Plumbing contractors must be proactive, or they will continue to lose out on the buy/sell process for high-end product.

My dad worked his entire career for a large plumbing wholesaler in central Pennsylvania. I can remember when he built a new branch in Harrisburg, Pa., and incorporated a showroom the entire way across the front of the building. I asked him why. He said, “As a service to the plumbing trade. Plumbers can send builders and homeowners in to get help selecting products.”

This was in the 1950s. Over the years I asked him how the showroom was working. He replied, “Not very well. If we get two or three folks in a week, we’re happy.” To me, this seemed like a pretty big investment for a very small return.

In the 1960s and 1970s (yes, I’ve been working in this great industry for a long time), I ran a couple of mid-sized plumbing wholesale businesses. Both had showrooms dedicated to serving the plumbing trade. Neither ever came close to paying for themselves.

While working for a large, family-owned plumbing wholesaler in northern California, I spent a full year trying very hard to talk different plumbing contractors into going into the showroom business. I felt strongly that having a showroom up front and running the trucks out the back was a model for a very profitable business. Not one plumber showed interest. They were craftsmen with the tools and didn’t want anything to do with selling to the end-user and worrying about marketing and operating a showroom.

In the early 1980s, I started my own business. It was a decorative plumbing and hardware showroom in Sacramento, Calif. It was a big showroom - 10,000 square feet - and we displayed and sold products from virtually every manufacturer. Some of the products we bought directly from the source, others we had to buy from wholesalers.

My initial marketing thrust was to plumbing contractors. I knew we could render services that would make their jobs easier and more profitable. However, I wasn’t successful in getting them to buy. At the time they were only interested in one thing: price. If I couldn’t sell them at the same deep discounts they were getting from their wholesale source, they certainly weren’t going to buy from me. This decision was made in spite of a long list of services and conveniences we offered.

So, if I was going to succeed, I had to market my business to builders, remodelers, architects, interior designers and homeowners. Over the next 15 years, the business grew to three showrooms, several millions of dollars of revenues, very attractive gross profit margins and almost 40 employees. Sales were about 50 percent to the trades and 50 percent direct to the homeowner. We operated similar to a wholesale business in that we inventoried product, delivered to the jobsites and carried accounts receivable.

I sold that business in 1995 to a fairly large plumbing/HVAC wholesaler and they are successfully operating the business today. Since then I have had the unique pleasure of writing several books on business management and selling skills, writing monthly articles on showrooms for two national trade magazines, teaching all day workshops and - the most fun! - doing a lot of consulting with plumbing wholesalers all over the United States and Canada on how to run successful showroom businesses.

Let me tell you - showrooms and wholesalers have “come a long way, baby” from the early days when my dad built out one of the first showrooms in the 1950s.

15 Reasons

So, after that long, historical lead-in, why should plumbing contractors use a plumbing wholesaler’s showroom? The reasons are many and varied - and, in my opinion, all add up to a win-win for both the plumber and the wholesaler. See if you won’t agree:

1. The plumbing contractor doesn’t have to deal with the homeowner. The showroom sales consultant does it all. Helping homeowners select the products for their home can be a long, tedious and often frustrating process. We’re talking several hours of one-on-one sales consultation. This is time-consuming and expensive.

2. The plumber doesn’t have to have the tremendous amount of product knowledge that is necessary to sell the ever-growing list of luxury decorative plumbing products.

3. The plumber doesn’t have to invest the huge amount of money required to build out a first-class showroom. There’s the build out of displays, lighting, flooring, etc., and then the large investment in products that just sit there looking pretty. There’s no “turn and earn” here!

4. The plumber doesn’t have to worry about ever-changing styles, colors and finishes of products that dictate replacing about 20 percent of all display products each and every year. And, no, manufacturers don’t just give these display products away. They may do a little better discount on these products but, all-in-all, it’s a very expensive proposition.

5. The plumber doesn’t have to hire, train or manage the showroom personnel. This falls on the shoulders of the wholesaler. And wholesalers will tell you that the showroom business is a whole lot different than the wholesale business. Showrooms are much more retail-oriented. That means learning and exercising an all new set of strategies and operating procedures.

6. The wholesaler has to do all the advertising, promotion and public relations for the showroom. This could run 5 percent+/- of sales revenues - and it’s all done to drive prospects into the showroom so sales can be made (which the plumber may or may not participate in) and installation can take place (which the plumber definitely will participate in).

7. If the showroom sells the product directly to the builder or homeowner, the plumber will have no accounts receivable to worry about, no pick-up or delivery, no holding inventories and no warranty responsibility on the products. This can be huge. Plus, the smart plumbers are putting a nice mark-up on products whether they are involved in the buy/sell part of the transaction or not.

