Buying Groups: Strength in Numbers

In a tight economy, many distributors find joining a marketing group to be beneficial to their bottom line.

 Lighting Showrooms Buying Groups

Lighting One, which is part of CCA Global Partners – one of the largest privately held companies in the U.S. with 12 distinct businesses, 2,700+ locations, and aggregated annual sales in the billions of dollars – specifically targets lighting showroom owners. However, not every lighting retailer has the same type of operation.

Distributors whose products skew heavier toward electrical supplies might find a better fit with IMARK Group, a member-owned marketing organization made up of more than 1,100 independently owned electrical distributors throughout the country. Its membership includes 80+ members who are ranked among the top 200 largest distributors nationwide from over 2,000 branch locations.

IMARK Group, Inc. was founded in 1996 as the result of a merger between The Independent Electrical Distributors Group (TIED) and Western Independent Electrical Distributors (WIED). In 2009, it merged with the Equity/EDN marketing group. Membership includes electrical contractors, industrial and institutional MRO customers, electric utilities, as well as electrical distributors. As a member-owned group, it is managed by a board of directors composed of member executives who oversee the efforts of the lean headquarters staff. IMARK Group is an associate member of the National Association of Electrical Distributors (NAED) and the National Cooperative Business Association (NCBA).

Another prominent group is Affiliated Distributors (AD), comprised of independent distributors and manufacturers of construction and industrial products. AD has 618 independently owned members, with 3,605 locations, plus spans seven industries, and two countries with collective annual sales in excess of $26 billion. Specifically, AD serves electrical and industrial suppliers, plumbing, PVF, HVAC, drywall, and clean energy companies whose customers span industrial MRO and OEM, commercial and residential construction, utilities, retail, and government. AD’s Electrical division boasts 130 U.S. members in 1,118 locations and 52 Canadian members in 267 locations. It also accounts for more than $13 billion in electrical supply sales.

AD shares the same goal as IMARK in that it helps independent companies of all sizes to better compete with national chains.  In each of these groups, small business owners enjoy benefits that are comparable to much larger organizations because of the overall volume that the membership represents.

 

Many Advantages

One of the most attractive aspects of large marketing groups is the prospect of dividends and rebates. IMARK and AD negotiate rebates with each manufacturer member to come to an agreement that is mutually beneficial.

According to IMARK statistics, many of its members receive dividend checks that make up more than 50 percent of the member company’s net profits before taxes.

There are other financial incentives beyond rebates, however. There are programs that provide members with the opportunity to participate in insurance plans at competitive premiums as well as workers’ compensation coverage.

Some of the programs and services that AD and IMARK provide include: logistics help, data tracking, product training, promotion support, and peer-to-peer networking. Web-based educational sessions are another valuable tool that members of both groups can participate in.  They also each have an annual conference and host regular gatherings that keep a high level of interaction among members.

The Key Question to Ask

With all of these marketing groups, it’s not a matter of simply paying a fee and joining. Companies must apply for membership and their eligibility is evaluated on an individual basis.  “Each group also has different marketing tools,” explains David Gordon, president of Channel Marketing Group, which provides strategic and marketing planning as well as market research to manufacturers and distributors in the construction and industrial trades.  “And they both have planning prophecies that help company owners determine how to grow their respective businesses over the following year,” he says.

“The challenge is to look up the manufacturer line-up for the groups you are interested in and find out if you are already carrying some of the lines. If so, can you earn more on the rebate side by purchasing through the group than you could on your own? Another factor to consider is whether the [manufacturer roster] in these groups will introduce you to companies that you may not already sell,” Gordon explains.  “Ask yourself, ‘Will being a member make financial sense to me?’ These groups will also look at the volume of your business and will check your credit [while evaluating] your application. ”

If a lighting showroom is involved in energy-efficient product and just wants to join a group that can provide networking and good lighting training (as opposed to the expanded services of the marketing groups), Gordon suggests joining the National Association of Independent Lighting Distributors (NAILD).  Similarly, the American Lighting Association (ALA) is also a great resource for training and networking for distributors focused on the residential side of the industry.

 

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