Why go Direct to a Manufacturer? By Steve Allan At Isnare.com Ezine Articles

On the face of it cutting out the middle man is a great idea. After all – we buy insurance direct from the company – and cut out the broker, and we buy clothes direct from the outlet – and cut out the retailer. We even buy food direct from the farmers market and cut out the supermarket. But how effective is that for a specialist purchase of say office furniture. It’s the sort of purchase that most companies only make every 7-10 years – and let’s be honest it’s never cheap. If we go direct to the manufacturer, we can cut out the dealer – and the margin they add –can’t we? Many people think that the typical office furniture dealer just introduces a product, and adds their profit to the final invoice. For that reason it makes sense to ‘go direct’ – until that is you look at the bigger picture.

A manufacturer can only sell you the articles they themselves produce. They are limited by their very nature to offer what they have, rather than what you perhaps need. They will try and convince you that their offering is perfect, because what other option have they got? They can’t draw on another range that is cheaper, better quality or faster to get in stock. And the price? You have to remember that most office furniture manufacturers sell their goods through a dealer network. It makes sense as they are all over the country and already have customers who buy furniture from them. The manufacturer offers preferential discount terms to their dealers because they place continuous business month after month, and year after year. The last thing they want to do is upset their dealers by allowing an ‘end user’ to cut them out and buy direct. Not that a factory will tell you this – they will profess to be cheaper and faster than the dealer route.

Dealers are naturally placed to serve the customer (end user) and the factory is more often not. Often the factory is slow to react, and information and lead times slow to come through. Dealers are used to the factories and know who to call and who to shout at in the event of a problem.

Also, there are often unseen costs that customers underestimate as well. Costs like the designing of an office, the physical installation of the goods, the admin costs to manage the order and make sure it’s all going according to plan and that everyone is kept in the loop and organised. With the massive rise in fuel costs, the installation costs can be horrendous. Manufacturers typically charge a % of the RRP of the furniture to calculate an installation cost. One large manufacturer charges 20% of the RRP to the dealer – and many dealers swallow the cost to help the customer.

Then there is the ‘hassle factor’. How much is it worth to your business to be able to leave an order to one contact, to liaise with and deal with as necessary. A good dealer will take the stress away and more than likely will present you with smaller invoice than the one if you go ‘direct’. Remember on the face of it buying direct looks appealing – but the devils in the detail.

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