by Larry Ciptak
Vice-President, Big Dog Warehouse, Inc.
The State of the Locker Industry
A couple years ago we posted the original version of this article. It struck a lot of nerves. Manufacturers wondered why we'd openly provide such information the industry traditionally held so close to the vest.
Well, we did it for you, the customer. We believe that customers have a right to the knowledge necessary to make smart purchasing decisions. And choosing the proper lockers, shelving or other storage products isn't as simple as it might appear.
We believe we have the right to be honest about market realities and simply feel compelled to pass on the information what we see as important to our customers.
It's an election year. Which locker manufacturer has the best chance of "winning" this locker season?
The answer is whatever manufacturer(s) roll with the changing times and open their minds to embrace the latest technology and expand their distribution networks.
But now the rising price of steel means increased costs across the board for all locker and shelving manufacturers. Steel is a volatile market (prices have doubled since last October) and right now–June 2008–pricing is shaky ground.
The Chinese habitually bid higher for globally available steel, which means domestic manufacturers have to pay at least as much for steel as the Chinese do. Hence, higher prices for all. But US manufacturers don't have the benefit of a vast labor pool willing to work for a couple dollars a day. Imported lockers are on the rise. Some are well made, others just plain suck. If you're looking at buying lockers and your distributor won't give you a brand name, be very cautious.
But while the number imported lockers rises, the quickest growing segment of the industry is plastic lockers. They're virtually impossible to destroy, look great and last for decades. Look for more plastic lockers popping up through traditional steel channels (we are an example, with our exciting new line of Penco plastic lockers).
Manufacturers now realize that if they sit around scratching their onions wondering what to do with this internet thingamajig, they lose valuable time and thus market share. It's interesting to watch them position themselves as they add new products to their mix. There is a certain amount of personal satisfaction in watching the predictions we made a few years ago come true.
Manuacturers have to be aggressive or they’ll continue to lose market share. Today’s consumers are web-savvy, and they know they’ll get a better price from us than their local stocking distributor. They also expect a quicker turn-around, bottom-line pricing and lower freight rates.
The Screaming Stocking Distributor Syndrome
Stocking distributors continue to kick and scream because we (internet companies) continue to carve into their market shares. But we’re moving volume, though the competition on the internet is fierce and margins are smaller. The screamers who get in on the internet action somehow will survive, and the rest will fade into obscurity.
A couple years ago we wrote about how the "old way is dying a slow, painful death". This trend continues. Ever have a bird run into your windshield then flap its wings haplessly trying to fly again? That would be some of these guys. As much as we've tried to work with district managers and their stocking distributor network–bearing in mind that the DMs absolutely hate internet companies like us for "stealing" their business–there still exists too much paranoia on their end to get anywhere.
Meanwhile, while some manufacturers still carefully guard their stocking distributors’ territories, those days are winding to a close. The internet market is simply growing too quickly to conveniently ignore. The progressive manufacturers of today (yes, it seems strange to put "progressive" and "manufacturer" in the same sentence) are looking for stronger relationships with a handful of key web distributors.
The differences between on-line companies and traditional brick-and-mortar distributors are finally being acknowledged and addressed by upper management. The industry is starting to change with the times, though slowly.
Why Customers Are Choosing the Web Instead
There are other reasons beside simply price that lead an increasing number of consumers to shop online for our products. Companies like ours better understand logistics and are positioned to best move product from A to B in an affordable manner. With multiple manufacturers and distribution centers around the country, we can match the best product with reasonable freight charges. By not purchasing a stocked product, the customer is only paying for shipping once—from the manufacturing or distribution facility, and not from a stocking distributor who had to pay to get the product to his warehouse in the first place.
Not all of our ilk operates the same. Salsbury Industries, located in California, sells lockers through Lockers.com and Mailboxes.com. They purchase lockers from an east coast manufacturer, ship them in bulk out west, slap their name on the lockers then ship them all the way across the country again when they get an east coast order. To us, this makes little sense to the customer who in essence is paying for cross-country shipping twice.
An efficient nationwide distribution centers with multiple FOBs is what this industry needs. Right now, from our point of view Penco Products has the most efficient nationwide distribution system. Hallowell also realizes that the old ways don't work anymore, and have developed a highly-efficient distribution system themselves.
We continue to attempt to forge alliances with all facets of our industry–from stocking distributors to their district managers to their regional managers to their national sales managers to the owners/CEOs. These parties all need to meet and decide on a smart way to split the pie and allowing everyone to have their fair share.
Old ways die hard, but all material handling companies must either catch up with the times or fall further behind.
Why Some General Contractors Don't Like Us
Since we sell tons and tons lockers, we’re often facilitating on-site assembly and installation with factory-authorized installers. Some of these firms are strictly installers, some are stocking distributors with installation crews. It doesn’t matter to us, provided that if they are a stocking distributor they don’t attempt to poach our customers. If they do, they simply won’t get any more of our business. However, we see no problem doing business with “competition”. What’s healthy for the customer is healthy for the industry.
And smart organizations are starting to realize that we can do as good or better a job than GCs, without all the GC costs and headaches.
Some complex locker jobs will necessitate the involvement of GCs. But if you're putting 300 lockers in a school corridor, we can easily arrange for this job to get done in a professional and affordable manner.
We like dealing directly with the schools themselves. Some GCs are a pain in the… end panel.
Lead times on production orders range from two-to-three weeks during slower periods to up to 12 weeks during locker season. And there's quick ship, common items in standard colors and sizes available for quick shipment (a week of less from time of order). Most manufacturers have spent considerable resources beefing up their distribution networks. It's getting better, but there's still vast room for improvement. Logistics is playing a larger role than ever.
Big Dog's Open Challenge to the Industry
As a leader in the industry, we at Big Dog Warehouse would like to publicly challenge the locker and shelving industry to do the following:
- Continue improving on the inroads you're made with your distribution networks, and make sure what you claim is in stock is truly in stock;
- Give us (and thus the customers) adequate shipping and tracking information so we/they can better track orders;
- Continue to develop better marketing materials. A good photo sells product. Provide descriptive text for your products that aren't so dry. Have quality web-ready photos for all of your products and put them on a CD;
- We understand that as your steel costs increase, so do ours, and the customer will pay more. Just give us enough of a heads-up before a price increase so we can go to customers with existing quotations and give them a chance to save some money by getting orders in before an increase.
The Consumer Drives the Market
We’re working with our manufacturers to have better communications, quicker turnaround times and more checks and balances to diminish the possibility of errors. Our customers want undamaged products quickly and affordably. What’s good for the customer is good for the industry–so the consumer drives the industry, not vice-versa.
Any response to this State of the Locker Industry 2008 article is welcomed.
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