Wholesale Dilemma, Suggestions Anyone?

[jdpetey]

We have a situation with a wholesale customer that I would like some input on.

Everyone surely has dealt with wholesale customers who perceive their business with you as more of an “I’m doing you a favor by buying from you”, rather than, “We’re both helping each other out.”

Meanwhile, they are only doing business with you because you are doing things that other dealers would not even consider offering.

Well, I’ve got one of those.

We have bent over backwards for this particular customer over the years, but often times, it has come with a lot of aggravation.

We are a small dealership and maintain a very modest amount of wholesale business within the outskirts of the Pittsburgh metro area. There are several large wholesale dealers in the area, but many cannot offer that ‘Johnny on the Spot’ service that we can.

On a monthly basis, sales to this customer are not overwhelming, and are usually based on the fact that the parts could not be purchased aftermarket. If anyone saw the numbers they would agree.

It’s an independent shop, whose owner has done a successful job of establishing his business. I respect that, but unfortunately, he has also developed an undesirable persona to deal with.

I do not feel that he recognizes, nor appreciates the effort that we put into enabling HIS SHOP to be productive. Taking our services for granted seems more befitting.

We absorb all the expenses when obtaining parts locally when we don’t have the parts in stock. I do however have a wholesale discount structure that is different than the manufacturer pricing tables to accommodate situations where we have to obtain parts locally, and at the same time charging the same price for parts that we have in stock.

After today, I would like to discontinue kissing his ass. How to go about it without being completely impolite is the question.

The most subtle way that I would like to ‘open his eyes’ would be to decline picking up parts for him that we would have otherwise done in the past.

This is one of the bones of contention, as his advisors harangue us in regard to ETA’s.

“We could have it in the morning.”
“XYZ dealer down the street has it”, go get it.
“We’re not heading in that direction”, etc.

Don’t get me wrong, I want all the business we can get, but not problem childs.

Whatever it takes to get him to come down off his cloud, and have more respect for the effort, AND EXPENSE, we incur to do business TOGETHER, is what I would like to achieve.

When he realizes how much it will cost him to pick up the parts himself to keep his shop flowing, and attempts to get the same service from someone else, to no avail, he may reevaluate.

Otherwise, good luck to the other dealer that picks him up as a new customer.

I mentioned this to my wife and said, “If he would quit being such an a-hole, we could probably continue to do business.”

Her reply was, “It doesn't sound like that’s going happen”.

Thanks in advance.
jdpetey

[cville1987]

I would contact the owner and just tell him that due to the rising cost of doing business, that you can no longer afford the expense of fuel and absorbing the mark up from other dealers in order to provide him with same day service. Explain that virtually all GM parts now arrive overnight and that you would be happy to continue doing business with him but all parts will be obtained from GM in the future and will be promptly delivered on arrival. I've been through this, my old boss hated wholesale and raised the prices on all wholesale customers. My best customer got mad and started using that big wholesale dealer but after about a month he came back complaining about how the big wholesale counter guys couldn't look parts up to save their life and he only got a 10 and 2 delivery and if the parts were wrong which they usually were, he had to wait until the next delivery. My abilities, personality and promptness won him back at the higher price. There is still value in customer service. If you lose this guy then so be it, doesn't sound like it's really worth fighting for. Let him do what my guy did, chances are he will come back and agree to your terms.

[scott2112]

Cville is correct. Our expertise has value. Sadly, with GM making it more difficult to obtain parts more cheaply without penalty, it has forced us to rethink wholesale. There is no need for me to sell you a part @ cost plus 10-15% and let you make all the mark up. I will gladly split the difference with you and we both make money....so cost 40-50% and no delivery. You will find that shops will come back to you, if you have personnel like Cville giving accurate and timely service.

IMO, my discounts are based on what the account has spent in the last two years. I have service customers that buy more frequently than many of my wholesale accounts and they dont ask for a discount. So, just because you work on cars or have a shop doesn't automatically get you any wholesale rate. It's a new world....buy more save more.

[GM2FOCUS]

Many body shop owners/managers have one leg caught in the insurance company STEEL trap of cycle time. I have fielded that Friday afternoon at 2:45PM call, " I gotta have this emblem, applique, protector film, etc, and I gotta have it now as the car is promised to go today by 5pm". Funny, I did not sell any other Rendezvous parts this year??? This same guy is the one that will order a Headlamp and STEAL an adjuster or harness off of it then return it as new unopened in the box because that component is unavailalbe seperately from the OEM. I have also been a casualty of the order it from three dealers and whoever gets here first gets to keep the sale. Thus I started factoring return percentage into my discount structure years ago. These real life good hands, on my side experiences have taught me that these customers are not like a good neighbor, and my best strategy is to get my STIHL saw out, create a little mayhem and cut off their biz.

