Dealing with Equipment Distributors

      Here's a long, lively, and sometimes contentious thread about the middleman's role in the machinery market. April 29, 2012

Question
A bunch of us are about to make the pilgrimage to the annual woodworking show. We'll all get to see the latest and greatest gizmos for our industry. We already know about some of this stuff because the trade journals have been advertising it. We'll probably see some things we've never heard of before.

My question now is about what happens afterwards. More specifically, what is the role of distribution in actually selling the merchandise we learned about at the show? Many of these items are sold through distribution, i.e. some independent firm learns about my interest and tacks $800 on for the phone call and what could have cost me $2400 now costs $3200.

I wouldn't have a quarrel with this if maybe the distributor invested some shoe leather to let me know the product existed or looked like he would actually be competent to answer questions or solve problems, but if his role is only middle man, I would prefer the lower price.

How many times has anybody on this forum actually learned about a new product or process directly from the distributor? How many times when you needed service did you have to contact the manufacturer directly or solve the problem yourself? How many times was this distributor useful after the sale?

Would you rather be able to access better videos or website photography to learn more about features or training or would you rather get this training directly from the distributor? How many times have you ever met a distributor who actually knew more than you did? How many times has a distributor actually added value to the sale?

The distributor business model is very old and probably the best vehicle for connecting with purchasers in the past. Has this model changed in the day of forums, websites and video? How much more inclined would you be to actually make a purchase if the price was 25% to 30% less?

Forum Responses
(Business and Management Forum)
From contributor A:
I have absolutely no use for so called machinery dealers for the very reasons you have just outlined. There is not one piece of machinery I've ever purchased that a dealer has ever pointed out to me. I've found it on my own by either going to IWF or AWFS. And then only after talking with one of the tech reps for the company, so I could really get the lowdown on it and why theirs might be a better selection than a different machine, then I would make my choices. I knew more about them than any dealer out there, as well as why I chose one brand over the other, by the time I made the decision to purchase it.

My last major purchase was in Dec. of 09 and after making some inquiries with the importer, after already having talked with the factory itself, they decided to pass my name along to two different dealers of their line. Both these guys walked into my shop thinking they were going to just throw a contract down in front of me and walk away with their 15-18% commission. Fortunately I was able to play these two guys off of each other and I think they both still think I bought it from the other guy, but I called the importer back and said if he was going to force me to go through one of these guys he was going to lose the sale.

Seeing as not a lot of machinery was being sold towards the end of 09, the importer dealt directly with me and what was going to cost $47,000 ended up running me $39,400 delivered.

The point being, if you know what you want and know what your options are, if the dealer doesn't want to work with you, there is a lot of money to be saved. Be firm and let them know you'll only deal direct because you found them and you expect to get dealer pricing because of that. You may be surprised.

The old distribution model is crumbling with the downturn in the economy. The exception is the German companies. They still hold dear to the notion that a sale has to go through a manufacturer's rep.



From the original questioner:
One of the problems with buying through distributors is that they don't often provide continuity from one year to the next. CNC machines, etc. are constantly being represented by different distributors. One company has the brand for a couple of years, then because of a change in strategy on the part of the manufacturer or distributor, somebody else is repping the next year.

What happens if you need service on a big machine when the franchise has traded hands? The new representative might check in on the problem, but quickly realizes he's not going to sell you a new machine and he didn't sell you the old one so… Good luck, best wishes, hope you get it figured out!

I say the machinery companies should sell the product direct. If they won't, I am positive somebody else will.



From contributor D:
I haven’t had the pleasure of meeting a machinery dealer who was an expert in any anything (ever). It’s a peculiar and messed up way to outsource the sale of an expensive and in many cases technical product. What are manufacturers thinking?

With that said, I faithfully attend the show. I look at it as a place to compare various equipment without jetting all around the country, or in some cases, the world. I have access to technicians, owners and engineers all in the same place – how great is that? I also get a chance to see people I haven’t seen for a year or more.



From contributor L:
I've never met a distributor's salesman that knew as much about his product as I did. I really hate it when I ask them a question and the try to bluff their way through, lie, or say they'll get back to me. Their technicians are the jack of all trades types - don't bother with them. All but one factory technician that I've had here has been excellent. I don't see any point in the distributor model.


From contributor M:
I agree, no one likes salesmen. Before the internet, distributors were needed, but today they are nothing more than middlemen taking a piece of the pie at someone else's expense.


From the original questioner:
A lot of the reason for why we do things is because this is the way we did them in the past. The distributor model was the absolute correct approach for many years. The manufacturer needed boots on the ground to get the word out to the marketplace. The world changed. Today we have video. If I wanted to bring a product to market I would focus on things that added value rather than things that just added cost.


From contributor L:
How about everyone here send this thread to an equipment manufacturer?


From contributor M:
They would ditch the distributors and sell the product themselves at the same price and keep the extra profit for their troubles. I know I would.


