For many marketers, dealer accounts are a mainstay of their fuel business. Entire divisions have been created to serve contractually bound branded dealers. Other marketers have specialized in the challenge of non-contract, non-branded “open” dealer accounts for significant volume and profits.
For this sector of a jobber’s business to remain financially viable under hypermarket pricing stresses may take extra service and effort never required in the past when competition was less heated. In areas where hypermarket competition is already in full swing, many jobbers are realizing that getting more involved with their dealers may be a necessity for that dealer’s success. What will it take? There is no one right answer, but here are a few viable alternatives to consider.
Total Fuel Management – In some instances, jobbers are assuming total fuel operation responsibility for the dealer. This includes fuel inventory management, street pricing, and tank and line compliance. In some instances, jobbers may find it advantageous to have direct ownership of all of a dealer’s fuel equipment. Other times, it may be better for a jobber to install a fueling center, but have the dealer own all the equipment.
The advantage to owning the fueling equipment is control. The jobber gets to monitor and maintain the entire fueling facility up to desired specifications. The disadvantage to owning the equipment, particularly underground tanks, is the liability. If you don’t own the equipment, it’s easier to stay clear of unforeseen liability and environmental issues; however, then preventative maintenance, repair and even cleanliness standards must be taken into account. Although all these issues can be handled contractually, contract enforcement and breach consequences are never pleasant.
Regardless of ownership, electronic tank monitors will become the rule in dealer service for both leak detection and order ease. With tank monitors automatically interfaced to order generation, a dealer doesn’t have to worry about tank stickings, calling in readings or running out of fuel. Anything a jobber can do to cut a dealer’s overhead costs during times of hypermarket price stress will put that jobber in a competitive advantage.
Pricing is the next area where jobbers can help. Street pricing has become more complex. Some dealers are very good at pricing, while others need help. A jobber with lots of dealers and pricing experience can help a dealer maximize fuel and store profits. One of the most common questions Meridian receives from individual dealers or small chain owners is about hypermarket pricing strategy. Most jobbers have good pricing experience and can be an effective resource, even if they don’t intend to contractually control the dealer’s price. Hypermarket pricing strategy is such a hot topic that we’re including it in our Focus on Finance 2002 roundtables.
Business Analysis and Cash Management – Some savvy jobbers are finding great success with dealer education for better business management and cash management decisions. New dealers, or even those who have been in business a while but have no formal business education, can significantly boost their store’s bottom line with a little education. A jobber who had knowledge and can help their dealers gain this education are valuable to the dealer. Jobbers are getting involved in everything from marketing and merchandising classes to inventory management training. Education can be structured on a fee basis, or captured based upon increased store profits.
Non-fuel Suppliers – Many jobbers with large chains are seeing an opportunity – buying co-ops for their dealers. Small, one-store dealers always have the highest grocery supply prices. They don’t have the purchasing power to negotiate discounts. Jobbers who form buying groups for multiple dealers can help dealers significantly lower their supply prices while adding to their own bottom line through a captured fee for the buying group.
This same service can apply to non-grocery needs as well. From equipment to payroll services to signage, anything regularly purchased by dealers in a network can be included in discount buying groups. In fact PMAA just negotiated a discount-buying group for all PMAA member jobbers. Check out this service on the PMAA website at www.pmaa.org.
Promotion Management – Some jobbers are seeing opportunity in extending their dealer services to include product promotion and rebate management. With volume buying groups in place, dealers are now able to take advantage of specials and rebates never available to them before. This is another area where jobbers can boost their own income while helping their dealers increase bottom-line profits.
In summary, the key to helping your dealer accounts is a simple one – just help them make more money. Your expertise and buying clout can be a blessing to small dealers. Offer your knowledge and services in a way that will grow dealer profits while increasing your company’s revenue. By becoming a continual source of profit for your dealer, you will take your company out of the realm of just “fuel supplier” to a much more valued position of business partner with your dealer. Today more than ever, your dealers need you.
