The solar supply chain
Where do solar dealers fit in the supply chain and what does it mean to be a solar dealer?
Different companies will give you different answers, but one way or the other being a solar dealer is about successfully delivering solar solutions. You potentially have to be an installer, a retailer, a buyer and a marketer and find a way to compete against thousands of others.
Solar dealers really are at “the pointy end” of the supply chain.
Many solar dealers start out as trades people and become sales people almost by accident. Most find out that pretty quickly that as a tradie, selling your labour, skills, professionalism and products are what pays the bills.
Before long you realise that being a great solar dealer takes a lot of work. You need to know how to do it, what to sell and how to make it work seamlessly and all the while, systems are getting more complex.
Big companies sometimes have the ability to ensure all their staff and contractors are fully trained and up to date on the best products but many smaller ones often struggle to keep up. This is where great wholesale partners can really help.
One step up the supply chain are solar wholesalers.
Great wholesalers invest substantial time and money working out which new products are the best, leveraging deals and setting up training so they can be hugely valuable for smaller companies. Staying in touch with the latest industry intelligence and statistics takes a lot of time but ensures you aren’t getting left behind.
Of course, you could do all that yourself and make a little extra by buying direct. You could choose to manage buying, importation, duties, foreign exchange risk and hold several million dollars in stock if you prefer. You could go to every conference and event, buy intelligence reports and constantly meet with manufacturers to stay tuned in.
Some years ago there was a shift away from wholesalers and a lot of dealers started buying directly from manufacturers which was carefully tracked by industry analysts. The simple logic was deal direct, get better prices, make more money. For a small number it worked out, but for the majority it was a disaster.
Talk to any number of dealers who tried it and you’ll find the reality was very different. Many went broke in their attempt caught out by fluctuating exchange rates, price changes, shipping delays, being over and understocked or just plain got ripped off by unscrupulous manufacturers. Quite a few got caught by manufacturers who went broke leaving the dealer (as the importer) responsible for warranty obligations. Many found that carrying hundreds of thousands of dollars of stock was just too much to bear.
Fast forward a few years and many dealers realised that importing and holding stock is an entirely different game loaded with substantial risk. According to the latest industry statistics, the majority of Australian solar dealers purchase through wholesalers these days.
For the average solar dealer, choosing a great wholesaler can make life much simpler. Of course, you pay a small premium through solar wholesalers – and generally the better they support and the more they help you, the more you will pay. The reality is wholesale margins are extremely slim, usually less than 10%, so before you jump in yourself or get frustrated by wholesale prices ask yourself if you can really make it work for a small premium.
Do you value strong technical support? Would you prefer not to carry stock, foreign exchange and price risk? How much bad debt risk and extra insurance premium can you cope with? Would you like some help to stay up to date with latest products and share this with you? Is your time best spent focusing on installing and retailing or do I want to be everything to everyone?
Being a successful solar dealer – or a successful solar wholesaler – is about understanding the supply chain and knowing what your focus is.
Till next time, The Juice.