This month, our anonymous PC retailer is still not convinced by IT buying groups.
Before I go on, it may seem a bit harsh, but I feel our industry needs a serious rebrand, we have no time to dilly-dally.
This is clearly of my own opinion.
Thanks for your reply Craig, but I’m not surprised with your response.
My comments are NOT aimed at you, but the Sith Lords of the industry and the new kids who are getting suckered in.
I know you and your team are the good guys, but most of the older members shun away and come out with negative remarks, like: “Why do you want to teach young people? They will just take your job.”
Or, “why employ women, they can’t fit in”. Or, “Don’t let your staff be themselves. If they want to leave for university, break their legs”.
These are actual comments I have overheard at past and recent trade association events. It’s very upsetting to hear remarks like this – we are tarnished by the same brush.
Worryingly, these organizations are so antiquated and scared of any innovation and are only interested in new talent if they can convert you, young Anakin. They don’t provide enough value or service that is strong enough for me to compete with bigger rivals. This old world mentality doesn’t work for me – it is actually causing our own demise.
Just look at the recent fiasco with Black Cab drivers and Uber.
In the information age, social media, communities and other resources can offer an alternative to buying groups. Furthermore, events like PCR Boot Camp, Channel Expert and other trade events during the year do a good job of networking and business opportunities – and it doesn’t cost me a fee. The days of the buying groups could sadly be numbered - like poor Cecil the lion.
What we do need, however, is fair pricing regardless of size and spend, reasonable credit terms, just in time delivery, margins and marketing support that are in line with current customer needs and trends.
Back to your argument of value, the systems that are offered within the premium subscriptions are freely available via most distributors (large and small). We developed our own in-house engine and feed aggregator with drop shipping over seven years ago.
Also, vendors are more than happy to offer you marketing, incentive schemes and partner programs directly. Buying groups in my opinion are just a waste of time and money, add an extra layer of confusion and dress up their savings with a fee. It’s a bit like being charged for financial help from an advisor who uses Money Saving Expert.
Also, your business model must be tailored to the demands of a buying group. You will only benefit if you can keep up with the sales volume. Now this is okay if there is a solid 30/50 point margin but not if your margin is the rebate. Surely there are better ways of making money.
For example, let’s assume that all 100 members of your group (stats taken from a previous article) turn over £1 million. That’s a communal turnover of £100 million, nothing compared to any of the well-known etailers and retailers. They would make double this with better pricing and lower overheads than buying group members put together, making a better net profit! These companies are well known brands with customer loyalty, the ability to cut even bigger deals and have a far greater reach than buying groups. The competition is just too great.
As you said, buying groups are not for all, and I agree. There aren’t as many indies geared to adopt such a model as you think and therefore you cannot create the momentum you need to persevere and compete successfully.
If on the other hand you want to know how an Indie can achieve growth and reach, then you don’t have to look any further than PC PAL. Within 10 years they are one of the largest independents in the UK. No one other than a national chain has this kind of coverage.
Similarly, why do you think disruptive companies like Amazon weren’t conceived by a book shop, Airbnb wasn’t created by a hotel owner and Uber wasn’t invented by a taxi company? It is because industries are NOT innovating from within but are being destroyed from the outside, forced to change by the new kids on the block.
Death and market cannibalization of any backwards industry is ultimately inevitable. But if we're to be a bit philosophical about it, maybe this is exactly what our industry needs if we are ever going to move on.
You don’t need a buying group to hold your hand anymore!
I hope for all of our sakes it’s not too late. Buying groups and trade organizations, in the current form, are not the saviours of our industry.
I am happy to answer any of the readers’ questions, so please pass them on to the PCR team.