Have to say im not convinced by your argument.
Hi Phill. It would be funny old world if we all agreed with each other!
However, there are a couple of misconceptions in your post...
For example - That is the exact reason you dont sell baxi because you cant negotiate a price you want based on the size of your spend.
Nope. The reason we don't sell baxi is because in their current channel strategy, they don't want us to sell that brand so they have made the pricing unsustainable. Its a complex and quite political issue, but our spending power is now at least twice what it was when we last had a great deal on Baxi, so its not about spending power. I believe its mostly about BDR group wanting to increase the penetration of the Main brand by forcing it through certain independent merchant channels. I have no doubt that this will change at some point, and we will stock Baxi again.
And your presumption is that the buyer will always presume you will be the cheapest because you fly under the "trade only banner".
Nope. Our "trade only" policy has two rationales. Firstly, trade customers don't have to wait in line on our trade-counters or face delays on the phone while retail customers are served. Secondly, we think that tradesmen should be able to apply a margin to materials. We understand that this is very hard, particularly in these days of the internet, but just because its hard, doesn't mean we shouldn't help as best we can. Not selling retail at all is the best way that we can protect trade margins.
We don't presume customers will think anything. We just tell them the price, transparently and openly.
your business model is a double edged sword which limits your own bargaining power because of your limited customer base.
You are quite right that our business model is a double edged sword, but that is because we are open about our pricing. This makes it very easy for our competitors to price match, or just undercut us - something which they do routinely, particularly down here in the South East, where we have a strong trade-counter presence.
We know that it happens, and there is nothing we can do about it, so we don't let it worry us.
Wooolsy can sell me one cheap because for everyone they sell me cheap - they probably sell 5 or more at higher prices to enable true trade discounts based on spend.
This is spot on. And thats fine for the one in six people who negotiate those rates. But what about the 5 people who don't? Lets not kid ourselves they will all be retail - outside of bathrooms, retail is less than 10% of the UK plumbing materials market. The answer is that they make up for your cheap rate by charging 8 quid for a washing machine tee to unsuspecting tradesmen!
I'm absolutely sure you are right - that if you worked hard enough at it, you could negotiate better prices than ours on very many things. But you would have to spend quite a lot of time both negotiating, then checking your invoices, and probably shopping at multiple suppliers. To get a fair comparison, you have to consider the time you spend doing that as part of the cost of materials.
Anyway, as I said at the beginning - it would be a funny old world if we all saw things the same way.
If we ever open a branch up in Newcastle, I'll buy you a pint, and you can tell me how to run it!
