The Competitive Advantage of Working With a Distributor
American Digital Security, a security dealer based in Liberty, Mo., specializes in alarm systems but sometimes is called upon to install locks for a customer. Because the company doesn’t install locks as frequently as it does alarm equipment, it relies heavily on its equipment distributor for advice on which products to use. The distributor also helps make sure American Digital gets all the parts it needs for a complete installation, explains Buddy Mason, president of American Digital Security.
“The only way to make money is if you have a complete bill of materials,” comments Keith Lathrop, business development manager for Kansas City, Mo.-based Midwest Wholesale Hardware, a door lock distributor that is frequently called upon by American Digital and other dealers to help determine the equipment needed for a job. Mason sees the help he gets from Midwest Wholesale and other distributors as a competitive advantage — particularly when it comes to bidding on jobs. “Nobody gets paid to put an RFP together,” Mason observes.
By leveraging a distributor’s knowledge, American Digital minimizes the expense involved in responding to an RFP while also helping to ensure that the quote is an accurate one that leaves American Digital an appropriate profit margin.
Some distributors have systems in place to help streamline the process for dealers responding to their customers’ RFPs. Rob Aarnes, president of Melville, N.Y.-based security equipment distributor ADI North America, notes that ADI offers a service it calls “project registration” which, as Aarnes explains, “allows projects to be registered with us in advance.” Project registration helps ensure that the dealer gets competitive pricing which, in turn, “allows them to bid more aggressively,” Aarnes comments.
Registering a project also helps ensure that when a project is won, all required equipment is in inventory and delivered to the proper location at the proper time, Aarnes explains.
John Krumme, president and CEO of Kansas City, Kan.-based Cam-Dex Security Corp., says working with distributors makes his company more competitive by minimizing his company’s inventory costs and by offering attractive payment terms.
“Some distributors offer competitive payment terms for large projects,” Krumme says. For example, Cam-Dex might be given longer than usual to pay for equipment used on a large project.
Longer payment terms are sometimes an option for ADI customers that meet certain credit requirements, Aarnes notes. One option is an ADI credit card that lets dealers charge equipment and pay off the balance at the end of the billing period. Dealers appreciate “the ability to get paid by their customers before they have to pay for the product,” Aarnes says.
Tony Sorrentino, president of Greenville, S.C.-based distributor ScanSource Security notes several other equipment financing options that may be available to security dealers — including leasing, flooring and assignment of proceeds.
“Flooring,” Sorrentino explains, is where a distributor introduces a dealer to a third party that underwrites the deal. Sorrentino likens that option to the deals furniture stores sometimes offer that let customers pay for the furniture on an installment basis, perhaps with the first six months interest-free.
“We can get pretty creative in helping to close deals,” Sorrentino comments.
The “Micro Integrator”
An important trend in the security business in recent years is the rise of the “micro integrator,” observes James Rothstein, senior vice president of global security marketing for Woodbury, N.Y.-based distributor Tri-Ed, an Anixter Company. A micro integrator, Rothstein explains, is a small company that does the sophisticated installations that previously were the purview of larger competitors. He says micro integrators often are run by people who previously worked for some of the larger companies.
Distributors help support micro integrators by handling some tasks that the integrators traditionally would have handled themselves. Rothstein points to Tri-Ed’s interoperability lab and vertical marketing programs as distributor-provided assets that facilitate the micro integrator business model.
Tri-Ed even lets dealers use its facilities. “Our office is their office,” Rothstein says.
Marketing & More
Other tasks that distributors may handle for dealers include in-person and online training (see “Distributors Add Value With Online Training,” on this page) and marketing services such as brochure design, lead generation, Web development and event planning.
Another task that some distributors handle for customers is to ship equipment directly to the job site — after first checking out the equipment to make sure that it is functioning properly. Distributors also may load software and program equipment such as video management systems, IP cameras, and other devices before shipping them.
Services such as these were particularly helpful for one ScanSource customer that won a big national account with multiple locations. “Instead of 18 boxes showing up at each location, we got it down to one or two boxes,” Sorrentino recalls.
Like other distributors we spoke with, Sorrentino notes that some of the value ScanSource provides is its industry knowledge — and that’s not just about products and technology, he says. For example, ScanSource employees are knowledgeable about various manufacturers’ dealer programs and can advise dealers about which one might be best for them.
Not all of the services that distributors offer are free. Distributors may charge for some of them, such as marketing services or equipment programming. But dealers may find that distributors offer better pricing than what is offered by other suppliers. And the more time and money dealers can save by offloading tasks to distributors, the more competitive their businesses will be.
SIDEBAR: Distributors Add Value With Online Training
When salespeople and technicians understand the technology they are selling, installing and servicing, it can go a long way towards helping a security dealer be more competitive. By taking advantage of training provided by equipment distributors, dealers can help ensure that employees have that understanding. And one of the easiest ways to get training when it’s needed is to use online options.
ADI originally created an online training program called “ADI University” for its own employees but the company is now launching an online training program for its customers. Dealers will be able to learn about technology as well as specific products, explains Rob Aarnes, president of ADI North America.
ScanSource also offers online training, including training on topics such as how to hire properly and the importance of cash flow. ScanSource President Tony Sorrentino notes that if desired, dealers also can access training videos through a mobile app that ScanSource offers.