[vendtalk] Rebates and related

Sun Jul 20 05:11:44 UTC 2014

Mike,

I appreciate your observations.  I felt the same way 6-8 months ago and have
spent much time detailing your/ my concerns to RSBG, all to no avail.  So I
am 90% ready to move on.  I hope RSBG can straighten itself out and I will
gladly return to the fold.

As you stated, establishing a buying group is a daunting challenge.  It will
be 1-2 years before any meaningful results can be expected.  That is why we
have to start small and only expand when the time is right.  There is a
lesson learned from what RSBG is going through.  John Plummer from
AmeriSource knew this.  

I do not think there is anything nefarious about what RSBG is doing.  I
think it is lack of focus and spreading itself too thin.  The concept is
incredible and when properly put together is going to change the entire
vending business.  This I believe sincerely.

There is a reason for no progress with Coke.  It is my understanding that
Coke will not offer any sort of incentive to United Strategies Group because
Canteen has told them us or them, and Coke has chosen Canteen.  I don't
blame them, business is business.

As far as a distributor marking up prices tied to their costs be careful.
They might have an invoice showing they pay a certain price but that is not
generally what their actual costs are.   They work on incentives similar to
the rebates we are trying to establish.  I spent over ten years in the
distributor/ warehouse business and generally their product costs are less
than any invoiced price, sometimes considerably less.  For example, as a
Ford Motorcraft warehouse I would be billed $1.14 for a spark plug on the
invoice.  If I achieved my volume sales goals my actual cost could be as low
as $.90.  These incentives were paid in the form of a check and were never
reflected on an invoice.    Another means of lowering the cost to a
distributor is to offer free product of promotion items which could be sold
independently.  I won't bore you with the details but I guarantee you that
any successful warehouse is implementing all of these.

Thanks again for the input,

Dennis

-----Original Message-----
From: Mike Vandervoort [mailto:vandervoorts at sbcglobal.net] 
Sent: Saturday, July 19, 2014 10:54 PM
To: 'Dennis Horn'; 'Vendor Talk Mailing List'
Subject: RE: [vendtalk] Rebates and related

Dennis,
Thanks for the email.  I, too, have received less, after the merger of RSA
with USG, this last period.  I, too, have received no accounting.  With no
accounting transparency, one might conclude that the new company is simply
taking a larger share while they seem to fail to deliver on what they
promised to us before any corporate change.  

I would suggest that if they want our cooperation and membership, then they
need to be more open and provide and explain the financials in a way that
makes it clear what we should be getting and what they are making off of our
buying.  I would also like to know why there is still no progress with Coke.

Interestingly, one regional food distributor has gone to a pricing system
that is simply their landed unit cost plus a certain operating percentage by
type of product.  This allows them to vary pricing as the market price
swings, but yet keeps their cost and profits as a function of incoming cost.
This is fairly transparent and helps to explain the rapid change in
wholesale prices on to the next step in the distribution chain.  Credibility
and trust are maintained.

I have no problem with an organization making a percentage off of rebates
from what I buy, etc., as it takes a lot of overhead, computer work,
reconciliations, and so on to pull this off on a nationwide basis.  If we
are truly seen as members and partners contributing to RSA/USG's financial
well-being, then we need, and should rightly expect, a clear accounting,
based on facts, not promises, that shows what is happening.  

You know, one of the first thing one learns in running a company is not to
promise something that you cannot deliver on.  Credibility is a very
important quality and one that, I would hope, the RSA/USG marriage would
strive for.

Moving on to form another buying group is a daunting challenge but one that
could be done if the will is there.  Before the divorce is final, though, I
think I would like to give RSA/USG a chance to reform their ways and get
real - and provide the facts and be measured by us on their performance to
plan.  If there are no satisfactory facts forthcoming, then I believe we all
would then have the answer as to whether independent action to form another
group is advisable.

Just my opinion.

Mike Vandervoort
Abilene, TX 

-----Original Message-----
From: vendtalk [mailto:vendtalk-bounces at nfbnet.org] On Behalf Of Dennis Horn
via vendtalk
Sent: Saturday, July 19, 2014 5:36 PM
To: 'Vendor Talk Mailing List'
Subject: [vendtalk] rebates

I was probably the foremost proponent of joining the Randolpph Shepard
buying group(RSBG) but have become completely disillusioned.  Over the past
eight months I have been in continuous contact with the people at RSBG and
have been told the tremendous benefits that would come to the participants.
I checked to see if these promises could possibly be true and found they
could.  But they haven't.

I am realizing greater rebates than I received from AmeriSource but not
close to what I was told to expect.  I keep fairly accurate records and know
approximately what I should receive.  Last quarter when the numbers did not
jive, I spent many weeks trying to get a detailed summary of how the rebate
was determined.  AmeriSource provided this information along with the check.
When RSBG begrudgingly provided this information I found the rebate I
received was mostly that for Pepsi.  There were no rebates for Mars, my
largest rebate in the past, Hershey, Mrs. Freshley's, Cloverhill, Wrigley's,
etc.

If it were not for the Pepsi rebate I would have withdrawn from RSBG then
and there.  I stayed on only after assurances from RSBG that the next
quarter would be in order and detailed summaries would be provided.  Now the
1Q2014 rebates have arrives and my rebate is considerably short of what I
expected.  Also, I did not receve the promised detailed summary to see if it
was my mistake or RSBG's.  To top it off, I been ignored is my request for
an explanation.  I have had enough.

For the past six months a number of operators and myself have considered
putting together our own buying group.  A number of these operators are
anxious to get started.  I have prevented this by assuring them that RSBG
would eventually get its act together and we would all prosper.  But I have
lost my confidence and trust in RSBG.  So, the journey/ endeavor begins.

There are some advantages and disadvantages to this endeavor.

Advantage:

Minimal fees, I envision a nonprofit buying group that would only deduct
operating expenses.  We would eliminate the profit taken out by middle men,
RSGP/ Amerisource.  Eventually, this would be between 5%-10% instead of the
25%-30% we are now being assessed.

Advantage:

We would be blind operators working for blind operators.  AmeriSource used
the buying power of the blind to create meaningful rebates which he offered
to non-blind operators.  

Disadvantage:

We would be starting small and may not realized sizable rebates for 1-2
years.

Disadvantage:

Corporate structure.  There has to be a central control. This is why I am
sending out this message.  We have approximately $2 mil in sales from6-7
operators in Florida.  This is enough to get started.  If that number can be
increased to $5 mil, however, every meaningful rebate product source would
be open to negotiating with us.  We also would be able to join other larger
vending buying groups.

There is much more to this.  If you have any desire to join the rebate
conscious vendors in going down this road please respond to me directly.
The longest journey begins with the first step.

Dennis Horn 

Presiden

Blindster Vend

BlindsterVend.com

DHorn at blindsterVend.com <mailto:DHorn at blindsterVend.com> 

407-242-4395, mobile

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