Cutting out the middle man

southcoastboile · Sep 11, 2017

has anyone got any experience of setting up a merchants?

We now have a shop so I'm thinking we can sell direct to the public and deal direct with certain manufacturers.

The main issue is knowing what suppliers we could use that would deal directly with us. Obviously the likes of Glowworm and Vaillant etc are out of the question but has anyone got any advice on getting direct accounts with manufacturers? I.e things like copper, fittings, taps etc. Could we enter a buyers group? If so does anyone have any experience or advise on this?

Many thansks!!

Stanios · Sep 11, 2017

Is there much to be gained? Decent merchants are the ones with low prices and they make their money on massive quantities rather than mark up

ShaunCorbs · Sep 11, 2017

not worth the time or hassle max there making are £50 on each boiler, copper is at cost as its up and down as much as a yoyo

southcoastboile · Sep 12, 2017

There's a few reasons I wanted to do it.

It's not really any more hassle ordering direct and if your making £50 each boiler that's a lot of money each year. Plus I get annoyed when we return items and they don't give credits. Or they charge more than places like screwfix on items. You can't keep track of everything. I think it would be a huge saving with direct accounts. It may only be 20% cheaper but that's a hell of a lot of money on your total spend each year.

I was just interested to know if anyone had entered any buying groups or how you would go about it. Or what the different avenues are in setting up direct accounts if anyone has tried it.

Stanios · Sep 12, 2017

southcoastboile said:
There's a few reasons I wanted to do it.

It's not really any more hassle ordering direct and if your making £50 each boiler that's a lot of money each year. Plus I get annoyed when we return items and they don't give credits. Or they charge more than places like screwfix on items. You can't keep track of everything. I think it would be a huge saving with direct accounts. It may only be 20% cheaper but that's a hell of a lot of money on your total spend each year.

I was just interested to know if anyone had entered any buying groups or how you would go about it. Or what the different avenues are in setting up direct accounts if anyone has tried it.

If you go and get a credit account with a merchant then blindly walk in every day and only get statement end of month you will have overpaid a lot of. Merchants just sell random bits for double the price I've noticed that long ago.

You will never get a good deal buying all from one merchant, I use Screwfix + williams and then if I am really desprate I use Grahams but I know their stuff is almost always more. When I asked the manager why Magnaclean is £110 he said because they arent in a large buyng group or syndicate. Get real you can buy crates of Magnaclean for £90 online they are blatant profiteers (and this applies to pretty much all other merchants)

Chuck · Sep 13, 2017

southcoastboile said:
We now have a shop so I'm thinking we can sell direct to the public and deal direct with certain manufacturers.

I'm thinking you've found a recipe for turning a successful plumbing business into an unsuccessful plumbers' merchant.

southcoastboile · Sep 13, 2017

We use Screwfix as well to be fair. We have had accounts at all the locals and majors and they all take the p*** the merchant we are with now aren't so bad but we still don't get credits when we should, a lot of parts are overpriced etc. I know they have to make a living as well and I'm not trying to set up a merchants but if we dealt with suppliers even at a 10% gain we would make a huge saving each year. I'm mainly looking for some names of suppliers we could go to but it sounds like everyone is happy to pay via merchants. I begrudge over paying on items, having to keep track of engineers using parts and items being credited etc. It would save a lot of hassle as well.

oz-plumber · Sep 13, 2017

What I have found out to be the biggest savings in materials is to buy everything in bulk amounts.

Work out what you use the most of and buy what you estimate you will use in the next 3 months, or start out with 1 month ahead.

Send the material list off to numerous merchants / suppliers and see how you go.
Best if you send the material list off in the last week of the month - some manager might be struggling to make their quota for the month.

I have a mate that has 7 plumbers working for him. His factory is like a plumbing supply depot. He got to the point of scrutanising every invoice for price discrepancies
on different items, that it nearly drove him mad.
He now orders bulk once a month, and has a truckload of items delivered monthly.
He doesn't care what each individual item costs, he cares about who gives the cheapest quote for the whole order.

And he is very rarely supplied by the same supplier 2 months in a row.

I do the same, but not to the extent that he does, but the savings are there if you can work them.

Just remember to sell the items at the regular price - not your discounted bulk price.

AWheating · Sep 13, 2017

Will need a large cash flow to start up I'm betting. The more you sell the cheaper it's sold to you from what I can gather. Indian merchants by me sells WB Inc vat same price main merchants sell ex vat. How that works unless tax invasion I don't know.

southcoastboile · Sep 16, 2017

Thanks for the advice. Good point about buying towards the end of the month, I hadn't thought of that. I already buy in bulk were I can as I know the deals are much better that way. I guess the only way to go direct is to speak to the local reps and do some bulk buys direct through them? I have tapped up a couple of x managers who have moved from one branch to another to see if they will put me in touch with their x sellers on the basis whatever we buy they will get say 5% but they don't seem interested. It's definitely a hard game to get into. The profits seem huge though. You obviously need substantial funding to start a merchants which I don't have, nor the knowledge but everyone who has done it (mainly x managers at the big branches) seems to have done really well out of it. This makes me think the profits are a lot bigger than we are lead to believe.

justlead1 · Sep 16, 2017

It is intresting reading others views. Large material suppliers have skilled people to negotiate there buying. Small plumbing firms are to busy to earn via good deals. Mangers of merchants in general are only given information on a need to know basis, so there offer of a deal is only based on there knowledge.
Manufacturers are also owed large amounts of money by merchants, who dictate the rates once a manufacturer has geared up to supply there demands. With the introduction of on-line buying we will see manufactures selling direct, however it a massive gamble on there part, as the big merchants will threten with canceled contracts to bring them back in line. It just a question of time.
However once on line everybody knows best price so percentage profits are out the window. Selling you skills and knowledge is all that is left.

oz-plumber · Sep 17, 2017

The x managers will have technically 'stolen' 100's upon 100's of customer details.

They would also know how much each customer was paying for their equipment and the mark-ups of each customer.

They would most probably been on performance based salaries with bonuses for exceeding monthly sales / turnover.
So they have a foot in the door as to what to charge each customer individually for items sold to them.

The 'behind the scenes' deals that go on include reimbursements from maufacturers'
depending on the amount of stock sold of their product.

It's a whole other world that goes on behind the scenes of running a Plumbing Supplies business.

That's why I said - buy in bulk at the end of the month and get quotes from 2,3,4 or 5 merchants.
Someone may need desperately to make their month quota or their next level of bonuses.

justlead1 · Sep 17, 2017

There are people in construction turning over a few million a year, who pay the monthly bills to merchants using American express card which give double air miles. Not a great deal of discount, but nice to book first class flights a few time a year.

Cutting out the middle man

southcoastboile

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Stanios

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ShaunCorbs

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southcoastboile

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Stanios

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Chuck

southcoastboile

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oz-plumber

AWheating

southcoastboile

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justlead1

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oz-plumber

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