Many companies that regularly buy products from large companies don’t know that they are really costing their business tons of money by making one large yet simple mistake. Buying from LARGE well known corporations. Let me explain. That isn’t to say you as a consumer can’t save by buying from large brands and businesses, but even the public consumer often times unknowingly gets had as well.
Being a branding and marketing consulting firm I meet with small to medium business owners often, we share ideas, pricing and business models all the time. It’s what we do, and all too often I see one fatal flaw all the time. People thinking that they should or have to do business with the large multinational corporations your familiar with. This couldn’t be further from the truth. For example: one of our clients is a small fast growing (but awesome) industrial and construction supplies distributor in Charleston SC, and they regular beat the pants off their competition in pricing. Yet, they have to constantly compete against the large familiar names and brands like Grainger & Fastenal to get this business. Rosco Industrial Supply of SC without a doubt is a far better choice for contractors, heavy duty, mechanics, and industrial businesses to purchase product from then their huge counterparts. Why you ask? It’s simple, ever seen this? How do you think they pay for their sponsorship of a NASCAR race team? That’s right by having higher prices than the “small guys”. Both our client Rosco Industrial Supply and Grainger sell the SAME exact stuff, but Grainger is considerably more expensive for the same exact brands, and manufacturer products that their competition can sell as well. If the local buyers of these products would do their home work and not be lazy they would realize that they could save an average of 25% each year in product purchasing costs just by using a smaller company. The same goes for Fastenal, both companies are spending so much money on their marketing and advertising that they have to make up the expense somewhere – right? That expense gets pushed onto their customers. I get it, you think well they are so large, and buy so much product from the manufacturers that surely they have to get bulk purchase discounts. Yep. You’re right they sure do, but do they pass that savings onto their customers? NOPE. They just pad their pockets.
We haven’t even mentioned service yet. I doubt anyone would refute that a small company would give you better customer service. You’d be correct. When using a large multi-million or $billion company they have a tendency to be “too big for their britches” one might say. SO if you’re a small to medium sized business that only buys $5000-$10,000 a month in fasteners, hoses, tools, etc vs a BIG company spend $50k a month or more do you think you’ll get the same level of service they will? I think you know the answer. Small distributors have to care about their company’s reputation more and thus give everyone better service than to the large “players” in the market place because they don’t have to care as much. So your sales reps, and inventory fillers don’t tend to put forth the effort as much as your local “small guy” might.
In conclusion.. Next time you’re looking at your purchase orders it might be time to reconsider talking to the “small time” sellers and distributors. Chances are if you’re the purchase manager in charge of product order fulfillment and the boss finds out you’re costing him/her money it might be your job on the line.