What happens when the Messiah becomes the Anti-Christ ?

Why the company that every manufacturer and Rep in the CEDIA channel loves to hate, is on a collision course with retail and what that means for the Custom Installation Dealer.

Preface: Let me begin by saying that I think the company that I will be talking about here has a genius marketing department and has timed their entry into our market perfectly. I think everyone reading this post will grasp who this company is, but for now, I will refer to them as "Messiah". I know some dealers are very passionate about this company and you will not hear me downgrading the company or their products in any way in this post. I think they make a good product for the money and are a good all around company. My point in this blog hinges on the way that their product is distributed. This post should get some very interesting comments!  Read on....

As an Independent Manufacturer's Rep, my line card has traditionally been filled with higher end goods for our channel. Most of the goods sold by "Messiah" did not crossover into what I was selling my dealers. But over the last year and a half, "Messiah" has started introducing product that directly competes with some of my middle priced lines. I did not think much about it at the time, but after I started asking my dealers if they do business with "Messiah", a funny trend started appearing. Half of the ones I asked readily admitted that they did and the other half said no way and would not admit to it! But, upon walking through the facilities of the ones that said "no way", I started seeing a "Messiah" box in a corner, on the shelf in the warehouse or installed in the wall in about 30% off them. Hmmm, I thought to myself, I have 50% of my dealers that admit to doing business with them and also 30% that say they are not but are. That's 80% of my dealers in my 3 states that I cover! Again, I'm not saying that if I was a dealer in this day and time that I would not be doing business with them either. Their approach to the dealer channel is very appealing, especially in the hard times that we live in today.

Let's look at why their doing so well:
     1. Free Shipping- no matter how small of an order.
     2. VIR programs- different levels.
     3. Huge margins.
     4. Can't be shopped on the Internet.
     5. Great return policies.
     6. Very convenient website ordering.
     7. Extremely fast and easy dealer sign-up.
        (This one winds up being part of my point later.)

A lot of my dealers in my 3 states have been hit hard over the last few years with the recession. Before the recession, most of them were bigger firms that had personnel in the office to place orders, keep track of VIR programs and make sure product was on time for their install. This person was one of the first ones to go in the downturn of the market. Now the typical day for the typical 4-5 man dealer operation goes like this:
Works all day doing installs; gets off at 6:00pm (or later) eats dinner; gets the kids in bed; watches a little TV; then gets online around 10pm-12 to order product for the next week's jobs (a lot of the time from "Messiah"). 

I had originally thought that most dealers of "Messiah" were only buying basics (mounts, wire, widget/gadget type products, etc.) but after sitting down and talking to a few big dealers of theirs, I have come to realize that this company's products encompass 60-80% of the products on the job. It makes sense for the dealer to do this because of the above mentioned 7 benefits. I cannot fault them.

Here is where I start playing devil's advocate. Most of the nicer lines I sell as a Rep are territory restrictive. Meaning, I cannot have 10 Bryston dealers in Nashville, TN. It makes no sense for Bryston and it makes no sense from a competitive standpoint for the dealer. So, if I have 80 percent of my dealers doing business with "Messiah", the chances that a perspective client getting several quotes from a few dealers and that quote being made up largely of the same SKUs are very good. Remember, it took less than 5 minutes to become a dealer for "Messiah" on-line and any person with a tax re-sell certificate can become a dealer. At this point, what happens to the awesome margins that the dealer was getting from "Messiah"? The client is going to play that card and 1 of 2 things will happen:
     1. The dealer will cut their margins to get the job.
     2. Their competitor will cut their margins to get the job.
If it is not happening yet to a dealer, it soon will based off of the shear number of "Messiah" dealers in any given market. Either scenario is bad for the dealer because the custom dealer is the person that is supposed to have something special for the client to make them stand out from their peers. Now 2 out of 3 companies (or more) that the client gets quotes from are proposing the same thing. This does not come across as "Special" to the client.

It is my opinion that "Messiah's" dealer base is reaching saturation and their dealers will start to fall away quickly when most dealers in a given market start butting heads on the same line. When that happens, what do they do with this huge "machine" they have created with too few dealers to help keep running? The answer is simple and they are already geared up and have the infrastructure and business model for it. They will one day soon, turn the key and go direct to consumer leaving their dealers out in the cold but thanking them for making it all possible. It is the nature of the beast but make no mistake....the Anti-Christ is coming!

My question proposed to the dealer is - Do you sell your "Identity" of your business to this company for some of the 7 above mentioned benefits or do you do just a little more work and give your business to the Real Messiahs (traditional, restrictive manufacturers that have supported their dealers and the channel throughout the years)? Some of these manufacturers offer some of the same benefits and partner with some great Reps that make interacting with these manufacturers just as profitable and pleasurable as doing business with "the Messiah" and the best thing about it is the dealer gets to keep the Soul and distinctiveness of their business!