Wednesday, October 7, 2009

Distributor Direct? Is it really a good thing?

One of the reason many scooter stores are closing is the fact that both in scooters and parts many of the distributors are selling retail. You see it on Ebay, craigslist, mailorder, the attacks on the small dealer are evident everywhere. This is sort of the grey area of the industry and two of the largest distributors in the industry in general are now doing this. Magazines wont talk about it because they are in desperate need of ads so the industry continues down this path.

Desperate times many of these importers sell to consumers sometimes at the same price as stores leaving no margin for the US retailer. The loss of the small mom and pop shop is something the motorcycle industry will never ever recover from. Margins are already thin on the best known brands and getting thinner by the day on Italian and Japanese product lines. Meaning the entire industry will soon be Chinese.

When a dealer asks me what to do my biggest suggestion is that they start looking for another distributor. I'm probably one of the few not selling direct at the moment, but how much longer can that last when the entire industry is changing? Pretty soon all distributors will be selling direct including manufacturers. Usually if distributors sell at retail they sell at MSRP, not to undercut their wholesale customers, but thats not the case anymore. Our industry is run by a bunch rats right now who are only thinking of making a quick buck - screw the dealer - screw the consumer mentality. It is not professional or business wise to bite the hand that feeds them, but thats exactly whats happening to the small stores.

Given the level of information of many small business owners or the level of sophistication for internet sales and I will buy it from whoever has it mentality nothing will change. They dont do their research and the ones that do dont have the influence to stop it. Dealer 20 groups and Dealer Associations are loosing their power every year meaning that the bigger companies are getting bigger at the expense of the small guy.

It's a catch 22. Without the small dealers there is no industry, but since many of them are not buying it does not surprise me to see more and more OEM suppliers, helmet makers, and distributors selling consumer direct.

It's sad, but thats the industry we are in.

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