From contributor L:
Perhaps, but it would still be better! Competition may alter that too.


From the original questioner:
You can buy a lot of video for one salesman's commission. Primary difference being that video works 24/7, forever.


From contributor S:
This is surprising, coming from a bunch of guys that have been willing to pay no-discount controlled prices like Festool for years. Now you're concerned about the distributors? Give me a break!


From contributor J:
Show me a dealer making 25 to 30%. I would like to visit them so I can improve our bottom line. We make very small margins on new machinery and should something be wrong after a customer receives it and we have to make a site visit, many times we lose money on the sale. J & G is a dealer that offers a full range of services. We have 2 spare parts advisors and 5 technicians. This doesn't come cheap. Our 50 years in business has allowed us to carry the better products in the marketplace and help our customers make good sound decisions when purchasing a machine. We stand behind everything we sell. So don't put us all in your same sour grapes basket. And I would like to add, we do not mark up products to make profit. We work off the resale discount the manufacturer gives us to put a sales force on the road. So whether someone uses their own salesmen or dealer salesmen, somebody's getting a paycheck. A good dealer salesman will pull in the manufacturer when the time is right. To me that is double the insurance on a purchase and you need that, especially in a big purchase like a CNC router or edgebander. A direct seller typically is after a quick sale so he can move on to the next customer. We have to come back and see you on a regular basis.


From contributor M:
This is the reason no one likes salesmen. You are going to try to tell us you don't make money on sales? I have heard it from every salesmen I have ever talked to. This is the business forum! We have heard all the sales pitches before. I don't make any money off of woodworking, I make it on delivery. Does this sound believable? If it were, I would go into the delivery business and close the shop!


From the original questioner:
I am not saying that the dealer makes 25% profit. I am saying that because of his involvement the price to the end user is at least 25% higher. If the price was lower, we would buy more.

I would not have a quarrel with paying more for the dealer's services if there was actually some service involved, either before or after the sale. Every machine I have ever purchased was based upon research I personally undertook. After doing my homework and finally pulling the trigger on the decision is typically when I get to meet the dealer, not before.

Whenever I have had to solve a problem it has always involved me and factory tech support direct. The only role of the dealer in these cases was to write up the order. I would rather have the lower price.



From contributor L:
What is a spare parts advisor? The problem with dealers/distributors is they carry a wide range of equipment, supplies, you name it. Typical Jack of all, Master of none. The manufacturer's techs know their product. A dealer's tech can't know all their products as well. On major machine purchases the dealer just writes the order. I've never known a dealer's salesman that really knew the machine he was pushing or how it compared to the rest of the market. That function has to be filled by the purchaser or he will end up with what the salesman wants to sell, not the best fit. It's always interesting when a salesman has called on me for years and tried to sell one brand or another as being the perfect solution, then next year be representing another brand, and it has become the cat's meow. No, I don't think dealers make big money - I just don't think they bring anything to the table for major equipment purchases.

When I've talked to the manufacturer's techs at the big woodworking shows, they've been very knowledgeable and straightforward. Can't say the same for dealers' salesmen. If you stop and think about it, it's not likely to ever be any different.



From contributor C:
Contributor J, you stand behind everything you sell? Seriously, what else would anyone say? Come on! What really is there to stand behind? Weinig? Bosch? Tigerstop? Timesavers? Gee, thanks. I don’t need any sales guy standing behind anything I’m buying from a reputable manufacturer. I have to say, you didn’t sell me on that one.

You have technicians… If you’re a machinery repair guy, that’s awesome. I’d prefer to deal with the manufacturer directly. However, I’m sure there is a need for mechanics to repair older, foreign and obsolete equipment. So noted.

Again, come on. “We don’t mark up products to make a profit.” Neither do car dealers. Where are you trying to lead people with that statement? For the record, are you denying that new machinery margins can be 25%? This is a perfect example of why there doesn’t need to be a middleman in the equipment business.



From contributor I:
Are we beating up the local guy who fronts the cost of a store, equipment, parts and employees? Is the ability to be face to face with our concerns worth nothing?

I know that getting a tech from LA to Las Vegas is $2000 followed by $200/hour for actual work! I prefer the local guy whom I know and have a relationship with. On occasion he has said "you need the factory tech." The local people have overhead like anyone else.

Who of us would work for 25% over the cost of our materials? I certainly would not! If we apply the same logic to ourselves, our customers would just call China and their rep would come by, measure and direct ship. Their crew show up and install. Think of the money we would save…?

For you , the dealer or myself to stay in business, we all need to bring some value to the market. Or we will be done. I understand the frustration of being in a retail store/dealership and all the salesman knows is the name of the company. That's just opportunity for the competition to take their business. The best salesman I have known were not order takers, but great sources of information. They helped me solve my problems with their knowledge and skill. Those I was glad to see!



