Direct ordering from manufacturers; already common place amongst European installers
In the last decade, the buying and ordering behavior of the installers has been gradually changing. The installation market has been (and still is) very traditional, but we do see some trends developing in the buying and ordering behavior of the installers. The whole purchasing process is becoming more omnichannel. The specialized wholesale is still dominant, but the truly 3 step distribution model (manufacturer – wholesaler – installer) is under pressure.
It might come as a surprise, but the main contender for share of wallet are not the online players nor the general building wholesale, but the manufacturers. In some countries like the UK, the installers already spend 17% of their share of wallet for products ordered directly at manufacturers.
This could still mean that invoicing and delivery are done via the wholesale (to avoid channel conflicts and to ensure a smooth delivery & payment process), but the most important thing is that installers are in direct contact with the manufacturers . About half of the European installers order directly at manufacturers. In Belgium this is done the most and in France the least.
Why are installers ordering directly from manufacturers?
There are many reasons why installers are turning towards the manufacturer more often for ordering products. First of all, price is a key driver. In all countries, better prices and offers is listed as most important reason. Of course, there are also manufacturers, whose products are not available at the wholesalers, and for such products the installers do not have much choice but to get in touch with the manufacturer directly.
Furthermore, it becomes apparent that advice and service is mentioned in almost all countries as a reason to order directly, or is perceived to be one of the main advantages when ordering directly at the manufacturers.
The manufacturers are perceived to be the experts in their own products and with this knowledge installers clearly feel that the manufacturer is better equipped to provide advice and service. This is especially important given the fact that the products themselves are becoming more and more complicated.
What are the reasons not to buy directly from manufacturers?
When asked what barriers installers see for ordering direct at manufacturers, many can’t mention any at all. If they can think of one, it’s mostly revolving the delivery process (slow deliveries and lack of flexibility).
One of the key functions of the wholesale, organizing the distribution process, is clearly still a major asset for them. When looking at the installers who are not ordering directly from manufacturers, their main reason is a lack of necessity to do so.
Also the convenience that the wholesale offer and the loyalty of installers towards the wholesale seem to be clear reasons why some installers don’t order directly. Another interesting reason that is mentioned in some countries is that direct ordering at manufacturers is for bigger installation companies only. This is in line with the fact that direct buying at manufacturers is mostly done for bigger projects (and thus performed by bigger installation companies).
What products are ordered directly?
The product group that is ordered the most directly from manufacturers are boilers and water heaters. This comes as no surprise as there are big manufacturers supplying directly, of which Viessmann is a prime example.
There are some differences per country, like in the UK where air conditioners take the number one spot. In many countries (heat) pumps are mentioned often as well. When looking at their expectations for future ordering, especially boilers and water heaters will be ordered more (which already is the most popular product group for ordering directly), closely followed by air conditioning and heat pumps. The complete lack of low costs, small products is a clear indicator that direct ordering at the manufacturer is mostly done for more expensive products and on a project basis.
On average installers order their products at about 3 to 5 different manufacturers. In general Viessmann takes the lead regarding manufacturers where installers order their products, followed by Daikin.
The future of direct ordering from manufacturers
Overall about one fifth of the installers indicate that they expect to order more directly from manufacturers in the next 3 years. This is especially the case in the Netherlands and the UK. Installers who already are ordering directly, clearly more often indicate to expect ordering more than installers who do not order directly yet.
As for the key drivers to do so, the most mentioned aspect for increasing their direct ordering at manufacturing are attractive prices/ offers. Looking at it from a market perspective, we foresee a growth of direct buying at manufacturers as well. Obviously, this growth will be focused at certain areas of the market, primarily for bigger projects.
The products that will be bought more often direct from manufacturers will continue to be the bigger and more expensive products.
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