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Sat 28 May 2011 - 12:13 pm UTC
The Major Appliance Industry – typically distributes through a 2-step distribution system.
Manufacturers like Viking Range Corporation and Sub-Zero, Inc. sells their products to Distributors like:
Distributors sells to Dealers and Dealers supplies to Public.
I would like to know following:
What is a typical profit margin (percentage) of Dealers on products of the following two combines when they sell to public:
•Viking Range Corporation
Who are the Distributors for above-mentioned companies in Texas?
How hard or easy it is to open new account with appropriate distributors?
Wed 1 Jun 2011 - 7:11 pm UTC
I conducted a fair amount of research but couldn’t find something that would directly lead to an answer. Therefore I resorted to acquiring pieces of information from reputable source and then corroborate those findings from a sales rep of GE who has previously worked in the sector. I am posting an answer on the assumption that my findings are close to facts.
Q1 Profit Margin
Q2 Official Distributors
Q3 Requirements for dealership
Profit Margin for the above brands is calculated by UMRP and Markup.
Profit Margin = UMRP-Markup%
What is UMRP?
As you may already know that high end home appliance dealers like subzero/wolf and Viking range utilize UMRP system. The Unilateral Minimum Resale Price ensures that the price difference in dealerships across various regions is minimal. Every product comes with a set UMRP price therefore dealers are under contract not to sell anything below that price. Fortunately, UMRP price of Viking and SubZero products is publicly available.
Logically, if a price of a home appliance is $2500 then all dealers under UMRP system are most likely to sell that particular home appliance at $2500 or just above it. Naturally, no one will buy from a dealer who is selling that appliance for $3000 when there are several other sellers in the area selling it for $2500. Hence, most dealers will likely sell the home appliance at UMRP price. The question remains what is their profit margin? (For reference see links to UMRP prices).
The typical markup on high end home appliances is anywhere from 5%-20%. Actually, most home appliance falls in the price range where markup is between 10%-20%. I think the most active forum on this issue is ivillage gardenweb where most customers and salespeople congregate to discuss these issues. After reviewing their comments, I corroborated the facts from GE salesperson who confirmed my findings. Here is what ivillage community and other resources had to say about the markup followed by GE salesperson comments.
Viking/Sub Zero Markup
"Tri State area is 12 to 16%, Wolf is 15%, Viking 16%, their are 75 dealers with in 25 miles of each other all fighting for the same customer, not to mention all the phone guys."(Source 1)
"....and the initial question of markup is a loaded one. sub/wolf has about 10% under their current UMRP others are sold around 10-15% maybe 20% if we are having a great night." (Source 3)
"If you got 20% off of an appliance the price was elevated to off set the 20%. With most high end manufacturers using UMRP pricing there is no further reduction and the dealer at UMRP makes from 8 to 20% depending upon brand, Wolf SubZero allows the dealer to make 10% up from and if they hit all of their quotas they can get another 6% year end." (Source 3)
"Typical markup on appliances is 3-25%. Some items are below cost on the lower end to serve as loss leaders and draw in business. I know of no appliance retailer whose markup even approaches 40%, even on the higher end stuff. They'd go out of business being undercut by the competition at "suggested retail" price." (Source 1)
"Up here in Toronto area, if you get 25% off the list price, you did really well." (Source 1)
"One of our specialties is creating extraordinary designer kitchens and as a result of our relationship with our suppliers, such as Tasco Distributors, we receive a discount of between 10 to 20% from Tasco." (Source 2)
"I've been told that the average markup is approx 25% on appliances. Don't forget to speak to Theresa Vo at Appliance Canada." (Source 2)
"....That's why with higher-end appliances, after taxes and delivery, the avg discount that we can get for our clients is around 10-20% range. And since SnowKarver was asking about high-end appliances, we gave him that range based on our experience. Keep in mind, discount and markups are two different things 'coz distributors have to make money too!"(Source 2)
"Appliance margins range from 3-20% or so. Not much when you factor in the store overhead. Restocking fees are pretty much standard throughout the industry." (Source 3)
"Mr. Larson recently stopped buying appliances passing up on the customary 20 percent contractor’s markup simply because he doesn’t want to deal with the headache of installing a brand-new dud." (Source 4: NY Times)
When I spoke to ex GE salesperson about these findings, he didn’t disclose the actual markup but said that it is between 10% and 20% based on the type of brand.
Source 1: http://ths.gardenweb.com/forums/load/appl/msg120003382705.html
Source 2: http://forums.redflagdeals.com/lf-high-end-appliances-gta-230093/
Source 3: http://ths.gardenweb.com/forums/load/appl/msg0101450829312.html
Source 4: http://www.nytimes.com/2007/01/19/realestate/greathomes/19appliance.html?ei=5124&en=297a9072f68ae297&ex=157680000&partner=permalink&exprod=permalink&pagewanted=all
Viking Range UMRP High end appliances
Viking Range UMRP smaller appliances (2006 rates)
Since profit margins are lower for high end home appliance industry, companies like subzero/wolf and Viking range continually offer rebates, discounts and promotion on their products. This also includes waiving off delivery charges, free installation etc. An example of such rebates is here:
Viking Range has three official distributors in Texas
Milestone Distributors - Texas
SunWest Appliance - West Texas/AZ/NM
HADCO - Georgia/NE Texas
Official Distributor for SubZero/Wolf in Texas is
THE WESTYE GROUP
After talking to Ex-GE salesperson about the possibility of becoming a dealer, he insisted that these companies prefer someone who has been in retail business for at least 3-4 years and owns a physical store/shop(brick-and-mortar establishment). A typical dealer application for Viking dealership is here:
I hope this helps. THANKS.
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