BLOGS

PARTNERS NOT CUSTOMERS

 

One is for the long haul, the other purely transactional

 

In the late 1970’s, Kubota were making plans to establish a wholly owned subsidiary in the UK, and the Japanese company looked at the feasibility of handling all sales and service directly from its newly acquired headquarters at Thame.

The brand was still in its infancy in the UK, having previously been sold through a distributor, John Croft in Yorkshire. But could any manufacturer come into the market and dispense with a dealer network?

 

It soon became clear that the costs and logistics would be prohibitive, and the plans were dropped.

As a result, the company appointed Brian Hurtley as its new Managing Director in 1980. Brian had worked for Massey Ferguson before joining MF distributor Eastern Tractors as Financial Director. 

 

He had spent a considerable amount of time in The Gambia, where he was responsible for putting together a basic package of tractor, trailer, plough, and drill, mostly second-hand units, for use by farmers in the under-developed agricultural economy. This required considerable logistics in transportation, setting up a dealer network, training and ensuring an adequate supply of spare parts.

 

When the Cowie Group acquired Eastern Tractors, Brian’s role in the company disappeared. But his financial background coupled with proven experience in establishing a distribution network came to the attention of Kubota UK and he soon set about establishing the UK dealer network.

 

I recently asked David Hart, Kubota UK’s current managing director how or why it would ever be thought feasible to operate a business such as Kubota without a dealer network?  It appears that dealers and a dealer network are rarely used by Japanese manufacturers, and that they utilise a very different distribution model to the rest of the world.

Disintermediation

All of which feeds into the current debate about the future of dealers – and the recent discussions surrounding ‘disintermediation’, a word which simply means ‘cutting out the middle-man’. (eg the dealer).

There have been a number of recent reports of manufacturers going direct to consumers, using various inducements, but to date these have been sporadic.  Trading conditions during 2020 have been unusual, to say the least. We’ve not known such disruption to day-to-day life since the Second World War, and even then comparisons are futile.

So there will be some strange things going on. Pressures on manufacturers and retailers have been mounting – and I think we might excuse the odd transgression from the norm.

BUT, if manufacturers or suppliers believe that they can have their cake and eat it by selling direct – whilst still expecting dealers to fill in the gaps and look after the product – they will soon get a rude awakening.

In a podcast I recorded with Bob Clement and Sara Hey from the US recently the talk turned to the manufacturer/dealer relationship.  Far too many manufacturers regard dealers, they said, as their ‘customers’.  But we are all customers, and can walk away at the drop of hat. It’s a transient and fragile relationship.

Then again, you often hear manufacturers talk of dealers as their ‘partners’, but frankly use the term without commitment. It just sounds better.

As the industry evolves, as it will, there will be changes, new strategies, different relationships in the supply of products from factory to farm gate or end-user.  Dealers will play a crucial and important role, but principally where manufacturer and dealer have established a partnership where both are totally committed to each other.

Both need to be totally concerned with each other’s success. Communication between them needs to be ongoing, honest and transparent.

So forget being a customer, forge a partner relationship.