From contributor Y:
I think this same theory also applies to our market in selling our own wood products. We have found in the last 3 years customers want to save money, and if they can buy direct, that's what they want. We used to sell our wood products through middle people in larger markets. Now we find most of the builders or clients find us direct and do not care to pay the middle guy. I don't mind paying someone a commission if they add value, but most don't. I have to agree with this post in general; I would buy direct if I can save, and most distributors don't add much value. Even in our plywood and consumable distributors, most call us every week to sell a unit of plywood, but when there is an issue, they skirt the problem. We started buying direct from the imported on our plywood - same stuff, less money.

The logistics are a little more cumbersome, but the bottom line is what counts. People in this country need to look better at the bottom line and what they get for their money. This is why we are in the mess we are in. In a free market the consumer will dictate what works or does not work. Now if we could just bypass the middlemen government bureaucracy of this country, we might see some positive change.



From the original questioner:
Monday's NY Times reported on a campaign by the Vatican "to bring its evangelizing message to an Internet-using audience…" The hopes are that it will "improve internal communications by letting various departments know what one another are doing and help provide a more coherent message." If the Pope's chosen path is going to be YouTube, doesn't it make sense that the machinery dealers do this too?


From contributor S:
I have to say some distributors will work with you. I bought a Saw-Stop 3 weeks ago. There are 3 dealers in my area. It is a price controlled item, and they told me that first thing. I asked all 3 dealers the same question - what about delivery? My shop is at my home and it involved moving the saw 60 feet down a brick path, turn right, go up a short step, and another turn and up an 8 inch step into my shop.

Dealer #1: "Everybody picks them up here at the store; we don't deliver."
Dealer #2: " We could probably arrange delivery for an extra charge."
Dealer #3: "We will deliver it and set it into the mobile base in your shop."

They all charged the same $5400 for the saw and accessories. Dealer #3 actually has an in-house repair facility and does open, check and align before delivery. Care to guess who got the order?

By the way, if you are considering one, forget the "professional" model. Look inside and you'll part with the extra bucks for the industrial model. They look the same from the outside, but there's a world of difference in the internal construction.



From contributor G:
I have purchased equipment from contributor J at J and G Machinery and I will say he and his team did a great job and they do stand behind their sales. I had an electrical issue with a switch when the delivery came and he had new parts and techs to walk me through the install in a matter of a day and a half. All of which was covered under the used machinery warranty they offer. They have great service and you have peace of mind especially when buying used machines.


From contributor W:
I, too, have had quite a bit of experience dealing with equipment vendors over the two decades I've been building furniture. I'm a custom furniture builder and I upgraded quite a bit of equipment recently. I used many online forums, online bidding forums, online brokerages, and online what have you. In this latest purchasing spree, I bought four machines and have tried to do business with more dealers than I can remember. Just imagine how many of them stopped communicating with me once I asked real questions. Or how many said "we don't have that machine on-site" because they were brokers, at best, and had never seen, touched or operated the machines they were selling.

I've finally found one that actually knows their equipment and in every dealing with them, they clearly care about their customers. They were willing to match a competitor's price and their service has been excellent.

When my latest equipment purchase, a 1450 lb planer, arrived as a drop ship from the manufacturer, it had significant hidden damage that I only discovered when I began to move the planer into my shop. The pallet jack wouldn't fit under it and when we looked, the motor had broken free of its mount and was hitting the concrete, two castings were shattered, and the table was floating free. Ouch! All of this damage was hidden and it was clear that enough things were bent that I didn't want to repair the planer. I wanted a new one and I wanted it now!

J&G Machinery immediately went to bat for me, asking me to wait while they worked out a replacement rather than going through weeks of shipping parts back and forth and years of struggling with the ongoing issues of bent and misaligned parts.

Within 24 hours of receiving my plea for help, a replacement planer was on a truck, 3000 miles away, and arrived at my shop exactly seven calendar days later, as promised. I'm in Fort Bragg, CA, which is a tiny town on the northern coast of California and 2.5 hours from the nearest freight terminal. The dealer, J&G Machinery in North Carolina, has been the exception from the very beginning. The salespeople have been in the industry for decades, and they never tried to shovel even the first piece of BS past me. Man, that certainly hasn't been my general experience. But they have been exceptional and noteworthy. They're large enough to stand behind their products and small enough that the receptionist remembers my name and makes sure I'm taken care of.

Yes, I know that what is expressed in this thread is generally true, especially when it comes to knowledge and follow-through. But these guys are the exception. I've never met them and I'm 3000 miles away from them, but they are real mensches and if they don't know something, they have taken the time to contact the manufacturer and find out very detailed information for me. In one case, they found out about the different levels of parts being manufactured in Taiwan and China and determined which grade of part was being used to build the type of machine I wanted. They were also happy to recommend a planer which wasn't the most expensive but seemed to have the best resources and reputation for the kind of service I required. I couldn't ask for any more than that.



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