Riding Both Sides of the Fence By Dan Smith I have read, with great interest, all of the recent EREN posts concerning suppliers selling to a customer’s customer. It is my opinion that while there may be some who will deliberately target them, most vendors will not know- ingly bypass an existing customer. Often when this does happen it is an honest mistake. That being said, how do we know who is a supplier? How do we determine which customer belongs to which supplier, and more importantly, at which level they do business. When I started in this business there was a recognized multilevel distribution chain in the automotive industry. You had manufacturers, “WDs’” (warehouse distributors), “jobbers” (parts stores), “dealers” (new vehicle dealers), repair garages, fleets, and end-users, aka list price. The closer you got to the manu- facturer the lower the cost. The closer you got to the end user the higher the selling price with a nice healthy profit margin for everyone. I know that to many of you this sounds like a fairy tale but I swear it’s true. Even more unbelievable is that most everyone knew about the supply chain levels and respected them. Unfortunately this chain got kinked and broken. Buying groups were formed by jobbers to bypass the WDs. WDs then went directly to dealers. Large fleets jumped over the dealers and some went directly to the manufacturers. Mass merchandisers got into the act and sold to end users at dealer prices and so on. Notice that I did not mention rebuilders in this distribution chain! That’s because different rebuilders fit in at different spots. Large production rebuilders were at the manufacturing level and small local shops bought at the dealer level from parts stores. However, rebuilders had another, separate, aftermarket, supply chain of their own, known as rebuilder suppliers. These rebuilder suppliers normally sold only to rebuilders and at prices that were equal to or lower than jobber costs. When rebuilders did purchase through the traditional automotive supply line it was usually from a jobber for OEM parts that were not available from their aftermarket suppliers. That is unless they had managed to get set up as a jobber with a WD. After all, they sold rebuilds to garages and dealers. Didn’t this qualify them as a jobber? Pretty good so far? I almost forgot. Some rebuilder suppliers carried additional parts not related to rebuilding. A good example is the Valley Forge line of ignition parts. Did I also mention that many repair garages and dealers did their own rebuilding? Confused yet? Let us ask a few more questions. Who is a rebuilder and who is a rebuilder supplier? Does rebuilder equal jobber? Which customer belongs to which supplier and at what level? If a rebuilder supplier also carries complete units or ignition parts can they also be a WD in the traditional automotive supply chain? If a dealer or fleet rebuilds their own units are they a rebuilder? Is a part store jobber with a machine shop a rebuilder? What would you classify a rebuilder who grew into a WD supplier for OEM lines and carries aftermarket parts for sale to other rebuilders? Where does the young upstart “out of my cel- lar’ rebuilder want to be fit in? Now let’s try to pick the answers to these questions. Yes, no, maybe, I don’t know, all of the above. You can see that the boundaries, if there are any, are not clearly defined. Our industry has several suppliers who are also rebuilders. It does not mat- ter if they started out as rebuilders and grew into distributors or the other way around. These multiline suppliers sell their product at various different levels in both the rebuilder and traditional sup- ply chains. Determining customer levels has become more difficult. Many treat rebuilders and part stores as jobbers, with similar prices. Fleets and installers are usually lumped together as dealers and list price is all but gone. Large regional and national fleets often nego- tiate special pricing at or near jobber. For all of us these gray areas need to be navigated carefully. I have worked on both sides of this fence—as a rebuilder and business owner for 30 years and in my present position as sales manager for Boston Auto Electric., Inc. It’s not always easy to know where the lines are drawn. As a rebuilder I have lost customers to suppliers who went directly to my customers. When prospecting I take care to ask who the current suppliers are. If one of my rebuilders is the sup- plier, I back off. Then I make a point of informing the rebuilder of my contact. When possible I will ask my customer first if they are selling to a prospect. Since we carry several accessory lines it is not unusual for a parts store to buy units from their local rebuilder and other parts from us. It is highly possible that your parts supplier is also selling to a national account with a branch next door to you. The warehouse where you buy your Cole Hersee can be the same one where the local independent parts store buys t