Williams also has watched Bison Building Materials diversify into complementary products such as roof trusses and window manufacturing, which gives his lumberyard, as well as RLI, more opportunities to sell to their respective customers. “It’s important not to focus on just one product category,” he says, exemplified by RLI’s stock of metal products as well as lumber. “Anyone can figure out how to distribute lumber. Putting a full package together, including forms, frame materials, doors, interiors, insulation—not everyone can handle that.”—Rich Binsacca is a contributing editor to PROSALES.
Tip Sheet: Two-Step Distribution
Avoid a conflict of interest by operating a wholly separate profit center for two-step distribution, or … Respond with, rather than overtly sell, your capability to supply other dealers. For ad-hoc operations, set up dealers the same as contractor accounts. Supplement dedicated wholesalers and spill off excess inventory, as needed or requested. Use two-step to reach retail customers through resales to smaller, noncompetitive dealers. Operate as a weigh station among smaller dealers to gain volume discounts and share freight costs. Avoid competition with dedicated wholesalers or big-box retailers offering similar products or brands. Maintain the same pricing structure for all customers. Negotiate with manufacturers to maintain exclusivity with a product line and control market distribution. Be prepared to carry more volume and restock in larger volumes.
