Lots of Vendor Talk, here's my Jerry McGuire

[NewGenWheels]

You know, I think it’s about time I get some things off my chest for my friends here on Lateral-G. Things that have been on my mind for over a year now, things that I think that just need to be out in the open for everyone to think about and take into consideration, what with all the “vendor talk” this past two weeks.

I guess you can say I have a unique perspective since owning Driverz Inc, and in many a case experienced all sorts of “interesting” transactions pertaining to the fore mentioned.

First of all, things have gotten BAD. You’ve got vendors discounting products so deeply that profits margins are down to 5% in some cases. Let me put that into perspective. At that rate, on a 7000 dollar subframe, the profit margin is $350 bucks. You tack on vendors offering “free shipping” or “no tax” and you quickly go in the hole on that sale. I think the only reason a vendor would still make that sale is because they needed the cash flow… which is why you see vendors selling product and not placing orders with manufacturers for weeks, sometimes months. Business 101 tells you that a discounted business model such as this is only successful when selling high volume and no vendor is selling enough 7000 dollar subframes to make a living making 350 bucks a pop. At Driverz, I’d have to sell 10 subframes just to pay my rent at the shop, light bill, insurance, phones and internet. Yeah…right.

And why aren’t the manufactures enforcing dealers to sell at retail? Well, they are probably just stocked to get another order. When you have big name manufacturers, all of who out of the blue, start selling other manufactures product, you know that things are not like how they use to be. For example, all of sudden, Hotchkis sells Baer brakes… huh?

Back in the day, you had to have a brick and mortar location to become a dealer for some manufacturers. Now, you can buy Ridetech from a dude sitting at a laptop in his boxers in the comfort of his own living room just cuz he has a website. Hell, I’ve even caught manufactures selling product direct for less then what dealer cost is?? WTF is that about? That just isn’t ethical to me.

And there has been a lot of talk about *******. I’ve personally been battling him as a competitor for 6 years, so I have a unique take on it all. I’ll tell you this, you can’t pimp yourself as the Walmart of parts, sell product for as deep as a discount as he does, and expect to come out ahead. Something has got to give. Nor can you continue to do it, and facilitate a high level of customer service to each and every one of those orders. I know I got caught up in competing with him because we sell to the same crowd, in the same arena, and frankly, I wouldn’t have made a single sale if we didn’t at least match some of the discounting. That’s why we had to sell Forgeline for 10-15% back all the time… because he does. In retrospect, I can tell you we felt like we had no choice, hell, we had to feed ourselves too, but who really won from doing that? No one did. Now every customer expects to pay that for Forgeline, and who’s ever going to pay retail for them again? I don’t only blame *******, but I blame the manufacturers for allowing it to happen. And I could only complain about it for so long before you either price match, or lose, so I eventually was forced to do the same. If you can’t beat em, join em, and trust me, I complained about it until I was blue in the face. My question is this, how can you advertise yourself as giving away 14K dollars worth of Forgeline wheels last year, and then be in debt to customers for what seems like WAY more than that? Ethically, when does it stop? How can you move into a new building, and pay for all that comes along with that, when you’ve got these guys beating down your door for refunds from over a year ago? I’m just calling it like how I see it. I can’t believe nobody else has come out and just said it. And tell me this, why do you all keep buying from him regardless? Do I need to quote Webster’s definition of “insanity”??? For example, I got a call from a customer just yesterday asking for a quote on a Wilwood disc brake package. I quoted him what Summit sells that same kit for, and he said ******* was beating that by 200 bucks. I said that was ridiculous, and I told him to go right ahead and order it from him, and good luck on getting it anytime soon. He then proceeded to tell me he’s had parts on order from ******* from July of last year, and that he doesn’t think he’s ever going to get them… so I asked the golden question, WHY ARE YOU GOING TO ORDER MORE PARTS FROM HIM THEN? I said, you’re ready to just go ahead and spend another 1700 bucks with him then? I understand if you don’t want to order it from a dealer because of your experience, but then by all means order it from Summit, or direct with Wilwood, but come on, lets think about what we’re doing, and who we’re spending our money with people.

