A buying consortium for contractor? What do you think?

[Topelec]

Hello Guys

This is not an advertisement, just a survey. Please read on.


I am considering to set up a buying consortium for electrician and contractors that will save up to 35% of your annual spending on electrical goods. Hence the reason need your opinions on this business model.

Have worked in electrical wholesale industry for almost 4 years, and found a lot of problem in this industry and fortunately, I am still passionate about it, hence the reason trying to start a new business.

Now the problems in currently Electrical wholesale industry
1. Price is not transparent in a transparent world (due to internet
2. Wholesalers are trying very hard to make every penny off electricians and contractors
3. Profit is always first to every wholesaler
4. Time wasting on price negotiation process

There are few thoughts from my working experience for electricians and contractors
1. You don't need a wholesaler, but you need a buying media to help you to buy goods at competitive prices and provide local service
2. For most of time, you pick up the lowest quotation is due to you have no idea on the products. However, once all product information is revealed, you will choose the best matching products prior to price for the project
3. You buy off from a local wholesaler due to the convenience they provide and people you could trust who introduce a product to you
4. The price tags cannot reflect the true value added any more. i.e. how you could value the price on a product indeed reflects the true value being added to it

Above all, here is what I think electricians and contractors shall expect as the time goes on

You need a Buying Manager rather than a wholesaler work closely to your business to provide you right products advice at low cost

So my business plan is to create up a buying service business for electrician and contractors that helps you to reduce overall spending and provide local service to dealt with suppliers as well as financial services i.e. credit terms
Here is how I think it will work

First of all, this business is a buying service based on Service not a wholesale business based on products

1. This business will be membership ONLY business.

2. Monthly Membership fee is £36 + VAT, (From my calculation, if you spend over £100, you start to saving by using the service

3. The Price you pay will be the price we buy off from the suppliers, We will not take any commission, rebate etc to increase our profitability, plus this is not ethical for a "buying manager" of your business

4. We will charge customers a fixed service fees on different level of spending as profit to keep the business going on monthly basis, i.e. we will charge a percentage on monthly overall spending, if you spend £1000, we will charge you x% as a service fee, if you spend £2000, we will charge you

5. We will buy stock for immediate dispatching

6. 2 hour delivery at cost of £6, or free next delivery. (ONLY local business), Nationwide at £5 per box through DPD

7. Dedicated buying management team for the customers, so that you will only deal with people you know and who knows your requirements

Hence the reason, we are not trying to make money off from our members, we are trying our best to save our members' money. As a reward, we take a small percentage of member's saving

Due to the fact, this business is a buying service, it will require members to pay cash for the goods or deposit for a credit accounts to reduce the business risks as insurance requirement. I am very confident that by using this service, I could help our members to save

up to 30% if current monthly spending is less than £1000;
up to 20% if current monthly spending is;£1000 - £3000
up to 18% if current monthly spending is over £3000
up to 15% if current monthly spending is over £5000
up to 10% if current monthly spending is over £10,000

Any comment is welcome. you are much appreciated if you could complete the survey and your comments to improve the business plan.

 

[Spoon]

Can you pick your own 'management team'? or change from the one you allocate, just in case they are idiots or incompetent?

How do you get the figures for the savings?
Why are you cheaper than the electrician ordering his own stuff? Doesn't he/she know the best place to get equipment? (Unless they are new to the game)

 

[Andy78]

So I pay you to ring round my local wholesalers and try and beat them down on price ?

 

[Topelec]

Not really, there is no point to ring around wholesalers.

We are going to set up a wholesaler business, we will phone around manufacturers and get the best deal. However, we will not act like normal wholesaler who sell you a item at highest price possible, we will help to source items as cheap as possible. We share the saving from each purchasing. This saving could be from 20% to 30% of what you spending with a wholesaler now.

 

[Topelec]

Can you pick your own 'management team'? or change from the one you allocate, just in case they are idiots or incompetent?

How do you get the figures for the savings?
Why are you cheaper than the electrician ordering his own stuff? Doesn't he/she know the best place to get equipment? (Unless they are new to the game)

It is very easy. As I have been working in electrical wholesaling industry for past 4 years, I know what GP rates normal wholesalers are working on. Average GP for this industry is about 30%, lowest GP is about 20% and some can be as high as 44%, this is not for public, this is for trade.

Indeed, most of electricians and contractors know the best place to buy, normally means cheapest place, and they could not buy off from manufacturers. Hence the reason, I have the idea to set up a wholesaler which will act as a media to buy items from manufacturers for electricians.

In other words, I want to change the wholesaler and electrician from "buy and sell" relationship, into "help you to buy and save".

 

[Topelec]

Thanks Gents for the reply.

I am new to the site, it seems like it takes longer than I expect to post answer.

 

[Darkwood]

Hi Toplec, welcome to the forum, - Yes your first postings are moderated this is so we can block spammers, trolls etc before any member usually get to see them, usually we have an odd staff member about but on occasion we all can be busy with work etc so apologies for the delay.

I'll delete the posts that are duplicated or answering the same point - just ignore your auto generated messages that this causes.

 

[Octopus]

Not really, there is no point to ring around wholesalers.

We are going to set up a wholesaler business, we will phone around manufacturers and get the best deal. However, we will not act like normal wholesaler who sell you a item at highest price possible, we will help to source items as cheap as possible. We share the saving from each purchasing. This saving could be from 20% to 30% of what you spending with a wholesaler now.

Based on what?

