Choosing the Right Buying Group for Your Company

Getting Your Small Business the Heavyweight Treatment October 26, 2017

Over the years I’ve attended many buying group events both as a dealer and as a manufacturer, and at every event the topic of adding new members is discussed. I have also traveled a lot working for manufacturers and have been fortunate enough to meet with thousands of custom integrators and oftentimes they ask, “Should I join a buying group?” It takes a lot of work to run a business, and many don’t have the time to spend researching buying groups, let alone becoming members, and yet this decision could be a big part of improving their business both operationally and financially.

So if the groups want more members, and dealers want more information, let’s bring it all together and help make it easier for dealers to decide if they should join a buying group and if so, which one.

ProSource poses for a group photo

In its basic form, a buying group is a membership-based organization in which dues pay for special programs and deals from vendors that are part of the group, so the dealer members can make more money on the products they sell. The benefit to the dealers is that the more money being spent with the vendors, the better the programs. So, instead of just being a single location with limited buying power, you can leverage the size of the group to get a better deal.

This really can help dealers with lower profit categories, such as TVs, where most smaller companies would not qualify for a discount program. Being part of a bigger group, however, means that their purchases now count to the overall group number, earning them better pricing. In some cases, manufacturers won’t even consider selling direct to smaller companies, so a group might enable access to brands that you otherwise couldn’t buy direct.

Richard Glikes leads the most recent Azione Unlimited meeting in Austin, TX.

This also works well for the vendors, because buying groups can give the manufacturers access to new customers who may have never considered selling their brand had it not been part of the group. In some cases, the buying group may provide exclusivity to manufacturers on a brand or category, which ensures the vendor can sell more products, even if they are making less money on each sale.

Added Value

Better programs and brand access were the basic concepts on how buying groups got started. Over the years, however, they have evolved to differentiate from one another. Each group needed to try to find ways to bring added value to its members, so each tends to approach the needs of its members differently. For instance, buying group-exclusive trade shows allow members to see the latest from their group’s manufacturers in a much more intimate setting than the larger shows such as CEDIA or CES. Guest speakers, ranging in topics from best business practices, leadership, working with architects and builders, and marketing, offer targeted insight for group members, as well. The groups also arrange special marketing support (website design, custom videos, and presentation tools), insurance, credit card processing, and other business programs, and special training sessions to help develop the people in your company. There’s everything from second-tier manager training, to sales and technical best practice events for your staff. There are even manufacture factory tours to help you get a closer relationship with the brand and the products that you sell, as well as distribution programs that allow you to get fulfillment just in time, even if the manufacturer might be out of something or if the shipping time is too long.

Peer Time

Peer time is usually part of beer time, as in the social time at the events that each group hosts during the year. There are typically two events per year for each group, and they consist of a mix of special presentations, roundtable discussions, vendor meetings, and lots of entertainment. Believe it or not, the entertainment part is typically where most of the work gets done.

Nationwide’s 2017 event

During these breaks, vendors and members get to spend time discussing many of the topics shared throughout the day and get to know each other better. The industry peer interaction is very valuable as many groups have a limited amount of dealers from the same geographical area and so a lot of business stories and experiences get discussed. Oftentimes these conversations start during a roundtable discussion from earlier in the day, but the real good stuff comes out later on when everyone is being, shall we say, a bit more vocal.

Should You Join a Buying Group?

It’s hard to argue against the merits of joining a buying group. While this industry is a lot of fun, it’s still very much the Wild West, and many companies struggle with making the time to focus on their business. But each group has its own value proposition, so keep these things in mind when picking out a group to join.

For instance, do they have the brands that you sell currently or the brands that you would like to build your business around? Supporting the group’s brands is an important part of being a member.

Barrett’s Brian Perreault, John Cook, and Joe Barrett take a Traction management-training course from HTSA.

How are the vendor programs structured? Take a look at your top vendors and see who has a program that benefits you. Take a look at volume incentive rebates (VIR), both as an individual and as a group, market development funds (MDF), freight, and any other added benefits. Find the mix of benefits that is best for your business. What other resources do they offer? Again, it isn’t just about the programs, it’s about making your business better. Which group has the tools to help you?

Do you want to be part of a large or small group? Bigger groups can mean larger events, more members to speak with, and access to more brands. Smaller groups can be more casual and be an easier environment for networking and learning. They can also be easier to have your voice heard and to be more active in. Both have benefits, so it’s about which environment you prefer.

Find out how many members are in your area and if any of them are top competitors to your business. Most groups try to minimize dealer overlap, but it happens. Sometimes it is nice to have someone in the group that is in your market because you can help each other, and in some cases it’s better if you are part of a group that doesn’t have other local competition as members.

Talk to the team. If you are seriously considering a group, speak to its director and a couple of other employees or board members. These are the people that will set the tone of the group, and they are the ones you will be listening to at the events. It’s important that you join a group in which you enjoy and respect the leadership and the direction.

So now that you know some of the buying group benefits, see the above sidebar for information on each of the four major groups, and make your choice.

Azione Unlimited
President:
Richard Glikes
History: Founded in 2011
Number of Members: 179
Number of Vendors: 45
Annual Revenue of Members: $600 Million

HTSA
Executive Director:
Jon Robbins
History: Formed in 1996
Number of Members: 77
Number of Vendors: 45
Annual Revenue of Members: $500 Million

Nationwide/HTSN
Group Director:
Hank Alexander
History: Nationwide started more than 40 years ago, and HTSN was formed in 2015
Number of Members: 300
Number of Vendors: 36
Annual Revenue of Members: $1.3B

ProSource
Group CEO/President:
Dave Workman
History: Started as AVB in 1969 and then created the ProGroup in 1985. In 1994, the ProGroup and the HES Buying Group merged to create a group for Specialty Electronics members. ProSource was started in 2008 with three levels of Pro, Power, and CI, making it the largest and most diverse dealer group in the industry.
Number of Members: 550-plus
Number of Vendors: 75
Annual Revenue of Members: $4.5B

Gordon Isaac (gisaac2@cox.net) is a consumer electronics executive, sales leader, strategist, and industry advisor based in Phoenix, AZ. He was recently hired by AVAD.

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