8. Plumbing contractors should be charging more on labor for the installation of higher-end, luxury-type plumbing products. Yes, it may take a tad longer and it requires some kid gloves to install these nicer products, but it also adds to the revenue of the installers.

9. The plumber doesn’t have to worry about the timing of having products at the jobsite. The wholesaler showroom personnel accept this responsibility. They order it and have it delivered to the project - on time. So whether the plumber handles the billing or not, the product will be waiting at the project for him to install.

10. The wholesaler accepts the whole responsibility for keeping the showroom clean, neat and complete - all the time. This is a never-ending chore, but necessary.

11. Most wholesaler showrooms give the plumber the option of whether the billing goes through the plumber or billed directly to the builder or homeowner. Many wholesalers can, and will, build in a “mark-up” fee for the plumber. I believe 10-15 percent is fair. The wholesaler is doing all of the work in terms of building out and maintaining the showroom and handling the total product selection process.

The plumber may or may not have referred the builder or homeowner to the showroom. And yes, this is important and worth something, but in my humble opinion it’s not worth the 30-35 percent “mark up” that plumbers use to enjoy. The advent of the Big Boxes has changed all the rules. The Big Boxes can and do sell anything and everything to anybody - and at deep discount prices. Survival of wholesalers has dictated that they open up their doors to all potential buyers as well.

12. Plumbers don’t have to spend multiple hours listening to manufacture reps selling their products. This responsibility falls on the wholesaler showroom personnel. This frees up the plumbers’ time - and we all know that “time is money.”

13. Individual plumbing contractors don’t have the buying power that the wholesaler does. Most wholesalers buy in truckloads or very large quantities. This earns them the deepest discount available and, in turn, they pass these savings on to their core customer - the plumber. Thus, by using the wholesaler showroom, the plumber will benefit from the very best pricing possible.

14. OK, here’s one you may or may not agree with - but please hear me out. I personally don’t believe that a wholesaler can afford to extend the same deep discount off showroom products that they do over the counter or out the back door. The cost of operating a showroom is much higher. Good business sense dictates that discounts should be less on all showroom orders.

Now hold on - don’t quit reading yet. See if this doesn’t make good sense: The plumber puts a mark-up on all products whether he buys it or not, right? Take a look at this example:

Yes, the discount changed by 5 percent, but the net dollar mark-up for the plumber increased by $150 (8.33 percent). The plumber wins and the wholesaler wins. Both get to stay in business and make more money - and the plumber’s job is much easier!

15. Here’s a fact that many plumbers don’t particularly like, but it’s a fact just the same. Plumbing contractors are rapidly losing out on participating in the buy/sell process on higher-end luxury plumbing products. The fact is, they didn’t add much value to the selling and marketing process. Certainly they are vital to the install phase, and they deserve to be paid well for this.

About 25 years ago, almost 100 percent of the finish plumbing products on higher-end goods went through the plumber. Today, it’s around 20 percent, and in 10 years it will be zero. The trend is there; it’s spread across America and it can’t be changed. Thirty years ago, electricians handled all the buy/sell on lighting fixtures. Today it’s zero. They didn’t add value to that process either.

So instead of fighting a losing battle on this issue, plumbers need to partner with wholesaler showrooms and find out how they can participate in this lucrative and fast-growing end of the business. Here are a few ideas:

• Send builders and homeowners into the wholesaler showrooms.
• Don’t forget the issue of who will handle the billing.
• Work out an arrangement to get a referral fee for all the work you send into the showroom.
• Figure out a fair mark-up on product - and whether you buy it or not, make money here.
• Be sure to make more (once again, fair) on the install of higher-end products. You deserve it.
• Concentrate on what you are trained to do - install.
• Don’t fight the higher-end, more complicated decorative products. They’re here to stay.
• Allow the showroom to earn a fair profit on the products they’re specifying and selling.
• Work to develop a strong partnership with the wholesaler, builder, remodeler, architect, interior designer and homeowner.
• Market yourself as a high-end/luxury-product plumber. Look and act high-end yourself.
• Take a look at doing your own showroom. If you’re willing to take on the extra cost and responsibility, I still think it makes a lot of sense.

So, there you have it! It’s a long list on why I believe plumbers using wholesaler showrooms is good business - a very good business!

Times are changing! Don’t fight it. Study it and discover how you can take maximum advantage of these changes. Be a leader. Be proactive. There’s a terrific opportunity to partner with your wholesaler’s showroom. If you don’t, you’ll lose - because the smart wholesalers are going to grow their showroom business with or without you.

Best of luck!

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