Canadian Electrical Wholesaler

 

Transportation BusinessRick McCarten

Ford just recently announced that they are setting up a research facility in San Jose, CA to look at new forms of transportation and all of the software connected to new vehicles. They also announced that they see themselves not only in the car business, but in the grand scheme of things, they are in the “transportation” business. 

Right now, cars might be the best form of transportation. However, by taking a bigger picture view, the way we travel now, may not be the best method. Ford is not going to be tied to old legacy viewpoints that force them to defend themselves against new technology — which could end up hurting their business. 

I remember reading an article by Theodore Levitt in a 1960s issue of the Harvard Business Review which set up the basic premise that the railroad business at the time was seeing major decline. His point was similar to Ford's; if the railroads saw themselves in the transportation business and not just in the railroad business, they would have reacted differently. Perhaps they would have embraced highways and other forms of delivering goods, rather than seeing these other modes of transportation as competitors that need to be fought off. If only they had seen their job as helping customers get products from factory to consumer, they would have seen opportunity when new methods of transportation arose. Unfortunately, they only saw competition. The results? This mentality hampered their opportunity to grow and to capitalize on change. 

Another similar case is the city of Detroit. At one point in time, it was recognized as the world capital of the auto industry. Instead of embracing foreign car manufacturers — Honda, Toyota and Hyundai — it supported the three American automotive companies and forced others to locate away from the centre. The result? Instead of hurting auto manufacturers, it ended up hurting itself. 

So what is the big picture for electrical distributors? 

The unique thing about wholesalers, is their ability to turn items. Six to eight turns a year make it possible for a company to be in the wholesale business. Without these average turns, your mark-up would need to be higher and it would be difficult to maintain "wholesale pricing."

Here is a chart to show how it works:

• 2 turns X 60% margin = 120%

• 3 turns X 40% margin = 120%

• 6 turns X 20 % margin = 120%

• 12 turns X 10 % margin = 120 

As the figures above illustrate, three turns a year with a 40% mark-up provides 120% return on your investment at the end of the year. (You need 20% to pay staff, buildings, loans, etc.). Similarly, six turns a year with a 20% mark-up, provides a 120% return. This puts you in the wholesale ballpark. Other companies like Walmart try to maintain similar average turns.

The specialty retail market would have larger margins, possibly 60% or more, because the store just can't turn over inventory fast enough. 

On the other hand, if you double the number of turns to 12 — or Amazon's goal of 24 — and you get mark-ups of 5% to 10%, this scenario could diminish returns and change the dynamics of actually buying and selling products. Amazon’s method for example is to get payment prior to purchasing the item, so credit becomes a source of revenue — not an expense — further reducing overhead costs.

What makes electrical distributors unique is that the product and customer mix allows the market to have turns. The product and customer mix empowers electrical distributors to remain a combined force — one of the biggest wholesale groups in North America. It is this mix that allows yearly turns to take place, that allows the margins. Any change in "the mix" will change the dynamics of the wholesale business overnight. 

I recall sitting next to a small regional pharmaceutical distributor from Arkansas who told me that his industry had consolidated in the U.S. in less than 10 years. I asked him what caused the change and he said the customer base changed. 

And so, understanding what makes your business and services unique will allow you to look at opportunities for expansion. This understanding may allow you to move into existing product markets where you can improve service and pricing through high turnover rates. It might also allow you to build new customer connections that can take advantage of larger volumes. 

The next time you see a competitive situation, think about the big picture, like Ford, and you just might see it as an opportunity and not as a threat. 


 Rick McCarten is VP, Operations, Electro-Federation Canada.

Read more in Canadian Electrical Wholesaler by Rick McCarten
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Agility: Knowing Your Competition
The Big Picture
Could our Industry Lose the Lighting Market?
Adapting to the Future with Young Talent
If Your Customers Can See More, You Might Want to Help Them See Even Further
Health and Sciences Could take a Lesson from the Electrical Industry
Change is About to Hit Our Industry
Challenges of the Digital Age
Agility: The Customer Landscape
Agility is the New Lean: Alexander Defeats the Persians
Agility is the New Lean
The Gap Between “Us” and “Them”
Our Industry Needs to Help Canada Skate to Where the Puck is

 

 

 

 

 

           Partnering For The Next Step                

Siemens CanadaWelcome to the Digital Enterprise Virtual Summit brought to you by Siemens

How quickly can you react to changing conditions and demands in your market? How can you ensure your production will run securely at any time in the future?

Industry’s digital and technological transformation is the answer for meeting today’s and tomorrow’s challenges and market needs.

With the right digitalization and automation solutions, expertise won from practical experience, and a partnership approach that benefits all involved parties.

To explore these possibilities, we’re bringing together top-level speakers, specialists and decision-makers from various industries and experts from Siemens

to the Digital Enterprise Virtual Summit under the motto “Partnering for the next step.”   

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“Re-envisioning Electrical Switchboards”: For light commercial applications, the status quo is no longer enough

Eaton 175x125Whether you’re a contractor or consultant, compact footprint and shorter lead times are a priority. At Eaton, we understand these challenges. That’s why we have re-envisioned our traditional electrical switchboard to assess how it could better serve light commercial applications. The result? The Pow-R-Line CS. 

Join Eaton’s webinar on June 30th, 2020 and learn the secret to shorter lead times alongside the additional benefits of:

 -  Versatile Configuration - Cost Effectiveness - Plus a Complimentary 3D Product Demonstration!