I happily pay for my local suppliers, with local stock, OFF the shelf. No delivery charges, no waiting around for delivers, no going to the post office to return stuff.

Unless you are hoping to attract DIYers I would suggest your business model is flawed!

 

[Topelec]

Based on what?

I happily pay for my local suppliers, with local stock, OFF the shelf. No delivery charges, no waiting around for delivers, no going to the post office to return stuff.

Unless you are hoping to attract DIYers I would suggest your business model is flawed!

Based on the price you pay to your local supplier. for example say,

GU10 3w lamps, you pay at £7.99 + VAT for 5 lamps equals to £1.60 + VAT a lamp. The true cost is only £0.90 + VAT.

5w GU10, you pay for about £3.00 each + VAT, The cost for them is about £1.69 + VAT

50W LED floodlight, you pay for about £30-35 each + VAT, the cost for them is about £19-24 + VAT

LED 600x600 panel, you pay for about £30 - 35 each + VAT, the cost for them is about £18-25 + VAT


RCBO, you pay for about £18-23 + VAT, the cost for them is about £9 - £11 + VAT

MCB, you pay about £2.50, the cost for them is about £1.30-1.60 + VAT.

there are more examples I can show. This is how you could save money with the business I am planning.

 

[123]

I don't really get it. All wholesalers I know of are either the big boys like CEF and YESSS or local independants - that are attached to one buying group or another. So one way or another they all have buying power. What do you have to get prices from manufacturers screwed down?

If I wanted 50 Click Mode 2G Sockets from you, given you seemingly will carry no stock...I'd need to wait till you built your order up big enough to buy from Scholmore, then pay P&P when you had the items and could send them to me. I doubt the price will be anything like what I am paying at the minute.

And then there is another issue...of the 50 Sockets I got from you one is faulty. I need to get it replaced. So I need to pay P&P to return then wait till you build an order up again to get another one in...days and weeks may pass.

 

[rolyberkin]

Personally I think the concept is flawed unless you only offer one style of everything or you keep changing the manufacturer and type to get keen prices, you will not be able to negotiate such good rates unless you are buying in massive quantities and then it is all has to be one make. Most people on here will prefer different makes, one person will choose Legrand over MK etc. If you are buying one style of consumer unit you cannot guarantee the volume and therefore the discount. Sometimes the convenience of picking something up locally cannot be underestimated. My local supplier will send out in a van to my door the next day for £2.50 or free if over £50

Buying for a single project on bulk is different to having to negotiate various stock levels for a bunch of fussy buggers. I think you will always struggle when people like Electricfix and other local wholesalers are buying in such massive quantities and can offer such a diverse range of suppliers.

 

[amlu]

i have a home made spreadsheet, just type in whats needed for the job, how many, amounts, go online and compare the prices see wheres the best deal (combination of screwfix, toolstation, tlc, cpc, rs, two local places), order, job done.
I stay away from places that keep their prices secret. (got online account at the Big Wholesaler, but never found it competitive with others.
took couple of evenings making spreadsheet but does the job. no need for a middle man.

 

[davesparks]

Based on the price you pay to your local supplier. for example say,

GU10 3w lamps, you pay at £7.99 + VAT for 5 lamps equals to £1.60 + VAT a lamp. The true cost is only £0.90 + VAT.

5w GU10, you pay for about £3.00 each + VAT, The cost for them is about £1.69 + VAT

50W LED floodlight, you pay for about £30-35 each + VAT, the cost for them is about £19-24 + VAT

LED 600x600 panel, you pay for about £30 - 35 each + VAT, the cost for them is about £18-25 + VAT


RCBO, you pay for about £18-23 + VAT, the cost for them is about £9 - £11 + VAT

MCB, you pay about £2.50, the cost for them is about £1.30-1.60 + VAT.

there are more examples I can show. This is how you could save money with the business I am planning.

You might have better luck trying to get big contracting companies to sign up than people on here, most of us are either self employed, small companies or on the cards employees.

From my point of view your service sounds like a terrible idea. It's rare for a week to go by when I don't just go and have a rummage around my wholesalers warehouse to see what I can find to get over the latest entertaining little problem.
Will I be able to phone you up at five minutes before closing on a Friday and beg a favour for you to stay open an extra 20mins so that I can get something I need for an emergency?
What happens if I forget something on an order, will I be able to phone you on the morning it's big delivered and get you to put the extra stuff on the van?
What will you do about returns? Excess materials due to over-ordering or last minutes changes of plan?
Will you give me a bottle of wine and a diary at Christmas?
Will you hire things like crimpers, benders, cable jacks free of charge to regular customers?
Will you cut my order of SWA into the individual lengths I require?

 

[Octopus]

Based on the price you pay to your local supplier. for example say,

GU10 3w lamps, you pay at £7.99 + VAT for 5 lamps equals to £1.60 + VAT a lamp. The true cost is only £0.90 + VAT.

5w GU10, you pay for about £3.00 each + VAT, The cost for them is about £1.69 + VAT

50W LED floodlight, you pay for about £30-35 each + VAT, the cost for them is about £19-24 + VAT

LED 600x600 panel, you pay for about £30 - 35 each + VAT, the cost for them is about £18-25 + VAT


RCBO, you pay for about £18-23 + VAT, the cost for them is about £9 - £11 + VAT

MCB, you pay about £2.50, the cost for them is about £1.30-1.60 + VAT.

there are more examples I can show. This is how you could save money with the business I am planning.

so what?

as I previously stated, you are not on my patch, you don't deliver at short notice. There is more to a successful business than this weeks lowest priced deal