More than half of all dealers in a recent survey take part in early buy programs offered by manufacturers of wood and other products, according to an exclusive ProSales survey.
The survey of 328 lumberyards, specialty distributors, two-step distributors, molding and millwork dealers, and building product manufacturers indicated that early buy programs influence both the volume and type of product dealers carry.
More than half (58%) take part in early buy programs, while 80% of those consider the programs an important component of their business, with 35% saying the programs are “very” or “extremely” important.
“It’s a well-received and liked program for about half the world,” says Jim Robisch, senior partner at The Farnsworth Group, Indianapolis.
Early buys are important in helping dealers decide what products to offer customers. Early buy incentives influenced the product line decisions of 44% of dealers responding to the survey. Nearly a quarter (22%) say they would not stock certain products if they weren't available through early buy deals.
More than 40% of dealers, who report using early buy programs, say that if their current distributor or manufacturer did not offer early buy opportunities, they would seek relationships with those that did. “For the people who participate, if their manufacturer took [early buy programs] away, or reduced the deal or the benefit of it, about half would go out and seek someone else who does,” says Robisch.
Factors influencing the decision to participate in an early buy program included: manufacturer and distributor discounts (59%), buying shows and events (22%), customer requests (20%), and sales reps (18%). Nearly a third (31%) reported that they take part in early buy programs solely to be able to tap into manufacturers’ year-long incentive programs.
What do they like about the programs? Price, for one thing: Eighty-seven percent say they like the prices they got from buying early, while 82% like the terms. Rebate programs and price protection are favored by 61% and 42%, respectively.
But dealers say they want “real” year-long program benefits, according to 51%. Shipping flexibility was cited by 47% and extended order deadlines by 27%.
For some dealers, early buys were a condition of qualifying for year-long incentive programs, says Robisch. “But once you’re in, perhaps the deals aren't nearly as good, and they’re saying, ‘Give us some really good deals throughout the year, not just with the early buy.’”
The most popular products acquired through early buy deals are decking (59.1%), roofing (58%), railing (31.8%), fasteners and connectors (29.5%), housewrap and underlayment (27.8%), and pressure-treated lumber (26.7%).
The early buy survey was on behalf of ProSales by The Farnsworth Group, a market research and strategy-consulting firm serving manufacturers, retailers, wholesalers, dealers and distributors of hardware, home improvement, construction and building material industries.