DPA Buying Group
If someone told you they could save you money on the products you distribute and it wouldn’t cost you anything, would you investigate it further? Many independent distributors of products such as janitorial supplies, safety equipment and clothing, packaging products, and even industrial tools and fasteners have been doing just that since the DPA Buying Group was established in 2000 with 67 members. Now the group has more than 600 distributor members and more than 180 supplier contracts with preferred manufacturers that provide products to DPA members.
DPA’s CEO Zachary Haines calculates the combined purchasing power of the group’s distributors at more than $1 billion. “We are one of the largest buying and marketing organizations in North America,” Haines asserts.
To better serve its membership, DPA created a new position, vice president of distributor development. “We are pleased to welcome Mary Middendorf to the DPA family,” Haines says. “She will be tasked with making sure distributors are happy and that their needs are being met. Mary will call all our members to see how we can better serve them and to make sure they are aware of the resources and opportunities that are available.”
The vice president of distributor development might speak with distributors who are not purchasing products from manufacturers affiliated with DPA, perhaps because of long-standing relationships with non-member suppliers going back generations. “Mary will try to point the distributor in the direction of a comparable product from a DPA manufacturer that could end up saving the distributor money,” Haines says. “We’re excited about having someone onboard to help communicate the individual vendor programs and opportunities to each distributor so they are aware of all the ways our group can help them grow.”
Starting in 2000 with janitorial and sanitary supplies, DPA expanded into safety equipment and clothing in 2006. The group then expanded into the restoration market, which includes products used to clean up and restore property after fire, smoke and water damage and mold and mildew. Some of these products include specialty cleaning products for carpet, upholstery, air ducts, drapes, walls, stone and tile.
Next in 2013, the packaging supplies division – which includes corrugated boxes, tape, stretch film and other packaging products – was added to the buying group. DPA’s newest division is the industrial supplies division, which features tools, fasteners, ladders, abrasives, cables, paint and other industrially related products.
“Our newest product segment is industrial, and it’s going very well,” Haines says. “We got the crazy idea in our head about two years ago to establish a tool group, and it had a lot of traction in our first year. Now we’re full-blown and have over 100 distributors in this industrial division alone. These are primarily single-location stocking distributors across the country that are selling products to MRO, OEM and construction contractors. We’re doing great in all these product segments.”
DPA has expanded into these additional industries because of the synergies of each. “There’s a lot of crossover,” Haines says. “There are many products that cross over into multiple markets. If you look at industrial and safety, those are very much connected because the people that use power tools need gloves, hardhats and personal protective equipment that keeps them safe while they’re working.”
Janitorial’s connection to what Haines calls “soft safety” products are ones that aid in hygiene, such as disposable gloves, bouffants and beard covers that workers might wear in school cafeterias or restaurants. “The walls between these industries are coming down,” Haines emphasizes. “Acquisitions among wholesalers and suppliers bear out this trend,” he says.
“Some of the bigger companies are doing the same thing – they’re crossing over into new markets and expanding their product offerings to the distributor,” Haines says. “When a vendor can offer a distributor more products, they instantly become more enticing. The distributor is now able to mix-and-match products to meet order minimums and get their freight prepaid by the supplier. Our group and our philosophy matches up very well with the trends we’re seeing out there. If you’re not moving and complacent and not looking to sell more, then you’re unfortunately going to die on the vine.”
The DPA Buying Group recruits mainly independent, single-location distributors from across North America as members. The group also has members in Hawaii, Guam, Puerto Rico and Costa Rica.
“We’re very selective with respect to geography,” Haines emphasizes. “We’re sensitive to who we already have in the group and where they are situated on the map. We typically don’t bring on someone who is right across the street from somebody else.”
Other criteria include a good credit history, whether they are already doing business with some of DPA’s preferred manufacturers and whether their business size is compatible with the group. “$2.5 million to 25 million is our sweet spot,” Haines says. “We don’t often take the giants or very large chains. A lot of those folks are so big – at $200 million, you can negotiate your own deals and discounts.”
