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Is Joining a Buying Group Right for You and Your Business?

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 and find ways to bring added value to its members, so tends to approach the needs of their members differently.

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 a discussion. I have also traveled a lot working for manufacturers and have been fortunate enough to meet with thousands of custom integrators and often times 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 on if they should join a buying group and if so, which one?

Nationwide’s most recent event 

In its basic form a buying group is a member organization in which members pay dues to help get special programs from the manufacturers that are part of the group so the members can make more money on the products they sell. The benefit to the members 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.

This also works well for the vendors, also, 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 and find ways to bring added value to its members, so tends to approach the needs of their 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. A 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. 

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. Often times these conversations start during a round table 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.

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, here is some information on each of the four major groups in this article:

Azione Unlimited
President: Richard Glikes (610.772.3840)
History: Founded in 2011 with a focus on the custom integrator. After having experience with other groups, Azione Unlimited found that there was an opportunity to create a group with a more narrowed focus so that members had more in common and could learn more by networking with dealers just like them.
Number of Members: 179
Number of Vendors: 45
Annual Revenue of Members: $600 Million.
Number of Events Per Year: 2, plus optional educational special events.
Distribution Relationships: Tri-Ed for security and camera products.
Types of Dealers That Can Join: Primarily focused on custom integrators
Dealer Minimums: Over $1Million in revenue, and must match up with group brands.
What Makes It Different: It’s the only group in which more than 95 percent of members do not have walk-in business. Vendors are members, too, which is why they have a fewer number of manufacturers. Vendors can sit on the board, as well, to help with the direction of the group, and the limited amount of vendors helps with better programs. The group focused heavily on networking, education, and idea sharing.

Executive Director: Jon Robbins ([email protected])
History: Formed in 1996 by a group of passionate consumer electronics retailers, HTSA was created to have a “voice” in the channel and to serve as a thought-leadership group. The guiding principal was to aid dealers in understanding best practices from like-minded individuals across the nation. The association was built from the start as the only member-owned group in the industry.
Number of Members: 77
Number of Vendors: 45
Annual Revenue of Members: $500 Million
Number of Events Per Year: 2, plus optional educational special events.
Distribution Relationships: Partnership with the Nationwide eXchange program, which provides access to many products that are fulfilled by major distributors around the country.
Types of Dealers That Can Join: Retail and Custom Install
Dealer Minimums: Membership is reviewed on a case-by-case and market-by-market basis.
What Makes It Different: HTSA has performance brands that are group exclusive to its members. Due to being a smaller group, they have more information sharing among their members, as well. Education initiatives, they feel, are unmatched in the industry, and they stay ahead of new technologies. Just recently they added a director of new technologies to help the members keep ahead of trends. They also have a strategic partnership with Nationwide/HTSN that provides additional marketing and business resources that you would typically find in a much larger group.

Group Director: Hank Alexander (303.912.3237)
History: Nationwide started more than 40 years ago, and HTSN was formed in 2015 to better align membership with the CI and CI/retail business model.
Number of Members: 300
Number of Vendors: 36
Annual Revenue of Members: $1.3B
Number of Events Per Year: 2, plus optional educational special events.
Distribution Relationships: The Nationwide eXchange portal provides access to a wide assortment of products with fulfillment by AVAD, Audio America, Capitol, CED, D&H, O’Rourke, Petra, and Volutone, and gives you access to pricing in one place.
Types of Dealers That Can Join: Retail and Custom Install
Dealer Minimums: $800k in annual sales.
What Makes It Different: HTSN is part of Nationwide, a $15-billion group that focuses on appliances, furniture, and consumer electronics. This allows the group to leverage its size to help give HTSN consumer electronics retail and CI members the benefits of an even larger buying group. It also has marketing resources, including a full production facility that can provide 4K video content for showroom displays on the MemberNet TV service. Additional benefits are available from the alliance with HTSA that provides increased education and program alignment with other like businesses.

Group CEO/President: Dave Workman ([email protected])
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
Number of Events Per Year: Depends on membership type, but generally 1-2, plus additional special events.
Distribution Relationships: Expert Warehouse, group owned and operated distribution for video and audio just in time products. Custom Warehouse for wire, networking gear, and installation needs, fulfilled by ADI.
Types of Dealers That Can Join: Custom Install, Retail, and e-commerce
Dealer Minimums: CI Group $1M in annual sales, in business for at least two years, and operating from a non-residential facility.
What Makes It Different: ProSource has a strategic partnership with AVB, a buying group with $15-billion in annual member sales that can help with finance and business service negotiations for it’s members. ProSource, however, operates independently as a member-owned and member-directed group, in which everything starts with the dealer. They have a board and committees that all work together as a team, and it is not a top-down operated group. If there is excess revenue, then it goes back to the members. They have a DM support team, which is a regional group that assists both members and vendors, along with a group-run warehouse and a commercial alliance with the CI Edge buying group. They also do vendor factory trips in which attendees can help be part of the product planning and have involvement in product development.