Wholesale or No Sale?
The counterman waited on the contractor.
The homeowner then took note of the company name on the contractor's jacket and said that he would never hire his company, and that he would tell everyone he knew what had happened that day, and that he would also put it on the Internet. The contractor asked the homeowner why he was still there, and why hadn't he yet done with himself what the contractor had suggested he do with himself.
That dance is timeless in the supply houses of America, especially these days when business is the way it is.
A homeowner posted this on the Wall at HeatingHelp.com the other day:
"I am looking for some honest opinions from contractors about why wholesalers either don't want to sell to the homeowner, or are unwilling to help them out with items. I perfectly understand not selling natural-gas appliances, gas valves, gas water-heater parts, etc. to a homeowner, who may or may not know how to install and test such items. I have no experience with oil or propane appliances, but I would assume the wholesalers would have the same no-sale attitude.
"One contractor I dealt with last week said that the wholesalers do not want to sell to homeowners because it takes bread out of the contractors mouth. Fair enough. I understand and appreciate that. But we all have mechanics, and we all have auto-parts stores that sell to the public, which take money away from mechanics. Should Home Depot not sell hammers, so you have to hire a trim carpenter?
"Another point: Everyone is scared of the recession. Why would a business, HVAC/Plumbing wholesaler or not, turn away money coming their way, and risk poor word-of-mouth advertising while they're at it?
"As a homeowner, I am not allowed to purchase a vaporstat from one wholesaler locally (depending on the counterperson) because it is attached to a gas appliance. The cost to me quoted to purchase was $215 from two different wholesalers. I asked my HVAC tech if it was possible to rebuild mine. He called today and said he couldn't, and that a replacement would cost me $350. Now, is that fair, to pay another $135, plus $100 labor to install it? Again, I understand markup. I would expect 10%-30% markup is fair.
"What about radiator vents? Main line vents? Low-pressure gauges? A 0-2-psi gauge was quoted today at $200, same HVAC company, before installation. And I know people will jump in here and say that you can go online, or go to another city, or use a different company. Luckily, I found a wholesaler who deals with steam air vents. He will sell to my HVAC company or sell to me direct. He doesn't care who installs them. Six adjustable steam air vents will cost me $300, plus tax.
"It's just frustrating. I don't understand it. I'm hoping someone will chime in here and enlighten me. I even had to argue with one company to let me special-order a radiator union valve. I offered to pay upfront and said that I would not return anything. They wouldn't do it.
I posted, reminding this gent that we have a policy on our site of not discussing pricing because there are too many variables from job to job and town to town. I did this because I didn't want the contractors to get into a war with the guy over what stuff should cost. I also mentioned that most wholesalers favor contractors because contractors buy from them every day. It's just a matter of good business.
Not surprisingly, a contractor then wrote, You complain about the mark-up for the vaporstat and say that a 10%-30% mark-up is fair. Do you really think that covers the gasoline, insurance, and a service tech's time to go get the part? And if he has it on his truck, or in inventory, do you really feel he's covering all his overhead at 10-30 percent?
"There are also liability issues with selling to the public. I can see scenarios where a customer comes in and is slightly wrong in explaining what he's looking for, or just paints a bad picture to the counterperson and gets the wrong part, along with terrible consequences. Then the homeowners is just going to point the finger at the supply house because that's what they gave him.
"Our industry has so many parts, many of which can be used properly in many different scenarios, but if used wrong, the same parts can lead to very bad results. If I were a wholesaler I wouldn't want that on my head, not to mention upsetting your biggest customers, the contractors, along the way."
All good points, to which another contractor added, "Wholesale is just that. It's wholesale TO THE TRADES. If you want something, go to a retailer. There is a difference. I actually take offense when a wholesaler sells retail. The wholesaler is OUR supplier, not yours. I don't mean to come off as being rude, but don't get mad when a wholesale house actually does what they are supposed to do."
Which inspired a different homeowner to post, "I have trouble with this. About 30 years ago, I did some plumbing work in my house (installing a photographic darkroom). I did go to a retailer, of the Big Box variety, and they had really crappy stuff that mostly failed soon after (gate valves, especially), and they did not even know what a vacuum breaker was.
"I then discovered a plumbing supply house, and they had no problem selling to me, provided I got there in the morning. I think they closed about lunchtime, because by then, the professional plumbers were done buying stuff for the day. They knew perfectly well what vacuum breakers were, and they even sold high-quality parts for less than the Big Box places sold their junk. So it is all very well to recommend a retailer, but around here at least, there are none that I would wish to purchase from."
And then another contractor had this to say:
"With rare exception, the average homeowner has no idea what he wants. Most non-contractors that come into a supply house are carrying a handful of who-knows-what and trying to describe where it came from, as if the guy behind the counter speaks another language. It's a waste of everyone's time. And I don't think the policy will change for the few people who actually do know what they need and how to ask for it. Maybe there's a solution that the Big Box stores tried to pick up on and failed at. You don't go to them because of their great selection or knowledge base. You go there because it's cheap and easy."
This played back and forth for a while and then we heard from a wholesaler, and what this guy had to say really made me think. Listen:
"I am a wholesaler and I do sell retail. The main reason is that I have a showroom and there are no local hardware stores (thanks HD and Lowes). The showroom gives me an opportunity to educate consumers as to the reasons why they need a professional. Let's face it, a lot of consumers can change a flush valve, a flapper, under-the-sink components, install a faucet or a toilet. So why should I turn that business away? The consumer pays retail pricing, not wholesale pricing. He's either going to purchase what he needs from HD, Lowes, the Internet, or from me. So if he wants to support his local community's business people, it might as well be me.
"There have been many times where a consumer has come to the counter for help and left with a contractor in tow. Why wouldn't you go to the place the pros go to when you're looking for professional help? Most contractors who come to me don't feel threatened or turn red when a consumer comes in here. Nine out of ten times, the contractors try to help out the consumer. The contractors I see that do complain about homeowners are the same contractors that shop you from supply house to supply house, beating me over the head on price, and seem to have no loyalty."
Loyalty. Now, there's a word for you. I'll bet that wholesaler hooks up those visiting homeowners with the contractors who buy from him all the time. I can't imagine him making business connections for the price-shoppers. Human nature, right? And just smart business.
This whole thing made me think about the way things are these days, and the way they might be (especially in this economy). It made me think about friends helping friends by bringing them together with opportunity. It made me think about the way we all do business, and, yes, it made me think about loyalty.
I'd like to see more of that.