DPA recruits members at industry events such as trade shows, does some member prospecting by phone and receives recommendations. “A lot of our new distributors have come from recommendations from other distributors or from our manufacturers,” Haines notes. “So that is a great compliment when the DPA manufacturers think we are doing such a good job for them that they’re recommending new distributors to sign up in our organization.”
Similar care is taken when recruiting preferred manufacturers, which must be able to provide products to members throughout North America. “We typically don’t stack them knee-deep in a product category,” Haines stresses. “We prefer to only take so many towel and tissue companies, so many matting, mop or glove companies. We also want to make sure that the manufacturers that we partner with only sell to distributors. We do not take suppliers that jump over the distributor’s head and sell directly to the end-user. That’s a no-go for us.”
Distributors realize savings from doing business with DPA’s preferred manufacturers through cost-justified discounts (CJDs). The CJDs are accrued from the business that DPA’s distributor members do with the manufacturers. The CJDs are sent to DPA’s finance office in Naples, Fla., – which keeps a percentage for its expenses – and passes the rest to the distributors in a quarterly lump sum along with a report on their purchases from each manufacturer during that quarter.
“The manufacturers are happy because those CJDs create a culture of loyalty that incentivizes our distributors to buy from them as opposed to buying from their competitors that are not in our group,” Haines points out.
DPA competes with a number of other buying groups. “We are competitive with these other groups, but most of them are only in one industry, whereas with DPA, we play in multiple product segments,” Haines points out. “It gives us an advantage, because our membership is diversifying the products that they buy and sell, and they’re doing it to compete against large distributors like Grainger and the ‘big-box’ stores. So we are doing everything we can to help our distributors get access to a wider range of products at very competitive prices where they can best service their end-user customers.”
A key method for DPA to help its distributors is its annual buying and networking conference, which in 2016 will be at the Lowe’s Royal Pacific Resort in Orlando, Fla. “If you are a distributor, you get to meet one-on-one with approximately 60 manufacturers face-to-face for 15 minutes apiece,” Haines explains. “It’s like speed dating. You’re talking with the president or national sales manager or vice president of these manufacturer companies, and it’s the best way to get business accomplished.”
Exhibiting suppliers offer attending distributors promotions and specials during the show days. During the conference, DPA awards distributors who place the most orders and largest volume of orders with cash prizes.
New Year Benefits
The DPA Buying Group plans to offer its members additional benefits in the new year. Among them are a printed and online buyer’s guide that will be sent to DPA’s distributors. “It will list all manufacturers by product categories and also contain informative product information and articles within,” Haines says. “We want our distributors buying from our preferred manufacturers.”
The buying group also plans to launch an online training portion of its website that would function as an online university where manufacturers can upload training materials, product demonstration videos and other tutorials. “A distributor’s salesperson could go through and learn about products or show an end-user a product by simply logging in with their user name and password,” Haines says.
Another initiative in 2016 will be a DPA sales boot camp. “We’re going to have an in-person training seminar where a distributor, at reduced cost, can send their salespeople and new hires to get two days of intensive sales training that will help them close the deal with customers, manage accounts better and sell better, whether face-to-face with their customers or over the phone,” Haines says.
Among the industries that Haines is examining for future expansion are fire and rescue, which ties in closely with safety products; restaurant equipment and supply, or foodservice supply, which are both aligned closely with janitorial products; and companies that manufacture and distribute pipes, valves and fittings, which tie in with DPA’s industrial division.
Haines acknowledges the trend toward consolidation among distributors and suppliers. “But with that said, I think there will always be a place for independent distributors, because these folks, frankly, are the backbone of America,” he insists. “These are the family-owned businesses that bring value and service to their end-user customers that a lot of the larger distributors can’t do. They’re also bringing technical expertise and product knowledge, which translate into savings on a customer’s bottom-line. Who do you want to buy from? Do you want to buy your safety products from a ‘big-box’ store or Amazon, or buy from someone who is a certified safety professional?”