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Are Manufacturers Bypassing Distributors and Selling Direct to Contractors?

Four electrical contractors share their feedback on whether an increasing number of suppliers are trying to work with them on a one-on-one basis.

Here at tED magazine,we’ve been hearing undertones about how an increasing number of manufacturers are selling direct to end users, especially when it comes to lighting. In essence, these manufacturers are bypassing the “middleman” and deciding to both sell and service electrical contractors and other end users directly. An age-old threat that electrical distributors are always on the lookout for, this trend could present challenges for NAED members in 2016…or could it?

To find out, tED magazine spoke with four different electrical contractors in different geographic regions for their feedback on the topic. We asked them whether they’re seeing more manufacturers working directly with their electrical contractor customers and also how this trend was impacting their businesses. Here’s what they had to say:

Justine Maglio-Wardell, office manager at Maglio Electric, LLC, in Hampton, N.J.:

“We haven’t had many manufacturers try to reach out to us directly. However, in 2015 we did work on a couple of projects where suppliers sent out one of their own representatives to do a job walk-through, look at the lighting layouts, and then work with their local distributors/supply houses to get us the necessary products and technical support. This was a pretty collaborative experience in terms of the manufacturer giving us competitive (pricing). On another note, numerous suppliers that don’t have a brick-and-mortar presence have approached us. They’re 100 percent online and they want us to buy directly from them. Two weeks ago we were looking for some parts and bought them that way, however, my hesitation in buying from online-only sources is the lack of telephone support. There’s usually no one I can call on a regular basis to check on the status of an order or get regular updates on the shipment. I’m just not comfortable with that lack of communication when I know that the supply house with the brick-and-mortar presence has historically been very good about keeping us informed and answering our questions. That confidence in knowing that someone is a phone call away is what keeps us buying from electrical distributors, and not from some online outfit that we’ve never dealt with before.”

Joe Martin, executive vice president at KenMor Electric in Houston:

“From time to time we’ll see manufacturers attempting to sell directly. You don’t see it too much in the Houston market, but when we opened up a new location in the Dallas-Fort Worth region we did see more instances of manufacturers going directly to the contractors. These manufacturers are making deals at bid time and, if they get the job, they assign a distributor to it. It’s the weirdest thing, but I think it comes down to the fact that the supply houses aren’t as powerful in Dallas. Here in Houston, everything goes through the distributors first.”

Dave Gilson, owner of Terabyte Technologies, Inc., in Aloha, Ore.:

“We haven’t stepped into LED lighting yet, but if we did we know that there would be opportunities to buy direct from manufacturers. And while this sounds okay from the opportunity and pricing aspect, concern over the availability of good customer service definitely comes into play. That’s a major factor. When we’re out on the jobsite and under time constraints and other pressures, we need to know that there’s someone there – not just an online request form or a voice mail message. When things go wrong, I’m not sure that the manufacturers are positioned to – or, that they have the talent, skills, and knowledge to – help correct the situation in a pinch. This is where the manufacturers might struggle, and it’s where our distributors step in and lend their expertise. Or, if the distributor doesn’t have the expertise, it can usually direct us to someone who can (or, parts and distribution at another location). If I’m working directly with one manufacturer, on the other hand, when it’s out of parts it’s out of parts. Period.”

Bruce Seilhammer, electrical construction group manager at Camp Hill, Pa.-based SECCO, Inc.:

“We’re not seeing manufacturers make moves to go direct in any significant way. Every now and then you run into a project that has a national contract/account in place for a specific lighting package. In these cases, we’ll often work right with the manufacturer to get the products. For the most part, however, we rely on our long-term relationships with distributors.”

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