Good Luck!

[erikw]

The dealer I work for used to sell 1.2 million per month and never made a profit. Also had to take a 300K inventory write-off for all the garbage that wholesale accounts stuck him with. I slowly but surely ran all of the problem accounts out of the dealership over the last four years and recently cut our delivery area down to a ten mile radius.
We are on pace to have the most profitable month in the departments' history because we are now focused on retailing product. Ninety-nine percent of what we sell to the retail customer never comes back into the inventory. Can you say that of your wholesale customers?
I have been able to cut expenses by more that 200K per year and we make more money. We are actually producing NET profit for the dealership by selling half of the parts they used to.
In fact, the owner stuck his head in my office a few weeks ago and said, "Not much wholesale sales anymore, but profit is up." I reponded, "Yes. Sales are down and profit is up." He then said, "I tried it the other way around but it didn't work out very good. I like this way better."
I still wholesale 70 to 80K per month but on MY terms. No returns after 30 days. All special order parts returned WILL be assessed a service charge of $15.00 or 15%, whichever is greater. Any charge account that goes past 60 days is immediately converted to a cash account. Any account that goes past 90 days is sent to the lawyers. Parts are to be inspected upon delivery. Once my drivers leave the premises there are no claims for damaged goods.
Inventory is 98.9% under nine months and has been for over three years.
These terms also apply to our own body shop. We have been babying these wholesale accounts for so many years that they EXPECT us to bend over backwards for them, eat all of their mitakes and THANK them afterwards. No thanks.
Just my opinion, of coarse.

[Richard]

In the past, I've fired many wholesale customers. Return rate over 20%? You're fired. Stealing pieces from an assembly and telling me it came that way? You're Fired! Telling me that XYZ will be them a better deal? Have fun with that.
Buying parts from another dealer and trying to return them to me?

I have some great wholesale customers. I also have some world class idiots. I have one right now I've begged to stop calling me; but they have a fleet acct deal that the owner signed that we're stuck in, even though they buy 80% of their stuff from another dealership if we don't stock it. I told my guys just not to have anything 'in stock' so they will just go away!

[Denise Trimble]

If you respect his ability to be a profitable businessman, it should be no problem to sit down with him, explain your "New Program" as well as price & delivery structure. This is an opportunity to show him his statistics with you as a provider; ie: return percentages, etc. ,then put the ball in his lap whether he is on board with your "New Program" or not.

No cooperation, fire them as your customer. Sounds like you are already compromising the best you can, and beyond.

[jdpetey]

Thanks for the input.

I like the 'Fire the Customer' option.

I also like the 'not in stock' option, as an appetizer.

I'm sure that we're headed for a collision, but my foot will be on the gas and not the brake.

I will do my best to maintain an ethical approach.

jdpetey

[GM-gta]

Do you just want him to be nicer to you or is it the price he is paying?

As i don't think hell has a cold front coming.
If you are happy with the price some customers are just not easy to deal with, if its the price adjust it if the customer does not think the service is worth the price they will move on.
If they want something right away and you do not have it you can give them options, Wait till it comes in, pay for us to express it, pay for us to go pick it up.

They will for sure have a problem when you make the change but if you call and let them know they will accept it eventually. Just be ready for them to hold you right to what you say when they are paying extra for it.

[dbuck]

are you better off with him or without him?

how much does he cost you above and beyond the expenses you already have if he didn't do business with you?

We fired the biggest (group of) shops in three counties after doing the math. The previous regime had given the store away with the discount, they were an extremely high maintenance group of shops calling on average every fifteen minutes ALL DAY LONG. Sometimes two people from the same shop would call at the same time for the same job. Constant need of 'emergency' purchases or deliveries beyond their normal delivery times, return rate of twelve percent.
I handed over my numbers to our group's fixed ops manager, let him do more math with everyone elses' numbers, and he figured we were losing 30,000 a year doing business with them as a dealer group.
We then met, showed them the numbers, and said to continue to do business in a manner that allowed us to be profitable their discount would be such, we would deliver twice a day, emergency purchases would include the increased cost. We kept it cool, told them we wished to continue to do business with them but this was how it had to be.
They went away as we knew they would, but we played it nice, and occasionally they call for something and we pretend we're happy to hear from them....except we don't have it in stock.

And I don't make a penny less in wholesale profit, my stock orders are half of what they were, my returns are a lot less, my damaged parts and write offs are a lot less, my gas bill went down, and my obsolescence went from 9 to 0 percent in the year they've been gone.