Ricoh sells off 4 RBS branches to RJ Young…a blip or a shift?

February 20, 2012

There has been much talk about the mega dealer RJ Young buying 4 RBS branches.But what does it mean? Up until this point the trend has been for the Manufacturers to expand through acquisition of Dealers. And when they could not acquire a dealer they would often open up a direct _BS (CBS, RBS, KMBS, etc.) branch and try to compete against their own Independent Dealer. It goes without saying that doing so has not endeared the manufacturers to their dealers.

The manufacturers in their defense were reacting to their competition buying up large parts of their distribution change. See my blog post. They felt that they needed to directly control their distribution so that this could never happen again. In the beginning their was a considerable chill between the manufacturers and their Independent Dealers. I heard one quote ascribed to a Ricoh executive that in the near future they wouldn’t need their Independent Dealers! What Hubris! I am guessing that right about now he is rethinking that opinion. Do I think that that the practice of Manufacturers selling off their branches to large Independent dealers is a trend? Maybe in the more rural areas, we’ll see.

I think Ricoh’s significant financial troubles made them the first to be willing to take this step. But other manufacturers continue to struggle with their direct sales force. In the case of Canon, I think they felt that CBS would fill the void left by IKON & Danka, and to a lesser degree Global. And while they spoke about how important the Independent dealers were to them, they were opening up CBS branches across the street, trying to put them out of business, or at least relegate them to a significantly lesser role. But it hasn’t been quite that easy. The Independent dealers did not “go quietly into that good night”. With decades of history selling & supporting their products and an infrastructure that no _BS branch can claim the large independent dealers are thriving. We have been filling the vacuum, and competing quite well against the direct sales branches.

I recently saw a great line on the P4PayHotel that asked “Do you buy a car directly from GM? Ford? or BMW? Of course not! You buy a car from a local dealership that has a solid service infrastructure standing behind them. Cars and Copiers (MFDs) are very similar types of purchases. They cost about the same (ranging from under $10K to over $100K). They require regular maintenance and fairly high tech support. If BMW opened up a direct sales office in your town, and had a beautiful showroom and nice experienced sales people, but no parts department, or their top tech was based 3 states away, would you be comfortable buying a car from them? I doubt it, I surely wouldn’t.

Manufacturers are great at manufacturing, but they struggle when they get outside of that comfort zone. Most of their _BS branches are losing money. They have attracted an experienced sales force, they have nice demo rooms in major markets. But heir centralized support model leaves much to be desired from a customers point of view. I have heard CBS sales people say that they thought they would roll into town as CBS and fill the void left by IKON & Danka, but it has been a lot harder competing with the large Independent dealers than they thought it would be. I have heard managers within the Independent community say the direct _BS branches would be the end of the independent dealers. Only to find that the “reports of our demise have been greatly exaggerated!”

The truth is there is a place for both the direct sales and the independent channel. The biggest problem that the _BS branches are causing for the dealers today is giving away their products and especially their service. After they say “We are the Manufacturer” (see two paragraphs up) they then say “We have the same products as the Independent” (which is true). They then go to their Ace in the hole “We are cheaper than the independent dealer” (No wonder all the _BS branches lose money). To tell the truth I don’t mind selling against someone who is “the cheapest”, because the response to that statement is do you want “Cheap” or do you want “the Best Value”? Then I proceed to explain the difference between the _BS branch and our large Independent Dealership. For 20 years our President has had a saying Canon is the product, and NECS is the difference!” This has never been truer than it is today because CBS and Oce have the same Canon product as we do, but they don’t have:

an alternative product line like we do (Konica Minolta) when Canon is not the right fit.

They don’t have a local warehouse with millions of dollars or parts, and millions of dollars of inventory.

They don’t have a Sales force that has been selling in this area for 20+ years,

They don’t have a Service force that has been servicing this equipment with an average of 15 years experience (some as many as 25 & 30 years).

They don’t have local dispatch who knows the local weather, and the distance between Gloucester & Worcester.

They don’t have a local team of Systems Engineers to integrate, configure, and support these MFDs on our customers networks and with our customers software.

Finally, the _BS branch does not empower their sales force to solve their customers problems. Our Sales people CAN talk directly to Service (from the tech to the VP). Our Sales people CAN talk to the Billing coordinator to resolve billing issues, or the leasing coordinator to resolve leasing issues. If you have ever had a problem with leasing or billing you know how valuable that is.

All of which brings value to what we are selling. Because we are NOT just selling a Canon or a Konica Minolta. We are selling an NECS\Canon or an NECS\Konica Minolta with the full faith and infrastructure of NECS standing behind the manufacturer’s great product. That’s the NECS difference. It costs a little more, but it is certainly a better value.

The sweet taste of a cheap price soon turns bitter with the reality of living with poor service & support after the sale. Especially when you have to live with it for 3 to 5 years. So ask me why we cost a little more that the _BS branch even though we are selling the same products, that is a discussion that I look forward to.

That’s My $0.02
Vince McHugh




  2. Ricoh well has been a let down, nothing but a sweat shop.

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