I joined Fujitsu just as the great industry-wide distributor cull was coming to an end, with most manufacturers taking the view that they could compete with each other best if they took the distributors’ share of the profit margin out of the equation entirely. Some did this by buying up their former distributors and some by setting up their own direct sales arm.
FG Eurofred chose a different path, deciding on a dual route to market, both direct and through distributors. I’m not saying we did everything right, but it was undoubtedly the right philosophy.
While there are advantages to be gained from manufacturers dealing directly with a limited number of major installers and even end-users, it is now recognised that trying to operate without distributors at all was a big mistake, underestimating what the ‘middle man’ does for both manufacturers and installers.
Trying to operate in the air conditioning industry without distributors is like car manufacturers trying to sell their products without dealerships.
While manufacturers have high levels of technical expertise and the clout to handle large orders, most transactions in the industry are with small to medium-sized contractors installing splits or small VRF systems, many of which depend on high levels of support from their distributors.
This support can range from the simple fact that they have well-stocked warehouses just up the road, where equipment and components can be picked up easily, to helping with system design, commissioning and technical support.
Many of the manufacturers that went down the direct sales route underestimated the pressure these demands from hundreds of customers would put on their small head office teams. Things that distributors had been doing as a matter of routine became significant burdens on manufacturers.
The other thing they underestimated was credit control. The time required to quote, bill, and chase payment on large numbers of small-value sales is something distributors take in their stride.
Distributors also add value to the industry, doing an exceptional job as the primary point of contact with the majority of installers, without whom none of us would have a job. Installers know that within a few miles of their base there is a distributor who can help them sell their services, solve problems and even send someone out to site at short notice if necessary.
That’s why I believe there is room for both routes, and proud to continue promoting this philosophy.
Julian Brunnock is sales and marketing director at FG Eurofred, the face of Fujitsu in the UK