The Rise of the Mega Dealer (And How To Compete With Them)
In 2018 there are basically 3 kinds of office equipment dealers: Those looking to grow, those looking to sell and those looking to buy. If you are in the last category you might be one of the new breed of OEDs known as “Mega Dealers”. If you are in the first category you might have noticed you can’t possibly compete on price against them.
Why have Mega Dealers become a thing? In short, because the market is mature and in slight decline. Maturity has brought heavy competition on price and the slight decline in printing by users has only complicated the problem. Mega Dealers have become a thing because they know that economies of scale drive greater profitability in a mature market. They are funded by equity finance companies and other money vehicles because the “slight decline” is extremely predictable and print will remain a persistent part of the office for many, many years to come.
will reap some pretty awesome profits over the next 5 to 10 years."
Mega Dealers are not growing organically but rather through acquisition. The bigger they get, the more standardized their offerings become and the lower their costs become. Cost efficiency improvements will outpace the slow rate of decline and the financial backers will reap some pretty awesome profits over the next 5 to 10 years. Classic longtail investment strategy.
If you are an OED looking not to sell but to grow, a mega dealer in your region could be a significant threat. The efficiencies and lower costs through standardization are going to mean that if it comes to price you will lose. Not maybe, not probably, but for sure. Playing the price game hasn’t done our channel any favors in the last 15 years and now it’s getting downright dangerous.
A customer-centric approach is going to be the only way to grow."
So as a dealer looking to grow, how do you get away from price? Simple: You provide tangible value that a customer feels is worth the extra money. I’m not talking about your awesome service, superior product, or incredible JIT delivery program, that is not tangible to the customer. So what is? The only way to find out what is tangible to your customers is to do a proper business-level assessment. You need to find out what keeps them up at night and offer tangible solutions to help them sleep better. Yes, I know, I keep saying tangible, because more times than not what we try to sell as “value” doesn’t matter to the customer. A customer-centric approach is going to be the only way to grow as a dealer in the current OED climate. What matters to one customer is wildly different that what matters to another customer. Assessments insure that you get to what matters most.
This article wasn’t written for those looking to sell to a mega dealer, it’s for those who aren’t ready to shutter up the windows. For those looking to grow, to move beyond price, doing a business-level assessment is no longer an option, it is a necessity.
What are your thoughts? Do you agree? Disagree? Have some good stories of your own to share? Join the conversation and let your voice be heard by leaving a comment. Here’s a toast to tangible growth in the coming years!