Now I’m not going to stand up on a box and pretend we didn’t get behind when I owned Driverz Inc. Bills got higher, profit margins shrank for all the reasons above, and when we tried to raise pricing, buyers went away. But, I’ll tell you this… I took loans out on my cars, I sold hot rods, and took out lines of credit from my bank to make up for it. I didn’t let it get so out of hand that we couldn’t bounce back from it. And finally, when I re-visited my business model at the end of the year, realized that it couldn’t be done the way I was doing it and continue to feed my family, so I sold the business to a guy who is changing the model so it works. And I am now taking the things I’ve learned, applying it to the new venture, and building a business from the manufacturer’s seat.

You know, I had a customer call Driverz last week for a Speedtech subframe. I quoted him the retail price on our website, which is less retail by only 50 bucks and he asked about shipping. I told him there was a crating fee, which is clearly outlined on Speedtech’s website. He said, well Matt’s was going to ship it for free, and that there was no tax. I said no tax? They are in CA and so am I so there has to be tax. He said, “Oh, I’m sorry, it was that uh, that uh, Ironworks”. I said, Roger is in Bakersfield dude, he’s gotta charge you tax too!”. He said, oh, maybe I was mistaken, and that they were mis quoting me. I told him, I think you were just trying to get me to give you free shipping with no tax and that Matt’s and Ironworks said the same thing and you’re just trying to get us to compete with each other. I haven’t heard back from him, but judging by one of Roger’s other posts this week, I’m guessing he called him pulling the same BS.


I’d love to vent about another deeply disturbing situation. Don’t call a vendor, milk him for several hours’ worth of tech advice, then at the very end of it all, after the weeks, or months of working with him, make him price match summit, or *******, or whoever else is whoring it out that week. That is the biggest bull **** move of all time. I can’t tell you how many customers have pulled that. I know everyone wants to save a buck, but at some point, when does it end? Everyone talks about how they got screwed by the vendors, when do vendors start standing up and talking about how they got screwed? The poor sap who spent hours on the phone with you figuring out what works with your given situation just got screwed, and you have no remorse, or even later have the audacity to come on here and post about how its all about the bottom line, he didn’t give me the price I wanted? But you didn’t hesitate to waste hours of his time, did you? We had a customer earlier this year buy a set of wheels from us, that we customer serviced to death. He called and called and called and talked Justin’s ears off for months about what rear end to buy, what brakes to run, what transmission to run, what suspension to buy and when he finally got his wheels bitched, moaned and complained about how we could have gone wider, and bashed us like we screwed him and sold him a wheel set that didn’t “fit” when the wheels fit without rubbing, and that he could even run a wider tire. Yeah, that’s some BS right there. I know you all know what I’m talking about. All I’m saying here is it’s about time customers start taking some responsibility. If you start a relationship with a certain vendor, and they are truly bending over backwards to service you, give you all the tech advice they can, and are working HARD FOR YOU, then don’t give them grief when they are 50-100 or hell, even 200 bucks more in price. That guy, whose ear you’ve just chatted off for the last hour for free tech advice has a family, and kids too, and deserves the extra bit of money just for knowing what he knows, and willingly giving it to you in hopes you’ll spend your money with him. You know, I’ve even started having to tell customers, that I can’t give away backspace for a certain vehicle until we start writing up an order? You think I like having to say that? Definitely not. But at some point, something’s got to give. I’ve even contemplated charging for tech advice. Could you imagine that? You want to call in for backspace information cuz you saw a chevelle we fitted with 19s and 20s and you want the same look, sure, but unless you order from us, it’ll be 150 bucks up front for that info.

Have things come to that? I don’t think anyone here wants that.

