07.18.2008 — Whatever your business niche, as a custom integrator, hybrid retailer or boutique dealer, you have to have products to offer your clients. As a result, you're going to have to decide from where to source those products.

Unless you're a retailer getting low-priced door crasher items to blow out at your next holiday-long weekend sale, most of you are leery about dealing with grey market import goods that have zero warranty or service behind them.

As a result, you often have to choose between ordering your products directly from the manufacturer or from a distribution agency. As you well know, some brands deal directly only, others are agency-only, but many more CE brands are available either direct or through a distributor.

So the question is: as a business owner, which is the best choice when it comes to ordering your products?

Pricing

In order to be competitive, you need to comparison shop supplier pricing, just the same way customers do.

Recently, one dealer I know needed a large order of 20-inch LCD panels for a project they were working on.

Normally, for big panels, 42 and larger, the dealer buys direct from the vendor. However, pricing on 20-inch panels in the past year has been really squeezed, and they felt compelled to price shop.

What they found was that they could save 12 percent by placing their order through a distributor, thanks to a volume discount that exceeded what their vendor was willing to give them.

The lesson here is that just because a distributor is a middleman, it does not mean that his wholesale price will always be higher than manufacturer direct pricing. So shop around!

Availability

Beyond price, the cardinal issue with any product is whether or not you can get one when you need it!

Having access to a distributor in addition to the manufacturer essentially doubles your odds of being able to source what you need.

Recently, I posted in response to a question in the CE Pro Community about the availability of Panasonic Blu-ray players.

The same day, a Canadian rep emailed me to let me know that they had stock in their Calgary warehouse and asked me to spread the word to any dealers I knew who wanted to place an order.

Service

Because distributors act as middlemen, they recognize that they have to add value to the transaction.

One way they do that is to offer service and support that exceeds what the manufacturer themselves can do. For example, an expedited RMA program for defective goods. But the most important thing they offer is that they can converse with their dealers on a technical level.

While some manufacturers scale their tech support to deal with end users who don't know anything, a good distributor knows that his dealer clients are sophisticated, and is prepared to answer their toughest questions about specifications and performance.

As an integrator, when you have questions, you want answers, and you want them quickly. It's great to have a rep who always answers his cell on the first ring, and is there when you need him.

Realistically, there's no one-size-fits-all answer. When you have a choice between manufacturer or distributor, you've got to balance the relevant factors into an equation of cost, convenience and security.

You may well have to do this on a case-by-case, or even order-by-order basis. That my sound a lot like work, but when it's your money being spent, it's better to be certain you're doing the right thing than just throwing money at your suppliers and hoping for the best.

As it happens, these same criteria can be applied when considering whether or not to join a buying group.

For a list of custom distributors and what they can offer you, check out The Ultimate Guide to Distribution.

Lee Distad is a freelance CEDIA Certified Professional Designer who offers design and process consultation to firms in the Custom Installation industry, as well as copy writing and other professional writing services. Lee’s business and industry blog can be read at http://www.leedistad.com