Dealer Discounts

You won’t learn about this in public schools.  If you haven’t been in business before (or if you are new at it) I feel compelled to educate you a little on the facts of life.

It’s quite common that a small dealer will call us for the first time, and want to order one or two items at a dealer discount.  When we inform them that there is a minimum buy-in for dealer pricing, sometimes they’re just fine with it, but other people act all disappointed.

I have to wonder why they think it is that we offer discounts to dealers in the first place.  Maybe they just don’t think about it.  This is not the manufacturers being nice, or considering dealers to be part of some good-ol’-boys club or something.  We offer discounts because it benefits us to have our product stocked and promoted at the local level.  We could sell direct only, taking the same money we offer as the dealer discount, and put it all into advertizing, but we feel it is a better value to have certain dealers invested in the product and thus promoting it for their own benefit.  When done right, it’s a symbiotic relationship.

If all you want is one or two units, you’re not a dealer, by definition.  You’re just some guy who wants a discount.

Our buy-in is pretty easy, even for the smallest mom & pop store.  One of the branches of Yamaha that I’ve dealt with for decades has an annual purchase requirement (or did) of $100K to consider you a dealer.  Part of the language in their dealer agreement (which must be signed and witnessed) states that the dealer must “promote the product in such a manner as to elevate its perceived value”.  Yes; that’s what they’re paying you for, in the form of a dealer discount.  You’re expected not only to stock a “representative selection of the product line” but to maintain it, keep it looking nice, display it in an attractive setting, know the product and be able to demonstrate it, and you’re expected to advertize.  Some manufacturers want to see your advertizing budget and see your ads.  Our current, one-time, minimum buy-in requirement is around 500 or 600 dollars (five hundred or six hundred dollars– not thousands) more or less, depending on the model mix (it’s a unit count minimum).  You want to tell me you’re a dealer, but you can’t produce a few hundred bucks for something you say your customers want?  Seriously.


7 thoughts on “Dealer Discounts

  1. What’s funny is to contrast that with the grocery business where large brands will actually pay for prime shelf real estate.

    I used to be in the musical equipment business (was a Yamaha dealer among others) and most of the major brands not only had a good sized minimum order for franchisees, they also required dealers to send employees to product training seminars so that they were effectively supporting the product, not just clerking orders.

    Not too long ago, Redwing boots didn’t allow internet sales because they wanted to make sure customers were accurately fitted rather than buying the wrong size and then complaining that the shoes were garbage. All that is changing now.

  2. Heck, you probably have customers who own $500-600 worth of your products (and if there were an UltimAK for SKS, I might be one of them!).

    Really: $600 is what, less than a dozen mounts? They can’t stock four each of M1 Carbine, AK, and M14 mounts?

  3. Wolf; the most you can put on one rifle, of our proprietary mounts, is about $300.00. If you’re going to get a complete outfit with a new stock and high-end optics, you can spend over a thousand pretty easily, and quite a few people do.

    FYI; we started this business a) because of Clinton, b) because I bought an SKS because of Clinton, and c) because I wanted a mount on my SKS (which I hand-built in the music shop). The Kalash, it turned out, was as if pre-ordained to have my idea of a forward mount on it. The SKS, not so much. I ended up making a colapsible gas tube for my SKS, and that tube is a working part of the gas system, unlike an AK “gas” tube (the Ruskies call it a “gas dissipator”) which, functionally, is nothing more than a piston guide and blast shield. All the work is done in front of the tube, in a separate chamber. Also; the SKS tube must be removed for cleaning, unlike an AK tube which doesn’t hardly ever need cleaned in the first place, and can be swabbed from behind without removing it. An SKS mount is certainly possible (I’ve done it) but more fiddly and expensive, so far as I can see. We’d have to redesign the piston rod, and, well there I’ve already divulged too much.

    Robb; so call me.

  4. One of my favorite places to visit used to be the LA Mart, which is totally wholesale only.

    Check out their restrictions:

    Los Angeles has tons of wholesale with various restrictions. Once you get inside the buildings, you have to deal with the contracts, etc. $100K is a lot but Yamaha is a major brand.

  5. How is paying for shelf space any different? Either way, the supplier is losing money.

    That’s also an interesting observation on Red Wing. After having dealt with a real shoe store with a knowledgeable owner, so I could buy Red Wings, I don’t think I’d want to go back to do-it-yourself fitting. I’ve been relatively back pain free for a couple of years now because someone took the time to do it right. It was much cheaper than an unnecessary trip to the foot doctor.

  6. ubu; I’m in error. Yamaha (this was years ago) wanted a 100 unit purchase, not $100K, to reach a particular price point. Not all that different at the bottom line (depending on model mix) but my memory faild me there temporarily. IIRC, the $100K was where you started receiving an annual rebate (which is just another way of offering a discount that you don’t publish directly). There are several price points that depend on volume. These volume prices are published and sent to all dealers. At the entry level, you’re in the left hand price column. As you increase your purchase volume, you move over to the right. Eventually, you move “off the page” meaning that they’re giving you a deal so good they want no one else to know about it.

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