Howdy,
I have been watching this Stihl North American distribution thing with no small interest. The Stihl company suffered mightily to set this up, taking some massive lawsuits, especially in the NW. but once they make a decission, they see it through no matter what.
My marketing manager once told me to tend to the technical buisness, and keep my ???? nose out of the marketing, but I just can't help but watch the jerking around that goes on in the world of chainsaws from a marketing view. (I was trained to think this way by a fine professor of marketing in college). I operate from what is called the "marketing mix" and that kind of outlook gets you in trouble with about everybody.
It has been my observation, that distributors operate on the thinnest margins in the industry, typically 15% on sales, never over 17% to my knowledge. Factories on the other hand, seem to be unable to operate on less than a 20% cost of sales in distribution, in addition to the normal cost of sales at the factory. Now if you stop to think about it, this is acutally very obvious. The factory man shows up in a new rig, wearing a tie and pressed shirt, and is expected to take you out to lunch at the very least, right? He then has to "give" on the rediculous warranty claim that your mechanic has concocted with writting ability surpassing Mark Twain. Furthermore you can sure bet that the factory representative is not apt to be on hamburger budgets and staying in back country motels.
Now as a rule, considering recieveables, factories are a sunk monk before they begin in this buisness, as the normal dealer will pay the factory usually slow and late. A distributor, as a rule, is paid more promptly. This effect has historically sunk factory distribution in the past. It's kind of like the logger paying his dealer his saw bill. First paid is always the bar bill, then the grocery store and mabe bank, and then if there is anything left the dealer may get a token payment. Buy the time this kind of thing trickles down to the factory, it is all curtains and darkness!
Ok, there I go again, meddling where not invited.
Regards,
Walt Galer