Issue link: https://www.e-digitaleditions.com/i/42495
MAP & MRP continued perspective. The problem is with their margins. When cus- tomers see these low prices online, they go to their regular distributor and say, 'hey, what's the deal.' "Then the distribu- tor is embarrassed and has to match the price." FEDA Board Member Jay Ringelheim, the president of Bridgeport, Conn.-based, Globe Equipment Co., is all-too- familiar with the ramifications. In a candid speech delivered at a MAFSI conference a year ago, he spoke about how Internet sales has changed the way many distributors do busi- ness. "The current generation of customer is transferring to the e-shopper," said Ringelheim. "There is no way to hide, as if I even want to hide. We still have lots of opportunity to spec- ify and quote product, and we find plenty of value poachers in our showroom, but no longer does my customer need to ask a local competitor to stop by to get that second price. They simply Google the manufacturer name and model num- ber and zoom, there goes my gross profit. They still come back and offer me the opportunity to meet the price. A face and name gets me that second look. "Outside of the competitive disadvantage of a 6 percent Connecticut sales tax (my out-of-state competitors don't have), I now need to subtract all the services that we normally provide. This becomes even more of a problem with legacy customers, the ones who have been my mainstay for the last 15 years or more. They often look online to shop and pres- ent me with an opportunity to meet the price. If I agree to meet the price, then I need to discuss the add-on for freight, generally not shown until checkout on my competitor's site. (They never got that far.) The delivery method is by common carrier, with no inside delivery, removal, or credit. Suddenly, I have become the bad guy. This is evident by comments such as 'I've been buying from you for years and you won't even put the piece in my kitchen?' 'And now my credit is no good?' This creates quite a challenge for us." Four years ago, ITW responded with an Internet-only MRP policy. "We had heard a lot about MAP pricing and MRP pric- ing for a number of years, and really it was the growth of the Internet that influenced our decision to put one in place," says Tom Szafranski, the president of ITW Food Equipment Group. "On the one hand, we had dealers invested in brick- and-mortar buildings and showrooms, stock and a trained sales force. They were out there specifying and generating business for us, but the advent of the Internet made it possi- ble for other dealers to bypass all of that investment. Therefore, there was a need to have something in place to help pay for that investment." The supplier's MRP policy covers Hobart, Traulsen, Vulcan, Wolf and Berkel brands. ITW requires a stated percentage per brand above dealer cost, says Szafranski, reiterating that the policy only applies to Internet sales. "Dealers can set their own price in their place of business, out in the field, on the phone…, but in the highly-visible arena on the Internet, we feel our pricing needs to be in a place consistent with our brands," he says. September/October 201 1 33 "We had heard a lot about MAP pricing and MRP pricing for a number of years, and really it was the growth of the Internet that influenced our decision to put one in place." Tom Szafranski, President, ITW Food Equipment Group Feedback from the dealer community has been lopsidedly supportive. "I've been in the industry 27 years and I know that you're never going to please 100 percent of the people all the time, but this is the closest I have come to introducing a policy that has become unilaterally accepted and praised," says Szafranski. "We've seen the Internet business take a slight step back, but that has been more than made up by business through tradi- tional methods." The Wave of the Future? To be fair, change has not come without substantial pushback continued on page 34