[NewGenWheels]

Another thing, there’s a lot of talk about “It’s only the rich guys that say that”. Like in a post I read earlier tonite regarding you get the customer service you pay for. Dear customer: I’d propose this to you, do you think maybe you’re playing outside your means? Yeah, I said it… maybe it had to be said. If you can’t afford a subframe, don’t buy one. If you can’t afford expensive 3 piece wheels, don’t buy them either. Rethink your game plan, and if you can’t wait, and save up the extra duckets to afford it in a few more paychecks, well, then you can’t afford it (period). Don’t hunt and fish for the poor vendor who is willing to discount the product so severely that he practically lost money on the sale, because I’ll tell you this, you may have saved a few bucks, but you’re going to end up one of those guys on the forum bitching about his parts being late or how the finish on the wheel was inferior.
I learned a LONG time ago, there is always going to be another guy out there with more money than you, building a nicer car. So what? Let it go. Build the car you can, within the means that are available to you and have fun with it. Stop coming on the message board and pointing out the rich, like it’s a problem they buy expensive parts. They’ve earned their money somehow, and can afford to buy nice products, at retail, probably direct from the manufacturer. And you know what, good for them. They probably will get their parts sooner too. But if you bought at a deep discount, and are left waiting at the door a little longer for UPS to drop off your parts, don’t complain about it. You should have expected that. You saved 200 bucks though, woohoo!

When you shop, take into account this VERY important rule. There are three things everyone wants out of any transaction:

1: Price

2; Customer Service

3: Time Frame

Pick two of the three, that’s all you’ll ever get.


You want to know what I think? I think everyone should start selling at retail. Level the playing field. I think Frank, Matt’s Classic Bowties, Ironworks, DriverzInc, Muscle Rodz, and all the other vendors should start selling at retail, period. Then let the chips fall where they may. You want to talk about customer service? They’d be forced to out do each other with customer service and knowledge. And you know what, they could then afford to do it! If not, then maybe they'd be forced to do something new. Then everyone can start buying from who they like, and price wouldn’t be a factor. the last guy standing would be the one who knew the most, and customer serviced the best. I also think that everyone of these vendors should start talking to each other. Hell yeah, why not? You guys could share stories about that customer that just called you and tried to beat you down on price, and tried to play one vendor against the other. Hell, at least that would stop that nonsense from going around. No more, “Well I called (?) and they said free shipping, or they said they could do it for (x)”.

I think manufacturers should start forcing retail. Yeah, I said it. I’ll say it again. Margins are what they are for a reason. It allows enough profit in there for a vendor to maintain a living, and a legitimate business. And, it keeps the retail value of your product where it’s supposed to be. And if people stop buying your product, re-think your manufacturing, and find away to make your product cheaper so you can lower retail across the board.

Makes sense, don’t it?

Now I’m pretty sure I just stirred the pot, and I’m sure many of you may want to rebut. I’ll leave you with this final thought, until you’ve walked a mile in my shoes, you’ll never know what it takes to successfully run an aftermarket parts business, so don’t pretend to know. If you’ve done it, and are still doing it, then good, you have reason to post. If you haven’t, stop and just think about what you just read, and take away from it what you will. That is the real reason why I feel like posting this… hopefully you learned something. If you’re “that guy’ who thinks they could do it better then the vendors here, I beg you to try, and I’ll talk to you in 5 years about it, until then, don’t pretend you know, just read the post over again and take into consideration that I once, was just like you, and thought parts businesses made a killing, and that it would be “easy”. Uh, no, its not. Especially in this economy, and especially dealing with customers in today’s market who expect instant gratification.

Moral of the story? THINK about who you are spending your money with. And know that you are supporting them buy spending money with them, and if they are a little more in price… oh well, you put dinner on that dude’s table that night, or helped him buy his daughter that cheer-leading outfit they couldn’t afford, or helped pay for a portion of his mortgage that month when he thought for sure he was about to lose his house. And, finally, maybe, just maybe, you get what you pay for. And if you are ‘that guy” who shopped every vendor against each other for the little better deal, then don’t get all huffy when your order is treated the same way….you now know why.

[skatinjay27]

I enjoyed reading most of that...

seeing that 5% margine sucks big time
Hell I bitch n moan if my (face value) margine goes below 70% (restaurant)

[Bucketlist2012]

Don't know you, but I totally agree...

I always want to be treated fairly...I always want a good deal..

But I will be damned if i will nickel and dime the guy who is selling me my parts or doing my work..

