Vendor consolidation has taken you from valued client to just another number. What would you do?
Like most LBM pros of a certain age, you recall a simpler time when vendors took care of customers. And if they didn’t, the customer had plenty of options, and simply switched vendors. This still happens at your store, and with your customers. Sometimes you’ll gain a builder who’s frustrated with the service from your competition, and occasionally, unfortunately, you’ll lose a customer to the competition for the same reason. In your experience, that’s how it’s always worked, and in your view, it’s exactly how it should work. As you’re learning, however, consolidation among your vendors is redefining the customer/vendor relationship.
Here’s the story: for as long as you can remember, there were always two wholesale distributors in your market who battled for the same dealer customers. While their product offerings were similar, there was minimal brand overlap. On those rare occasions where they carried the exact same brand and product line, you and your fellow dealers were the beneficiaries of an inevitable price war. More typically, when choosing between product lines that are similar but not exact, you’ve still got some negotiating leverage—with price, or services, or both. And why not? After all, they want your business.
Your competitive reality changed about two years ago, when one distributor gobbled up the other. Now, instead of two vendors battling for your business, you have one who knows that you don’t have a lot of options. When the acquisition first occurred, you sat down with Susan, your longtime representative from the new, larger vendor. “Don’t worry,” she said, “I’ve always taken care of you. Now that we’re larger, it just means that our service and product selection will be that much better.”
Six months ago, when you called Susan to follow up on a shipment that was not only late, but also only about 85% complete, she said: “I’m so sorry, but now that we’re the only distributor serving this market, we’re stretched thin and we’re serving you the best we can.”
Last week, when you made yet another call to Susan to discuss the exact same issue, you learned that you no longer had a dedicated rep, and your call was added to the queue. “Thank you for your patience,” the recorded voice said, “as we give the customers ahead of you the same incredible service that you yourself deserve. There are…eight calls ahead of you.”
Meanwhile, the co-op and buying group that you also buy from have been urging you to take a fresh look at their offerings. And, of course, there’s the large national competitor who’s perpetually interested in buying your company. You’re not sure you like any of the options, but the current situation has become untenable. What would you do?
- MOVE ON. The loss of a dedicated rep shows how little the vendor cares. You have no choice but to leave and find a vendor who values your business.
- STAY PUT. Like it or not, the recorded voice telling you to hold is the new reality. If you want the convenience of your nearby wholesale distributor, get used to waiting.
- SQUEAKY WHEEL. Ask for a sit-down meeting with the vendor’s GM, explain your situation and your frustration, and ask to be treated like a valued customer.
- CASH IN. The market for established, profitable lumberyards has never been stronger. Maybe your frustration is a sign that it’s time to consider selling your business.
If you’d take a different plan of attack, email your suggested solution to James@LBMJournal.com. If we publish your reply, we’ll send you an LBM Journal mug.