Buying Groups Can Help Distributors Earn New Business
Longtime members of jan/san buying and marketing groups tout the benefits of belonging to an organization that has their best interests in mind. Such groups take advantage of the collective strength of their members to offer better buying power, discounted pricing and lower freight minimums. But today’s buying groups focus on more than just product pricing; many offer access to private label products, diversified lines and national accounts that can help distributors win new customers and grow their businesses.
Belinda Jefferson, president of Hercules & Hercules in Detroit, says her company became a member of the Dulles, Va.-based buying group NISSCO about 25 years ago.
“We joined because the group offered penetration into areas where we didn’t have exposure, and it gave us leeway into manufacturers’ lines that we didn’t have before,” she says. “It also provided an opportunity to speak with like-minded people: small, independent jan/san distributors.”
Jefferson estimates that her customer base has increased approximately 30 percent as a result of the company’s membership with NISSCO.
With competition from big box stores, coupled with a sluggish economy, more and more distributors like Jefferson are turning to buying groups out of necessity and reaping the rewards of an organization whose whole is greater than the sum of its parts.
A Private Matter
One way in which buying groups are helping distributors win new customers is by offering private label products — although not the private label that most people think of.
Paul Lemieux, CEO of Pro-Link in Canton, Mass., says when people hear “private label” they conjure up images of a generic product of inferior quality with pedestrian-looking labels.
“That’s not what Pro-Link means by private label,” says Lemieux. “[Our line] has a consistent look and feel across all the categories that jan/san distributors sell, and it has strong collateral materials that go with it.”
Phil Consolino, president of Atlanta-based Southeast LINK, has been a member of Pro-Link since 1984 and says that access to the Pro-Link brand of products is one of the group’s greatest offerings.
“Pro-Link considers every aspect of the cleaning supply products we distribute, and develops the brand identity in each of those categories. They give us a cohesive bundle of a national brand product offering,” says Consolino. “It frees up our time to concentrate on growing the business instead of developing products.”
Alan Sadler, president of Triple S in Billerica, Mass., also shuns the term private label and prefers “national proprietary brand” to describe Triple S’s line of products that offers members a competitive edge by providing exclusivity in the marketplace at an affordable price.
“If you’re in my market and you see the Triple S brand, you know you’ve got to go to Kenway to get it,” says Ken Crutcher, president of Kenway Distributors in Louisville, Ky. “And if someone moves into this market from another region, they’re seeing the same brand they’re used to seeing elsewhere.”
In addition to private label products, some buying groups offer diversified product lines, such as safety and foodservice supplies, that can expose distributors to new markets they wouldn’t have considered otherwise.
For example, members of Cincinnati-based Distributor Partners of America (DPA) are now competitive in municipal bids because they can sell cleaning products, but also offer safety products, says Zachary Haines, DPA’s executive director.
“It’s opening them up to a new world of customers that they didn’t know existed before,” he says.
Brian Magazine, owner of Gem Chemical Co., Evansville, Ind., is one DPA member benefitting from his buying group’s diversified product lines.
“My core business is floor finishes,” says Magazine. “I probably would not diversify into some of the segments I’m in if it wasn’t for our buying group and its leadership.”
By offering safety products alongside traditional jan/san supplies, Magazine was able to offset the reduction in cleaning consumable purchases during the recent recession.
“In today’s economic environment, it is imperative for groups to offer their members alternative channels of distribution,” says W. Michael Wilson, director of marketing, AFFLINK, Tuscaloosa, Ala. “By providing them a low barrier of entry into non-traditional channels like packaging, safety, office supplies and MRO, you’re providing real value with a well-established supplier base and programs designed to tap these markets with minimal investment and maximum upside.”
Offering more product lines will not only help distributors land new customers, but also prevent current ones from shopping elsewhere when non-jan/san supplies are needed.
“As the saying goes, it’s easier to keep a customer than get a new one,” says Wilson. “And by that rationale, it’s all about account penetration. The more hooks a distributor can get into an account, the more profitable they will become. It will also make it much harder for that customer to shop [around].”
Distributors are also relying on buying groups to reach new customers outside of their primary geographic regions.
“We help distributors by becoming the central point of contact for national or multi-location accounts,” says Sadler. “If all the products presented to national accounts are in our regional distribution center, then every member has equal access to them at an equal punch point. It puts us in a position to go to a national account and quote a national price, knowing those goods can be delivered.”
Some buying groups, such as NISSCO do not have direct national accounts, but they do provide a platform for members to support their national account activities.
“When a distributor’s business falls outside of their primary geographic area, we can arrange for partnerships across the United States for in-service on their business,” says Mark Bozich, NISSCO’s president. “For example, we have a distributor in the Midwest that has a chain of stores expanding from Maine to Seattle. That’s a big area for a Midwest distributor to cover. We’ve formed partnerships with other NISSCO members that will do the in-service at those 14 sites, and I bridge that relationship between our Midwest distributor and the other seven distributors assisting him across the country.”
Consolino sees national accounts as a means of delivering business to distributors as well as keeping existing business.
“Our relationship with Pro-Link does two things,” he says. “It helps us expand and get new customers, and it also helps us protect our business. If we have a customer locally, but their corporate office requires working with one supplier nationwide and is located in another state, that can complicate matters.”
But through the buying group, Consolino is able to continue working with the local customer while Pro-Link and other members handle the corporate office and other locations.
“If we didn’t have that relationship with Pro-Link, we might be vulnerable to another national organization taking our business,” says Consolino.
The Power of Peers
Exclusive products and new lines are an important component of growing a distributor’s business, but buying groups urge members not to overlook the value of training and networking when pursuing new customers.
“Aside from tangible savings, the benefit of being a member is the networking that goes on at the annual conference or while in the group,” says Haines. “You meet other distributors like you, and you share best practices.”
In fact, networking with other members can be one of the most valuable benefits of belonging to a buying group.
“As an independent distributor, to grow your business you’ve got to have strength in numbers,” says Crutcher. “You’ve got to have the relationship of other members around the country. It’s been instrumental to our growth and success.”
Kassandra Kania is a freelance writer based in Charlotte, N.C. She is a frequent contributor to Sanitary Maintenance.