During LeMans (parent company of Drag Specialties and Parts Unlimited) annual vendors meeting, not surprisingly, Corporate Chairman Fred Fox acknowledged that the economy had taken a toll on his parts distribution business. And although the company has never disclosed its sales figures, announced that the sales will be down for year 2009. LeMans Group has about 1200 employees with close to a whopping 70% of orders placed online by its Dealers. Fox focused his speech on defining 4 areas requiring his attention.
1- Inventory Control. A review of what sells and what needs to be ordered by buyers is done every 2 days. 2- Protecting Dealer Margins although LeMans profit is down due to increased costs for distributing and shipping. 3- Educating About Returns. The company would prefer that the Dealer sells a part at a discount than spend money repackaging and shipping back. 4- Price Managing. Fred Fox explained that he cannot and doesn’t have the legal right to control the discounts offered by a Dealer, but warned that those Dealers giving for example a 20% discount on all products devalue the brands they sell. About this, since 3 years I really wonder if the model of motorcycle parts distribution is not forever broken. Manufacturers can’t oblige Catalogs to sell at a fixed MSRP. Catalogs can’t legally prevent manufacturers to sell retail. Catalogs will continue to take orders from “brick & mortar” and “online only” Dealers whose policy is to offer discounts across the board. So, how will the distribution landscape look in 1, 2 and 3 years from now? For sure, with a majority of orders placed online. But for what kind of margins for all those involved before the retail client gets a part i his hands? Any idea?