Contractors Who Cop Out
This wholesaler, like most in our industry, prefers to sell through contractors. Otherwise, the wholesaler has to take charge of scheduling, delivery, changes, returns, troubleshooting, etc. For the contractor to handle these details is worth the margin the wholesaler gives up. That's why this wholesaler does little consumer advertising but a bunch of trade promotion.
Alas, the number of contractors who register for this company's showroom program diminishes year after year, the wholesaler told me. “More and more, they simply tell us, 'You deal with it.'”
Years ago, sparks would fly whenever contractors got wind of a wholesaler that was selling directly to a consumer without giving a cut to the installer. Frequently, the plumbing contractor had nothing at all to do with the sale, but industry tradition held that he was entitled to compensation simply by virtue of his plumbing license.
The industry's landscape has been reshaped over the last couple of decades. Wholesalers, reacting to intense competitive pressures, have started acting more like businesses and less like charities by insisting that, to earn a commission, contractors must do something to help generate the sale. Too many contractors, meantime, have started to withdraw from that responsibility. “You deal with it!” they say to people who are more than willing to give them a piece of the action.
One hears plenty of excuses for this: The big boxes have eroded the margins that used to be available for contractors. Wholesalers are quick to discount and no longer protect contractors like they used to. Plus, there's too much pricy, fancy product out there for a contractor to keep track of in order to influence the sale.
All of these excuses may have a kernel of truth to them, but a stack of kernels adds up to the size of a molehill rather than a mountain. Turning your back on the merchandising aspect of plumbing makes no business sense. This is the easiest money available to a contractor. Sometimes there's not even any paperwork involved. Simply make a two-minute phone call to a cooperative showroom and give the name of a customer you have sent their way, then sit back and collect a rebate or supply house credit for that minimal effort.
Another common excuse is that wholesalers habitually “steal” customers from contractors. Contractors send customers to the showroom but never see a nickel in return. This usually happens when a contractor relies entirely on customers to tell the showroom attendant who sent them. That's why a phone call is essential. Or even better, accompany the customer to the showroom. If you don't think this is worth an hour or two of your time, figure out how many hours of labor it takes to earn the same profit dollars as you'd make from commissions on thousands of dollars - maybe tens of thousands - worth of bathroom merchandise.
Sure, it has become harder for contractors to sell product nowadays. Competition is indeed keener, and mailboxes are stuffed with flyers advertising plumbing products at prices no contractor can come close to matching. No, you can't compete with Home Depot if you define “compete” as selling billions of dollars worth of plumbing materials like they do. But you can pluck off a customer from them here and there by emphasizing your value-added services.
Product knowledge is a big advantage - not just knowing what's available, but being able to tell consumers what among the ooh-and-ahh stuff the designers fall in love with is likely to withstand the test of time. Astute contractors also sell their warranties and troubleshooting, and - if they run their projects well and deal with the right suppliers - can assure customers that jobs will be done on time.
It takes a little bit of selling to do this, of course. I said merchandise sales amount to easy money, not free money. Yet, a low-key sales pitch is a lot simpler than trying to squeeze profits out of labor.
This magazine continually draws attention to contractors who succeed in the merchandising side of the business. Go to our archives and look up the stories we've done in recent years on companies such as Insignia, Hill Plumbing, Lovelace Plumbing, Master Bath & Tile, Prestige Bath & Tile, Savage & Son, Water Wërks, Benjamin Plumbing, Amy Plumbing, Horner Bath & Tile and more. These are all plumbing contractors or spin-off companies that prove contractors have something worthwhile to sell. All it takes is confidence in your value, and the initiative to “deal with” the small hassles of making easy money.