Wednesday, March 9, 2011

Terms for Scooter Dealers

Most small shops don't realize how terms and open accounts work in the industry. Companies like Parts Unlimited offer terms and buyback programs because they have minimum costs of entry. Much like being a SAMs club member you have to buy in to get the discount and qualify.

A big company like Parts Unlimited its $5,000. MRP it's a lot smaller $500 a year, but the real benefit is for the Gold dealers get terms. Why terms? A shop that stocks means they are buying every month and has a proven track record.

Now we have stores that call and want to buy $25 a year. I appreciate the offer to buy, but honestly all things being equal we're not set up like other companies to handle retail so a $25 sale does not go with our business plan. We want stores to buy consistently for us to grow. So the focus is sending those $25 store orders to the bigger dealer that stocks. Now much like BJs, NAPA, Pep Boys small repair shops can usually buy in the business but they never pay the same as a full club member. Yes, you want to shop at SAMS for an afternoon pay $10 and pay a little more you won't get the club pricing, but you can buy.

Now new shop owners constantly ask me for advice. How do I get more support from my suppliers?

My first question is how many brands do you carry? I always see new stores with 6 brands. "Oh I buy from the cheapest I can find." - WRONG APPROACH

I had this conversation today "I carry JCL, Roketa, SUNL, Kymco, Carter, Peirspeed, TNG, Massimo, and Genuine." I replied "Sir you are aware you just named over 9 brands which would equal over 60 models if you carried their full stock." to which he replied "I only carry the cheaper ones," exactly... See this store isn't doing anyone any favors. As a matter of fact if you walk into the shop you will only see two or three Kymco models. You can't expect Kymco to give this shop all their resources or terms if they only buy two or three models. I would go as far as to say they are doing the company a disservice by doing this. So Kymco won't give them credit, won't help promote the shop, and will allocate resources to the shops that do. You have to be good to a brand to get love back, it's how it works in every industry, I continue to fail to understand why in Powersports small shops think they are entitled to the same support when they fail the brands they represent.

So how do you get better terms? More marketing support? We covered this at the class in Indianapolis this year and one of things we said is give the brand help. I look at a client that is doing $10,000 a year in parts and I ask what do you need? banners, help? 30 days to pay?

What is irritating is when you talk to someone and they complain about Piaggio not helping them or Kymco not helping them. I used to sell scooters and its the same in parts as in scooters. I ask why? Why should they funnel additional resources to your market when you are pushing JCL or ChinaMoto?

Same applies to apparel and clothing. I just got some new banners for disk brakes and jackets. Each one costs $100. Where do we send them? We only got ten pieces. Do I send them to the guy that buys $50 a year or the guy who placed a stocking order at the Dealer Expo? Do I send it to the guy who tells me he buys wherever is cheaper (Sir I am mercenary I buy based on price only) or the guy thats been a great client for five years and every year I count on his stocking order to keep us in business.

In this industry right now. The guys that prove they are around to be loyal stocking dealers get the help they need from the manufacturers at every level. When you have a failure rate of 300 plus stores closing in the scooter market in the last two years. Companies that in less than 6 months ( Fly Scooters and others ) loose 50% of their dealer base. Where are you going to allocate your marketing dollars and help? This is true for Vespa / Piaggio as it is for Kymco or anyone else. You allocate it for the good client. Parts, Jackets, Accessories you work with the loyal client. Try telling your Kymco sales rep you rather buy SUNL next week and then hit him up for some race track tickets see what response you get from them.

The biggest fall of the powersports industry right now is all the Chinese companies selling consumer / dealer direct giving everyone China prices without any minimums or buy ins. This is the downfall of the business because it brings margins, consumer perception, and dealer perception down. It makes small dealers believe that a Chinese helmet is the same as an ARAI or a SUOMY. Seriously, I can't get into a discussion with everyone as to why a Malossi cylinder is better than the Chinese one, I sell both, but some clients aren't willing to pay the Malossi prices. What do you do in those cases? You basically have to let them shop elsewhere.

In those cases. I have one dealer that handles 70% of all our smaller repair shop orders because he's got staff and buys in bulk.

Much like everything in life the store that is buying $10,000 a year, stocking exhausts, buying and moving product will get better pricing from anyone. They stock quality parts, stock quality accessories, and tend to get terms from everyone in the business. If a store can't meet the minimums most companies in the industry will not give them terms or help them with additional discounts.

The truth is there is a lot of chest pounding in this business. My favorite line is when someone comes up to me and says I buy $100,000 a year in China. That doesn't help me or the industry in general, all I see if you purchased $50 in the last 12 months. I know things are cheaper in China, but were not in China.

For a company like Parts Unlimited to give you a discount all they care about is how much you're buying in the USA. Sad to say but they are right and you have to follow what the industry leader says.

If you want support in the business give the brands that help you support. If you want terms and credit, show loyalty and you will get it. That's my best advice for a new shop owner. I have no problem as a business owner trusting someone who deserves it, last time I checked we are one of the few that still have open accounts.

You need to earn that like everything else in the industry.

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