Yes, I paid retail....Yes I bought Rushforths. Yes I paid the shop fees to have it built..

I went to them, they did not come to me....And I got everything I wanted on time and the right stuff...

I did ask for a discount.....Was told no....Do you want the wheels ? Then buy them... No weirdness, just fact...This is the price, do you want them..

Yes I did...They arrived perfect and on time, as all the other parts did.. So i did get two out of three...But you don't get the cheap price on custom wheels..

I have run business before, and you have to let the bottom feeders go, but they cannot and will not survive feeding the bottom and cutting prices too low...And they don't..

So as a customer, what you say makes total sense to me...

If I wanted something cheap, it sure would not be pro touring stuff... I would buy a Camry... :lateralG

[bulldog19]

Well said Jon.

[SLO_Z28]

I worked in parts for some time, I know I wouldn't touch something that was less than a 75% gross profit. Ive often wondered how you guys manage to stay in business without manufacturing your own parts to supplement your income. At the cost of running a retail establishment I just don't see how you can keep going unless you're making $80 profit on a $140 alternator. Large volumes and just barely scraping by every month is the only way I see brick and mortar vendors even surviving.

[coolwelder62]

Jon,

[Payton King]

I am with you on this Jon. I could give reasons you are spot on and examples in my life but there is really no need. You hit the nail on the head.

[DTM Racing]

Amen!

[64pontiac]

AMEN to that!

Although if you pick price as your "two out of three", then I think you should have to forfeit your second pick.......

I'm sure every vendor has the exact same problems and hurdles, I spent days educating a customer (in person) about choices and parts to run, developed a project plan, and then got screwed when he started ordering his own parts and took the labour end of it to his "buddy" because he was only charging him 25 bucks an hour. And it wasn't someone who couldnt afford to pay....

I probably come accross as grumpy to some of our customers, but in the end its only because I can't afford to chat them up for hours and hours and they really havent spent much anyways. People are always amazed when they find out that the guy who just spent 250k is a "better" customer that their 569 dollar wiring harness purchase, because every customer is important right??

You have got to look out for yourself, because although all of our customers are coming to us in pursuit of their HOBBY, and have the misconception that that is all we are doing it for, when in reality we have got to feed our kids and pay our bills with it! And it is ALWAYS a shame to lose a sale to summit or jegs because it was 25 bucks cheaper, yet you were quoting your customer a shipped price........

For those of you who are Manitobans on this forum....... ITS NOT CHEAPER TO SHIP IT TO THE BORDER and pick it up yourself PERIOD. even if you get free continental US shipping, lets add it up:

-On ONE box, it is $5 US per box to pick it up at a parcel depot
-It is now $10.75 US service fee to cross the border only to pick up a parcel
-You still have to pay tax on the item you are bringing back, as you have not been across long enough for your personal exemption
-Gas money..... most of you are from Winnipeg, which is around 60 miles away each way. average 20 MPG for your vehicle choice, and that is 6 gal or 27.24 L (canadian) at 1.15/L so 31.25 in GAS
-TIME....our time is worth something, is yours? Did you take off work early? lose pay? waste your weekend? It takes MINIMUM 2.5 hours without lineups at the border.

That equals around 48 bucks CAD without the tax for the item on ONE box. That box could only contain a 100 dollar part. Was my price really that bad? You be the judge. Also, when I recieve my items, I check the box and the item to see if it is right or damaged or missing. If it is wrong, I deal with it. You have to ship it back or buy another one.

Also for any of our suppliers, this is why we DONT like to ship to a US address. Add in our time and it is cheaper for us to broker and ship direct.

To sum up, Jon has many valid points, as do alot of the posters in these last couple threads. We have to try and work together as vendors as best as possible as well. And a solid working relationship, either business to business or consumer, is worth WAY more that the little bit of a discount you might get shopping around any day. There are many times that I pay a little more just to deal with someone that I have a good working relationship with, and sometimes there are headaches that come along with it but in the end it is a way better experience to be able to have some repor with that person!

And Jon, I hear our wheels turned out amazing.... I cannot wait! NewGen wheels rock!