It’s been awhile since I presented an installment of “Off the Record,” a department that allows dealers to anonymously and honestly share their concerns about the issues and trends affecting their dealerships.
This week we have a familiar topic that for better or for worse doesn’t seem to be going anywhere—competition from direct branches.
Our biggest challenge has been the “race to zero” the manufacturers are running. The IKON/Ricoh merger pricing cost us a lot of business when they were down the street selling machines cheaper than we could buy from Ricoh. Accounts that were not IKON customers were getting the same pricing as the accounts they were trying to flip.
After they sucked all the margin out of MFP’s and service now they decided we should all be in IT, software, and tons of other things. Yet they still have hardware quotas and when they visit your office only want to talk about hardware.
The manufacturers have killed an industry that had a successful, profitable business model where people were able to make a lot of money selling ‘boxes’ down the street and have very profitable service revenues. Fortunately, the direct branches do a horrible job in our market of taking care of their customers whether it’s billing issues to service issues so we are able to capitalize on that a lot. One manufacturer rep told it to me best: “We know how to make the boxes and distribute the boxes, but we don’t know anything about how to keep a customer happy. We have a hard enough time keeping the dealership owners happy, so what makes us think we can keep thousands of customers happy?”
