Comparing Vendor Discounts And Rebates

The discussion on buying groups continues with part four of our roundtable.

What is the average percentage of savings per vendor that a distributor can realize by joining the buying group? Would these savings be as easily available to a nonmember distributor that pays its vendors quickly?

Savings, or in our terms, functional discounts, received by the group and our owners, vary according to the level of activities, strategies and growth generated during any given period of time. While I’m sure that nonaffiliated distributors who have strong balance sheets, employ subject matter experts and outpace the national growth of their key suppliers could, within limits, generate such savings, there is a compelling reason market-leading distributors have chosen to become owners of SMA. Where SMA truly differentiates from such independent entities is our focus on collectively staying attuned to, and impacting on a broader scale, the needs of our supplier base. Manufacturers value, and financially reward, the dedicated focus and collaborative approach we provide them in the implementation of focused growth strategies, market-penetration initiatives, and emphasis on sales of specific categories of products or systems. — Dick McGann, president and CEO, Strategic Market Alliance, Charlotte, North Carolina 

Rebate programs are completely separate from payable discounts, and they vary from supplier to supplier. Any member that’s buying from a manufacturer is eligible for rebates; there are no exclusions. In addition, United Group members earn deeper end-of-year rebates, because they own the group. — Bob Klief, vice president of marketing, The United Group, Monroe, Louisiana

The savings is significant and varies with each DPA supplier. If any distributor is interested in joining DPA, we have a worksheet that the distributor can complete and we would be happy to share the exact percentages in rebates that it could expect to receive. DPA savings is much more than just rebates, because our members also get better pricing, special terms, extra promotions, invaluable institutional knowledge and more often than not, lifelong friendships. — Zachary Haines, executive director, DPA Buying Group, Cincinnati