Buying Groups: Sharing expertise

Buying Groups: Sharing expertise

Once billed primarily as a way for kitchen and bath dealers to get volume discounts that can help them compete more effectively against big boxes, buying groups have evolved into multi-functional entities that are as much about education as about rebates..

Sound like a direct mail solicitation from Ed McMahon? It could be but it could just as easily be a message from a kitchen and bath buying group. While million-dollar promises are generally the venue of impossible-odds sweepstakes offers and lottery commercials, kitchen and bath dealers face far better odds of earning "free money" through membership in buying groups, which offer significant rebates, as well as a host of other benefits.

In fact, according to Thompson Price, director of membership for the Bath & Kitchen Buying Group (BKBG), last year, more than $1 million in rebates were distributed to BKBG members for the second year in a row, with the average member earning more than $7,800 in rebates and the top member earning more than $76,000.

Likewise, Ken Peterson, president of the Chapel Hill, NC-based SEN Buying Group sees his group's members earning significant rebates through volume purchase discounts rebates that amount to an average of 2.55% of sales, he reports.

However, while there's no question that the rebates have long been the draw for members, buying groups in the kitchen and bath industry have evolved far beyond just being a way to earn extra dollars.

Indeed, the two major buying groups in the industry BKBG and SEN have increasingly focused on education and a sharing of expertise as ways to further their value to kitchen and bath dealer members.

As Peterson explains it: "The value the buying group brings to the table isn't just in rebates. It's in marketing programs and business training things that enhance members' ability to be profitable on all fronts."

He adds: "Our mission is to empower dealers and designers to earn more profit." And, while the buying group's rebates certainly help with this, he believes it's the group's other services that really contribute to its value.

SEN member Tom Blau, president of Milwaukee, WI-based Blau Bath & Kitchen, Inc., believes the benefits of buying group membership are clear cut and simple: "Two heads are better than one. And, [in the case of buying groups], you are talking about potentially 20 to 30 people analyzing problems that are common to a lot of us, and coming up with solutions that you might not come up with on your own. It's not just about buying. It's also a business management, sales training and educational entity that will help to you to grow and keep your business profitable."

He adds: "While the rebates are great, the biggest benefit is the business management, the networking and the education that we get from being a group and talking to each other."

BKBG's Price agrees: "It's not just the rebate dollars as much as it is the education. There's a lot of business knowledge to be gained by being involved with a group like this."

BKBG member Megan Landry, president of the Santa Barbara, CA-based Jack's Kitchens concurs with this: "Buying groups give us several fundamental benefits. The first is the combined buying power and the ability to have a direct relationship with large companies who would otherwise have us buying through distribution, thereby adding more layers of middle men. As part of the buying group, I can buy direct from the company, which gives us a higher credit limit as individuals, since it is the buying group's credit limit [that counts]. The ability to contact the company directly in the rare instance that there is a problem [is another key benefit].

"Another important aspect is the opportunity to network with vendors and other members at conferences and learn from one another. It becomes an ongoing school for finding the best practices in the industry."

MEMBERSHIP
While buying groups have been around in most industries for decades, the kitchen and bath industry is still a relative newcomer to the buying group game, with SEN only celebrating its 10-year anniversary in September, and BKBG currently in its ninth year of existence.