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“In today’s world, ecommerce
is in almost everyone’s lives,” says
Dan Halama, president and
founder of supplier Bright
Stores, Inc., in Denver, Colorado.
“Ecommerce is influencing our
daily lives, and because of that
clients expect to be able to order
online. That requires a company
store of some kind, and not hav-
ing one makes a distributor look
behind the times.”
In Halama’s view, the com-
pany store “has effectively
replaced the order form. I can
remember, in the 1990s, sending
and receiving order forms by fax.
Now the order form better be
[accessible] on their mobile
phone,” he says.
Bobby Lehew, CAS, believes
the primary reason—and subse-
quently the most profitable
one—a distributor should want
to offer company stores is
because they can secure long-
term accounts with residual
sales and lifetime values into the
millions.
“Traditional statistics in the
industry place average client
turnover (for clients without a
store) at about two years; clients
with a store, on average, well
exceed this number and can
climb into several years or more
of loyalty,” says Lehew, chief
branding officer for distributor
ROBYN in Oklahoma City,
Oklahoma. “A $250,000 store
represents a lifetime value of
$1.7 million. A well-run store
will last through multiple buyer
transitions and provide stability
for both you and the client.”
Few distributors would argue
that launching a company store
is a laborious task requiring a
great deal of manpower and cap-
ital—financial and technical, and
the steps involved can seem
daunting, especially to smaller
firms.
DISMISS MISCONCEPTIONS
Distributors might believe
that company stores are only for
large clients, but this is no longer
the case, says Halama. “Fifteen
years ago when we started, com-
pany stores were reserved for
large companies. Now they are
more popular among medium-
sized and small clients. It helps
them control their brand and
spend.”
Your client may be a 500-
person corporation, or it may be
a mom-and-pop diner with a fan
base that spans generations.
Either way, a company store can
help ensure an ongoing source of
revenue for both distributor and
client. “If you want to compete,
even for a small business, with
$30,000 to $50,000 in annual
spend … it’s kind of low, but
they qualify. Even if they’re only
spending $30,000, the margin is
$10,000,” says Halama.
Lehew says after 25 years of
experience and 10 years educat-
ing fellow distributors on com-
pany stores, he has drawn this
conclusion: “They are complex,
take a lot of work, and, surpris-
ingly, can even be contentious
(while still profitable), but more-
over, they can be fruitful—if you
are selective about taking on cus-
tomers who value your service.
“Clients who value your mer-
chandising skills and full-service
offerings are purchasing conven-
ience as well as your skillfulness
in resolving complex workflows.
Any time there is complexity,
there is room for profit. Any
time you are reducing their labor
costs or saving them in opportu-
nity costs, there is room for prof-
it,” he says. “The golden rule of
company stores is profit. Gross
JULY 2016 •
PPB
• 23
IKE A DUCK IN THE WATER, successful company
stores on the surface appear to operate effortlessly, while underneath
an intricate, well-timed series of steps is carried out to maintain the
store’s profitable momentum. Company stores can be a valuable
source of long-term revenue, so passing on the opportunity to build
and maintain one for a client could keep you from maximizing your
earning potential.
L