Issue link: https://www.e-digitaleditions.com/i/72524
The President's Message A Slippery Slope for All Involved A s always, change is afoot in our industry. This should come as no surprise, as there always has been change and there alwayswill be change. However, there have been a few recent moves in our industry that I thought our membership should be aware of. In this article, I am going to write about one of them and will save the other issue until the next edition of News &Views. A prominent member Brad Wasserstrom, President The Wasserstrom Co. BradW@wasserstrom.com once the precedent has been set, this practice could spread. However, there is certainly a slippery of FEDA was telling me that a distribution entity that his company servic- es (that is owned by an end user and solely sup- plying the end user) has been awarded member- ship into a buying group. This can occur in the franchise setting when either the franchisor or a group of franchisees set up their own distribu- tion entity to handle various products for them, not just supplies and equip- ment.These distribution entitiesmay be amember of a buying group or the enti- ty, itself,may be a buying group. When amanufacturer decides to sell directly to these distribution entities,disruption to the supply chain can occur on a number of levels. On the surface, FEDA members are If more and more end users are able to some way gain direct access to the products that dealers offer, the market shrinks and there could be fewer dealers left to sell to. slope here for participatingmanufactur- ers as well. If more and more end users are able to some way gain direct access to the products that dealers offer, the market shrinks and there could be fewer dealers left to sell to. With fewer dealers and more direct sales, manufacturers, the distribution entity, or both, will likely be burdenedwith the addi- tional costs of services that dealers currently perform. Manufacturers consistently tellme they do not want to take on the functions (and costs) of credit, war- ranties, installation and additional inventories, among others, but selling direct to end users, or their buying/distribution entities, will unquestionably bring those costs along with the sales. I do think every dealer/distributor the potential big losers. Obviously,we stand to lose business as these end users are now able to buy equipment and supplies on a direct basis through these distribution arms. Whether this approach succeeds or fails will depend on whether the distribution entity can give the end user more value and serv- ice than the dealers can. That is what competition is all about and the dealer has the expertise and tools to compete and bring added value and service to the customer. Personally, I fear that 4 FEDA News & Views needs to do everything they can to deliver value to their customers. If we all take care of our customers—offering quality products, great service and do so at a fair price—there is no economic incentive for end users to find more direct means to access the products they need. Where will this path lead to? Will a significant portion of our industry's vol- ume be shifted to a self-buying model because these end users have been given enough tools to disintermediate dealer/distributors out of the supply continued on page 32