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Business supplies: How to find
a dealer -- and a price
By Kyle
Parks • Bankrate.com
David Guernsey has a message for small business
owners looking for a good deal on office supplies: Don't forget
about the independent dealer.
"For years, small business people have just
crossed independent dealers off their list for office supplies because
they figured such dealers couldn't compete on price, but that has
changed," says Guernsey, who runs Guernsey Office Products in Chantilly,
Va.
Dealers band together
to control prices
Guernsey helped organize Business Products Group International,
a fast-growing cooperative that now represents more than 2,400 office
product dealers around the world. The dealers borrowed an idea from
hardware chains, such as Ace and True Value, whose independently
owned stores banded together to buy products in bulk.
"The total of all end-user sales in BPGI is
over $12 billion a year, which is far more than superstore chains
like Office Depot and Staples," says Guernsey, who serves as chairman
of BPGI. Now, the key for the 3-year-old group is to get its message
out: It can compete on costs while offering personal service.
The office supplies industry is growing fast,
thanks to the nation's healthy economy and the growth of service
jobs. The industry shipped almost $180 billion in goods last year
-- everything from furniture to copier paper and computers, according
to the Business Products Industry Association, a Washington-based
trade group for independent dealers.
Professional organizations sometimes offer their
members discounts of as much as 5 percent to 10 percent on supplies,
but the savings have to be weighed against the cost of membership.
"For instance, what if there is a $50 fee to
join?" asks Irene Hurst, director of the Small Business Development
Center in Tampa, Fla. "You have to figure out if you will save $50
in costs over a year, if that is the only reason you want to join.
Of course, organizations have many other pluses, such as networking
and giving you more of a voice to speak out on issues. We tell our
clients to definitely look at things like supplies and insurance
through industry groups, but to compare prices with other vendors."
Picking
a vendor, finding a price
A small business owner looking for a good deal might find the task
daunting, with approximately 6,056 dealers in this business. In
addition to traditional dealers, warehouse clubs have entered the
market, along with catalog marketers, office supply superstores
and Internet shopping sites.
And shopping for the best price isn't simple,
either. The size of the order and the business owner's relationship
with the office product dealer will be key in determining the price
the owner pays. In general, most dealers operate on a gross margin
of 28 percent to 32 percent, according to the Business Products
Industry Association.
But the margin on an individual product can
vary as much as 10 percent to 15 percent, depending upon the size
of the order or the total business done by the customer with the
vendor. So it's important to get specific estimates.
Things
to consider
Office product retailers say a small business owner should consider
other issues as well, before deciding where to go for supplies:
- Are you just looking to buy a specific product,
or do you also want advice on what brands are best? If you just
want a good price, a superstore or Internet site might be the
answer; if you want advice, a dealer might be better.
- Do you buy supplies only as needed, or do
you need shipments every week? Office supply superstores and office
supply dealers often offer free delivery, but warehouse clubs
and other vendors may not.
- Do you want to choose the products in person?
If so, you obviously have to go to a superstore, warehouse club
or dealer. If that doesn't matter, perhaps ordering by phone or
through the Internet might be more convenient.
And there's one more thing to consider, Guernsey
says. If you want to negotiate on price, working with a dealer may
be your best bet. After all, it's tough to negotiate with a Web
site.
Kyle Parks is a freelance
writer based in Florida
-- Posted: April 29, 1999
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