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The person closest to the end of the supply chain makes the most money; this was a lesson I learned the hard way.
What is a Middleman (or Middlewoman)?
In the 1970s the universal distribution model for almost all products was:
- Manufacturer sells to distributors
- Distributors sell to local dealers
- Local dealers sell to the consumer
Everyone between the manufacturer and the consumer are the middlemen (or middlewomen).
Back then, options were limited. The resources available today didn’t yet exist. The system was bulky.
During the 1970’s my father gained a lot of local success selling storm windows & doors, screens, and garage doors both to builders and homeowners. I worked with him and after college, I joined full time. Within a few years, I got the itch to manufacture our own storm windows of a design I had gotten a patent on.
The president of the company we had been buying storm windows from visited us one day and gave me some sound advice. “The most money I ever made was through retail sales and installation, NOT manufacturing. The person closest to the end of the supply chain, makes the most money.”
Of course, I proceeded with the manufacture and we never made as much money again. His message has haunted me ever since.
Taking a Link Out of the Supply Chain
As our transportation system has grown with the advent of UPS, FedEx and motor freight carriers the logistics of getting the product directly from manufacturer and consumer has become easier and easier.
If the product is a commodity like screws or toothpaste—products that are sold as is—and can be packed into a box, it doesn’t need middle distribution.
Technical products, and those that require local services to work properly, still need local representation in the supply chain. For instance, windows and doors require expertise for proper installation and function. Basic knowledge simply isn’t enough.
But What About Amazon & eBay?
Amazon and eBay are consolidators that operate massive websites and fulfillment centers for the final leg of transportation and sales to the consumer.
The two stock millions of products so customers can put a shopping cart of items together and purchase from several brands at once. These same products are also still being sold by brick and mortar operations like supermarkets, drug stores, and department stores.
The convenience these companies provide to customers keeps them relevant. They are self-contained logistical distribution systems and customers like having options.
How are Windows and Doors Distributed?
Window and door sales continue to hold fast on the necessity of local dealers. Some, like Marvin Windows, still have rigid super distributors as part of its business model. It works like this: the local dealer usually has a showroom and represents several different (and often competing) manufacturers. They have salesmen who visit customers, offer consultation advice, and many also offer installation services.
Little by little the dealer model is being amplified by companies like Hope’s Windows that have gotten rid of all of their local installing dealer representatives. Instead, they have opted for regional sales agents to promote products to architects and to local “glass houses”—also window and door installers—when the project is being bid to provide prices.
The plan is for Hope’s to promote Hope’s. The local installers buy the product from Hope’s, mark it up, add glass and installation fees and sales tax, and then cut their profits to the bone in order to compete with one another.
This is good for Hope’s but not always greats for the dealers or consumers.
Why Do We Need Dealers?
Every link in the supply chain has to value add. Why each exists in the model is the nagging question.
The reality of the situation is dealers who represent many product lines have salesmen who are loyal to themselves. They want the sale.
The value is in the premium features and premium products (that are not the least expensive); those are harder to sell. At the first sign of price resistance, salesman do not stick to their guns and insist the best product solution for the customer. Unfortunately, they lurch to the lowest common denominator: sell the job for less, get the deposit, and move onto the next sale as quickly as possible.
If dealers are not offering superior services or providing necessary services, their markup is an additional cost to the consumer, not a comparable benefit.
Where Can You Buy Windows & Doors Without the Additional Markup?
2Fold® Doors has gone to market with the leanest distribution model possible. We offer a customizable product that is built on virtual manufacturing principles and massive amounts of engineering automation. We believe that the unique product concepts are best discussed by company technicians directly with the consumer, their architect, and their contractor. There’s no “playing telephone” here.
Client needs are tailored to the product quickly and efficiently. This way, they can be sure they are getting the most for their money.
This eliminates the need for a “glass house” because every product is shipped factory glazed (glass fully installed into each sash, complete). Installation is simpler and can be managed by the contractor’s staff on site.
When professional installation is preferred, 2Fold® hires or trains local technicians to make sure the job lives up to the lofty expectations. There is no need to pay for non-experts who diffuse the correct information and add cost.
At 2Fold® you are sent right to the top. Call Mr. Ed himself.