Sign up and join our host Annu Yadav - Distributor Programs Manager and our presenter Aditya Ramesh - Product Manger of Panelboards & Switchboards. Looking forward to seeing you there!

Click Here To Register.

 

John JefkinsBy John Jefkins

In 2011, I started working in the electrical arena and quickly noticed that there was a high employee retention rate within the industry. Today, I regularly engage with Electro-Federation Canada members with 20, 30 and even 40 plus year tenures. Other industries I had worked in previously, such as telecommunications, had higher turnover rates.

Our industry faces an increasing need for talent, with new retirements and product/process innovations and modernization driving the need for specialized roles — some not even known yet.

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Digital Twin MarketA recent Markets & Markets report estimates the Digital Twin market will grow from US$3.8 billion in 2019, to US$35.8 billion per year by 2025, at a CAGR of 45.4%. Digital Twin software is already revolutionizing industries such as healthcare, architecture, aerospace, defence, and automotive and transportation.

Furthermore, the global smart infrastructure market, which includes the Digital Twin sector, is expected to thrive at a considerable CAGR between 2020 and 2025 as demand for the smart infrastructure has been a booming year on year, reports Market Research Explore - details. 

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PNNL StudyBy Craig DiLouie

The U.S. Department of Energy has released the results of a study examining authentication vulnerabilities in connected lighting systems (CLS). Particularly as emerging CLS incorporate distributed intelligence, network interfaces and sensors, they can serve as data-collection platforms that enable a wide range of valuable new capabilities as well as greater energy savings in buildings and cities. However, CLS technology is currently at an early stage of development, and its increased connectivity introduces cybersecurity risks that are new to the lighting industry and must be addressed for successful integration with other systems.

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David GordonBy David Gordon

COVID-19 has heightened the benefit of, and interest in, eCommerce for electrical distributors. Our second and third COVID-19 Electrical Market Sentiment Reports have shown that those with an eCommerce offering have seen online sales increases. Further, from conversations with distributors, their site activity increased. The benefit is that these companies had lower sales declines (and some increases), and were able to better serve their customers.

A further benefit is that their remote workforce had access to an online resource, other than manufacturers, for quick, easy, product research.

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Changing Scene

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Northern Cables announced via their social media accounts that they have broken ground on the ...
Electro-Federation Canada (EFC) and ETIM North America (NA) have entered into a strategic ...
Southwire announced that Tim King has accepted the role of President of Southwire Canada. ...
Savant Systems has announced it has signed a definitive agreement to purchase GE Lighting, a ...
EFC’s Economic Forecast Series webinar will deliver global, national, and regional economic ...
A new video featuring Sonepar’s Vice President of eCommerce and Digitalization, Gaurav Sharma, ...
Electro-Federation Canada (EFC) and its members are proud to support the next generation of leaders ...
Eletrozad has launched Electrozad Online. The same standard of service you've come to expect from ...
After more than 42 years of exemplary service at Leviton, Gabriel Massabni, Vice President ...
Bill Stephens, National Sales and Marketing Manager for IDEAL INDUSTRIES CANADA has announced the ...

2020 q2 Pulse of Lighting FindingsChannel Marketing Group’s 2020 Q2 Pulse of Lighting Report projects that the lighting market, through electrical distribution, contracted by 20%.

The survey, conducted the third week in June, received responses from 164 individuals who equally represented industry stakeholders.

Distributor Performance
Very few distributors reported either flat or positive performance with over 30% reporting declines of over 30% for the quarter.

 

 

 

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EikoEIKO has announced the the introdutction of EiKO Marketplace, a digital storefront, located in the EiKO Portal. Developed to market and sell promotional specials and excess inventory including generational, overstock, and niche products; the EiKO Marketplace presents an opportunity to offer high-quality lighting at incredible savings.

Due to the rapid development and generational changes of LED technologies the timing is perfect to launch the EiKO Marketplace as an outlet to sell high quality, value-priced products.

 

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LevitonLeviton Canada is pleased to announce the nomination of Thomas Supinski as Sales Director for Alberta and the Prairies as of June 1st, 2020, as Julie Marineau will be moving to Montreal along with her family. Julie will be promoted to Vice-President, Retail at Leviton Canada’s head office.

Thomas has been residing in Calgary since 2003 and has a deep understanding of the regional market and its specific needs.

 

 

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Peers & Profiles

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  Sonepar is excited to introduce Anju Uddin as the new Marketing Manager for their Ontario ...
Electro-Federation Canada’s Young Professional Network (YPN) is a fantastic tool for industry ...
Sean Bernard is the Intelligent Controls Manager, Canada for Ideal Industries. Sean resides in ...
Christina Huang is a Senior Contracts Manager for Schneider Electric. She has a varied, technical ...
Jenny Ng is a Business Development Manager for the Power Solutions Division of Schneider Electric. ...
With over 60-years of experience in the lighting industry, CBC Lighting has established itself as a ...

 

Anju UddinBy Blake Marchand

Sonepar is excited to introduce Anju Uddin as the new Marketing Manager for their Ontario Region! Anju has more than 15 years of experience as a marketing expert, which includes running an independent agency working with a multitude of businesses in various industries and geographies from around the globe. 

With a passion for reinvention and finding success through a commitment to education and innovation, Anju has utilized her exceptional creativity and business acumen to engineer seamless brand experiences...

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