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Manufacturers Going Direct: What Do Contractors Really Think?

Manufacturers Going Direct: What Do Contractors Really Think?


By Bridget McCrea

Electrical contractors discuss the issue of lighting manufacturers “going direct” and the ongoing value that electrical distributors bring to the table.

Like it or not, many lighting manufacturers are opting to sell direct to electrical contractors—and to project owners that those contractors are working with. And while this may be happening in the marketplace, it doesn’t necessarily mean contractors are embracing or taking part in the trend. In fact, most of them are downright concerned about what this means and what it could turn into five to 10 years down the road.

When asked to look a few years out and predict whether distribution will “fall out of the mix” when it comes to lighting sales, here’s what three different contractors had to say on the issue:

Matt Hittinger, project manager at King’s Electric Service in Cincinnati:

“We’re starting to see more lighting manufacturers trying to sell direct and we’re not opposed to it. It’s no secret that I can go online and find plenty of manufacturers to buy from, but they are not always a big name brand that we may feel comfortable with, even if they are offering a five-year warranty or whatever it may be. I wouldn’t say we never go online to buy fixtures. In fact, we go on there often to find new products and get ideas, but we are still trying to stick with what is normal for us and that would be going through a rep and then ordering via a distributor. Part of this is geographical in nature. If I’m buying online, and if the manufacturer is out in California, there will be a lot of logistical maneuvering required if I have to return something. If I’m dealing directly with a local distributor, on the other hand, then they take that burden on. Ultimately, we see a good and a bad side to buying direct. The good is that if we order a product online and it gets here quickly, we’ve effectively cut out the middleman. However, we also wind up taking on some risk in the process, assuming that the product has defects or when some other issue surfaces.”

When asked how electrical distributors can solidify their positions with his company and make themselves more valuable than ever, Hittinger gave this response:

“One thing we’re taking a really hard look at with our distributors involves new ways to deliver products. One of the biggest challenges we have at the jobsite is that these spaces are already cluttered and messy. When we bring our materials onsite, we just add to this problem. We try to do our best to bring things in when we are ready to install them, but that doesn’t always work out if our distributors are ready to deliver those items. To solve the problem, we’re trying to come up with ways that we can get stored materials offsite but be creative enough that we are not getting invoiced for those products (and, making sure it’s not costing our distributor too much to store those items). We are seeing some distributors that are offering these product “staging” services for us because they feel that it’s going to win them the business. I think that is valid. We certainly are going to try to work with a supplier that seems like they are trying to accommodate us more than us having to accommodate them.”

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

“I haven’t been approached by any lighting manufacturers that want to sell direct, but if this is indeed going on, I don’t like it one bit. Electrical distributors serve a true purpose when it comes to solving problems, returning products, stocking items, and providing support and expertise. I don’t think manufacturers are set up to deal with any of that. That’s why they have distribution in the first place. From my perspective, distributors will continue to fill a real need for those of us in the electrical industry who need to know that there’s a reliable and reputable ‘middleman’ that is capable of handling things.”

David Witz, president at Oak Brook, Ill.-based Continental Electrical Construction Co.:

“At this point, we’re not doing very much direct buying from manufacturers. However, we are seeing more general contractors/end users buying their lighting on a direct basis—to the point where we’re not even involved in the actual selection and procurement process. These customers are working either with electrical distributors or with the actual lighting manufacturers. So either the end user client or the general contractor has been working with distribution more directly or dealing directly with the manufacturers themselves. That’s just a trend we have to learn how to deal with and accept, but it definitely brings up issues with warranties and other potential problems that we now have to work through. We’re seeing this strategy being used on larger, multimillion-dollar projects where the total fixture package would cost upwards of $1 million. This is also happening more with datacenter projects, where there is a lot of equipment to buy (and most likely by the project owner). On these jobs there’s a very realistic possibility that we won’t be the ones who wind up buying the actual lighting fixtures and related products. This has been happening for years now and it’s becoming more and more of an issue now. The problem is that the pendulum tends to swing back in our direction when something goes wrong, and we have to remind the customer that we weren’t involved in that aspect of the process. Maybe the general contractor doesn’t understand how to manage the warranty issues, or perhaps the owner has a problem with the delivery times. Whatever the problem is, if we’re not part of the procurement process—and if we’re only onsite to install the products—then getting the items there on time and in a way that doesn’t create project delays becomes their issue, and not ours.”

McCrea is a Florida-based writer who covers business, industrial, and educational topics for a variety of magazines and journals. You can reach her at bridgetmc@earthlink.net or visit her website at www.expertghostwriter.net.

 

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