November 3rd, 2020 by Dave Volberding
In business, the concept of cutting out the middleman often makes logical sense. After all, why pay someone else to get you what you need when you have the option to buy straight from the manufacturer? Fortunately, you have a choice in the world of office hardware, meaning you can choose to go to the manufacturer direct or dealer.
But what does that choice mean? Does cutting out the middleman help me when purchasing technology? Does purchasing directly from the manufacturer save me money on how much a product costs? To answer these questions, let's look at three areas, price, service, and multiple locations.
I can get a better price by going directly to the manufacturer.
This line of thinking would seem logical, but in this case, it simply isn't true. Manufacturers give the same wholesale price to their local branches (owned by the manufacturer) as they do to their dealers.
This scenario results in the same cost to the dealer as the branch. If a price difference occurs, it is merely because of a decision to sell it at that price, utterly independent of the manufacturer's initial cost to sell them the equipment.
The Service from the manufacturer is better because they know their equipment better than a dealer.
You may not know this, but dealers send their technicians to the same training locations as the manufacturers. As a result, the technicians at both locations are equally as qualified to work on your equipment.
Also, manufacturers are giant corporations; as you can imagine, they can't make decisions quickly. For example, a manufacturer's branch's service department may have to get higher approval before they can service a particular piece of equipment for you.
On the other hand, the service manager at a local dealer could walk down the hall and knock on their president's door if that approval level is necessary—this structure results in less downtime for your business and less red tape that will delay critical decisions.
Manufacturer service technicians are often restricted because of their parts budget. The result is that they have a limited amount of money to spend on parts to fix malfunctioning machines.
Why does this happen? Manufacturers are publicly traded companies, so their primary business goal is to increase their shareholders' wealth. As a result, their end of quarter numbers must look as positive as possible.
The result is the skimping of service to meet a net income number. Private dealers don't have to deal with this because they are only answerable to the company's owner. A company owner has a direct stake in keeping his or her customers happy.
My business has branches throughout the country. Would a local dealer be able to service all of them efficiently?
A manufacturer indeed can service your equipment in multiple locations throughout the country. You may not realize that their process for doing so is the same as that of a local dealer.
For instance, when your branch in Oklahoma needs service, the manufacturer's department in Texas will have already set up service supplied by a company in Oklahoma (often a local dealer). Local dealers use the same method when servicing multiple locations around the country.
Local dealers have a type of fraternity where they can hold each other accountable, even if they do not work for each other. Their business leaders see each other at various conventions and industry gatherings throughout the year. There is an incentive to support each other to help build their ability to support national organizations.
Dealer owners who work together will have each other's cell phone numbers, should direct contact ever be necessary. No one likes to let their friends down or be the weak link, leading to a much more substantial service experience. Many of these relationships span decades.
Two Different Goals
Manufacturers and dealers have two different goals [in a general sense]. A manufacturer's primary goal is to sell more equipment, not sell you service. A private dealer's goal is to give you excellent service, the equipment being the byproduct of receiving that service.
Fortunately for manufacturers, they can accomplish their goal of selling their products at the same price point through dealers while being more likely to keep selling to you in the future because the servicing of their product through a dealer is, in many cases, superior. After all, customers are generally happy with a product if it is working consistently.
Local dealers are also able to offer their customers a choice. A manufacturer only carries their brand of office machines, whereas a dealer can carry as many brands as they have technicians trained. Customers have a much better selection in quality and the ability to tailor your office fleet with the best models of each type of product - because no manufacturer is the best at every single class of equipment.
As you can see, it is logical to assume a manufacturer will be the best fit, but the facts show that it often is not. People often appreciate local businesses in their community because they usually have a higher customer service level and appreciation. Your local copier dealer is no different, but if you are a large company looking for a national account program, you might find that an office hardware dealer is just as capable of providing you excellent service, or even more so. Remember that "bigger is not always better." Look for companies that have a record of taking care of their customers.
Posted in: Business Technology