shelves on a monthly basis may sound a bit ‘Big Brother’ but it’s not a heavy-handed tactic to breathe down their neck and put them under pressure to sell more. In fact, it’s simply good business practice and enables the supplier to offer additional sales support if and where it’s required. Perhaps even more importantly for the stockist, up-to-date stock information across the distributor network also allows the supplier to direct enquiries to distributors that have product in stock – a valuable source of sales leads.
Having accurate data on current stock levels also allows the supplier to set realistic minimum stocking levels for each distributor, which can often be the key to bigger discounts…..and higher margins. Certainly, in our case, distributors that adhere to our minimum stock requirements automatically qualify for significant discounts, and those discounts enable the stockist to price products competitively so that the contractor has no reason to go direct to the supplier. As a result, wholesalers are not just able to set targets and forecast margins more effectively they are also likely to benefit from increased sales.
Clearly, doing business that way is a commitment and the stockist does have to nail its colours to the mast, but compare it to the alternative route to market: the contractor goes direct to the supplier and the wholesaler misses out on the potential sale completely. Quite simply, keeping products in stock puts wholesalers at the head of the food chain when it comes to having customers pointed in their direction. After all, a supplier cannot very well direct a customer to their nearest wholesaler if that wholesaler doesn’t stock the product they’re looking for!
From Shelf to Site
Ultimately, for suppliers, ensuring a wide geographical spread of stockists with good stock levels makes good commercial sense. It also means that contractors can pick up the products they need when they need them. After all, its as inconvenient to the contractor as it is to the supplier for small orders to be supplied direct. What’s more, if the contractor can get the same product for the same price from his distributor, with the personal, accountable service that a face-to-face relationship brings thrown in, surely this will be his preferred option?
Read more about Electrak by visiting the Electrak website via the link below.