You all will not believe this. I just bowed out of a school district bid here in Southern California. Small school district of 10 schools. Ricoh was incumbant but really created no value. They wanted to do business with me if I could get match. Ready..... (12) Ricoh 906Ex, regular finisher, hole punch and print scan the (8) Ricoh MP6000SP, regular finisher, hole punch. Each Ricoh 906 Ex was $325 per month and each Ricoh MP6000SP was $185 per month based on 60 month FMV. Copies billed at $.004 per page based on 1,025,000 per month. Here is the kicker, they are issuing a rebate check back to the client for $51,800. I went to my DSM from Ricoh in which he responded, "This is a direct account" not much we can do. Now I know why dealers are being forced to search for another manufacturers.
Original Post
Maybe, we all need to dig a little deeper. Could Ricoh just be buying these accounts to keep dealers out, meaning once they are the incumbent a dealer can't take the business away. I understand in this account they were the incumbant, however if they are willing to lose money (and I heard Ricoh lost a ton of money in the US this year), why not go out and buy all of the large accounts, fortune accounts and leave the scraps for the dealers?

Mind you, this is also happening with KM, Sharp, Xerox, Canon and Toshiba Direct and anyone who states it is not happening with the other Direct Branches has been brainwashed.

Why doesn't Ford, Chrysler, and GM own car dealerships, did they have a better business model, no they saw the writing on the wall and new that this type of distribution would lead to a comodity driven market and with hefty unions in place, the car manufacturers would have been out of business 10 years ago with that type of business model.

There is no answer except consolidation...... until that time, Direct Branches will continue to buy the business that they need, the weak pockets will not survive, right now it's a battle of who has the deepest pockets.
If it's a battle of deepest pockets, we've lost from the start.

If it costs Ricoh $5,000 to make a machine, they can then sell it to us for $7,000 or sell it to the customer for $7,000 and it makes no difference to them. Most dealers take that $7k and mark it up 10% before giving the rep a "commission cost" so it's $7,700 when it get to us, then we try to add 20% to it.

That means we are trying to sell a product for ~$9,500 that Ricoh could sell for $7,000.

In addition, there's the issue of supplies. The same theory holds true, Ricoh can sell a bottle of toner for $100 to us or the customer, makes no difference to them really. So if our cost to service a machine is .003, That's really the point at which Ricoh is making money already.

The kicker here is... We all know our dealerships have been willing to lose money on the front end to get a deal in hopes of obtaining the service/supply revenue. When you add that to the equation, now Ricoh might be able to sell that $7,000 box for $5,000 or even $4,000 with the right volume commitments.

Heck, I don't even see how we compete (on a pure price basis).
quote:
Originally posted by JasonR:
If it's a battle of deepest pockets, we've lost from the start.

If it costs Ricoh $5,000 to make a machine, they can then sell it to us for $7,000 or sell it to the customer for $7,000 and it makes no difference to them. Most dealers take that $7k and mark it up 10% before giving the rep a "commission cost" so it's $7,700 when it get to us, then we try to add 20% to it.

That means we are trying to sell a product for ~$9,500 that Ricoh could sell for $7,000.

In addition, there's the issue of supplies. The same theory holds true, Ricoh can sell a bottle of toner for $100 to us or the customer, makes no difference to them really. So if our cost to service a machine is .003, That's really the point at which Ricoh is making money already.

The kicker here is... We all know our dealerships have been willing to lose money on the front end to get a deal in hopes of obtaining the service/supply revenue. When you add that to the equation, now Ricoh might be able to sell that $7,000 box for $5,000 or even $4,000 with the right volume commitments.

Heck, I don't even see how we compete (on a pure price basis).


We can't compete on price at all, agreed! We need to pick and choose our battles
quote:
Why doesn't Ford, Chrysler, and GM own car dealerships, did they have a better business model, no they saw the writing on the wall and new that this type of distribution would lead to a comodity driven market and with hefty unions in place, the car manufacturers would have been out of business 10 years ago with that type of business model.


Specifically because protectionist laws setup in (I believe) the thirties prohibit auto manufacturers from operating directly in most states.

Or they would have done it.

I don't think they seriously feared that no one would buy cars ("car manufacturers would have been out of business") if they'd had a direct model!
quote:
If it costs Ricoh $5,000 $2,500 to make a machine, they can then sell it to us for $7,000 or sell it to the customer for $7,000 and it makes no difference to them. Most dealers take that $7k and mark it up 10% before giving the rep a "commission cost" so it's $7,700 when it get to us, then we try to add 20% to it.


Fixed that for you...
Hey, I'm a new RBS rep, I mean reallly green. Just started out in the business. FYI, I've been told to stay away from dealer accounts. I admit, it can get sticky when proposals are thrown around; but generally we have been instructed that its a "hands off" customer.

There isn't some corporate push to squeeze dealers out is all i'm saying. Your point on margins is noted. I'm just confused that this is somehow something new. If Ford sold cars directly, I'd expect them to be a little cheaper too, but then again; it would be up to the dealership to sell their value.

And just realized this thread is 2 yrs old.
Headshot:

Weclome to the P4P Forums! Yes, the thread is about two years old and on going. There's a lot of customers that you can't sell value and thus they are the price buyers. Seems like theres more of these with the down economy. I know my self and others guys sell the crap out of value and sometimes it works and sometimes it doesn't.

I think the biggest gripe between dealers and direct is the fact that direct in most cases can sell lower than a dealer can buy the equipment. Let's face it, its the way of the channel, and it's not only Ricoh, it's all of the other direct branches too.

Thanx for the reply and please post more!

Art
quote:
Originally posted by Headshot:
If Ford sold cars directly, I'd expect them to be a little cheaper too, but then again; it would be up to the dealership to sell their value.


Well, my view the situation you describe is this:

If Ford wants to sell cars directly, that's fine and they can do that.

If they instead choose to sell cars through dealers, they do not need also come into the same market as those dealers and hang a big banner saying "$4,000 cheaper than not buying direct!" "Get better support by buying direct!"

All I'm trying to say is this: If you have a dealer channel, support it. If you think direct is the way to go, just get rid of dealers. Simple enough.
Ford would LOVE to go with this model.

Unfortunately, state franchise laws make it virtually impossible for auto manufacturers to eliminate dealers. That's why the domestics have two to three times as many dealers as they need, compared to the imports.

This leads to lower average selling prices, lower dealership value, and a need to gather margin elsewhere. Such as muffler wax and windshield wiper protection plans. All in all, worsening the car buying experience.

Some links...

http://www.justice.gov/atr/public/eag/246374.htm

http://managerialecon.blogspot...-buy-chevy-volt.html

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