Bestbuy Distributors is a member-owned auto parts distribution company that services the automotive aftermarket. Their main warehouses are in Mississauga, Ontario and Edmonton, Alberta. Bestbuy Distributors’ unique business model, in which profits to go back to the shareholder members, is different from their public company competitors and allows for greater buying power than if their individual members were to go it alone.
“There’s power in numbers,” explains President Jeff VandeSande. “We’re stronger together than individually. We’re able to pull the purchases together from our various different shareholders and are able to negotiate the best possible program for them and provide the best branded product. It’s not just about price. It’s also about supply, delivery, the brands that the consumer is looking for and the latest applications out there. Because we have this buying power and these warehouses to store the inventory, we are able to negotiate some pretty good deals for our members.”
The Canadian Business Journal featured Bestbuy Distributors in December 2012, but much has changed with the company since then.
Expansion and Growth
The automotive industry experiences a significant amount of parts proliferation.
“Essentially that means that every year there are more cars, which need different parts. Car parts are like bunny rabbits: they just keep proliferating. We add into our inventory an average of about a hundred new part numbers a week. We are not able to remove the same amount of obsolete parts, so you end up getting substantially growing inventories, which is an issue that plagues our industry,” remarks VandeSande.
To address this issue, Bestbuy Distributors ensures that they always have the right parts on the shelf for when shareholders need them.
“Our building in Mississauga had over 70,000 square feet of warehouse space. About two years ago we started a project to expand this facility, which just completed this year. We added another 35,000 square feet. We also expanded our freestanding catwalk system by another 25,000 square feet,” VandeSande says.
Bestbuy Distributors is also constantly receiving new line opportunities. Often, when vendors carry a line of auto parts that starts selling more and more in the field, the demand starts to grow and after a certain point the products need to be stocked in inventory in the Distribution Centres.
“We were getting to a point about two years ago where there were several line opportunities, but we frankly just didn’t have the space! A good example is with exhaust products. This year, we’ve added exhaust products into the distribution centre. We’ve also added several other products, including coated rotors, and mid-grade friction; some of the stuff that was being sold in the field that we didn’t have space for before. Now we’re able to service both our members as well as our outside warehouse account customers much better because of the expansion we’ve undertaken,” VandeSande tells us.
In addition to expanding their warehouse facility, Bestbuy has also expanded the range of programs that they offer to their shareholders, which include (but are not limited to) marketing programs, training programs, and sales tools, including a commodity catalogue for non-application parts, which the company launched last year.
“How auto parts distribution works in the aftermarket is that there’s massive online catalogues that are attached to the management systems in the distributors’ businesses. You do a lookup if you’ve got a specific vehicle, say a 2010 Ford Taurus that you needed an oil filter for. You’d go onto the catalogue and find the part number, brand and price. It catalogues and inventories all of the products in the aftermarket. It doesn’t catalogue all of the commodity products, like tools, shop towels, gloves and brooms. All those commodity products are non-application parts. We need to be able to tell our customers and shareholders we’ve got it. So, we came up with a commodity catalogue that shows them all of that. It’s been a massively successful sales and marketing tool in the field. Last year was the first year we introduced it, and we’re working on next year’s already,” explains VandeSande.
Dedication to the Community
Bestbuy Distributors recognizes that success depends on both attracting new members and ensuring continued satisfaction of their existing membership. To offer something more for their members, Bestbuy hosts annual meetings and events, the major ones being their Buy & Sell event in September, and their Annual General Meeting in February.
The Buy & Sell event consists of one-on-one meetings between wholesalers and suppliers, and is held at a different location every year.
“It’s kind of like speed dating,” VandeSande analogizes. “We select our top 45 vendors, and we get them hotel rooms. They take the beds out and put a table in all the rooms on a given floor of the hotel. Every shareholder distributor gets 20 minutes. They go into every meeting room and discuss the opportunities with that vendor. It could be a new product line, an ongoing maintenance issue or updates on new programs or applications. From a vendor’s perspective, we’ve got over 150 stores across Canada, and for them to call on all of their locations is very expensive. If you can get the bulk of those distributors together and have a chance to meet with them all, it’s a massive cost savings and a benefit to both the vendor as well as to our shareholder.”
Buy & Sell is a two-day event. On the second day, Bestbuy organizes a golf tournament or a local tour of wherever the event is held. The proceeds raised during that activity go to the Toronto SickKids Hospital, an organization to which Bestbuy has donated over $650,000.
The February AGM, which is always held near Pearson International Airport, in Toronto, provides an opportunity for members and management to sit down together to review the previous fiscal year’s financials, the sales and marketing initiatives, product line changes and operational upgrades. Bestbuy also invites keynote speakers to discuss the economy and overall market. During an evening gala dinner, a vendor of the year or individual who has given Bestbuy exceptional service is recognized with the Horace J. Pratt award, and long-time members are also awarded for their service. The dinner ends with a presentation and donation to Toronto SickKids Hospital. The next day, Bestbuy hosts a trade show in the Toronto Distribution Centre, which gives shareholders an opportunity to see the operational side and basically what is stored in the warehouse.
The “Be Car Care Aware” Campaign
Bestbuy Distributors appreciates the importance of car care for the end-users, and are proud supporters of the nationally branded “Be Car Care Aware” campaign, which is driven by the Automotive Industries Association (AIA). The AIA is an association that unites all the aftermarket distributors, warehouses, as well as the vendors.
VandeSande likens the necessity of car repairs to trips to the dentist:
“When you go to the dentist, the best way to avoid cavities is preventive maintenance: brush and floss everyday and get cleanings on a regular basis. Taking care of a vehicle is not that different in the sense that the better you care for it, the longer it will last. Repairing a vehicle has always been a grudge purchase. But although it may cost more in the short term, you’re not undertaking large, costly repairs or buying a new car every couple of years, and it will save you in the long term” he says.
Whether it’s with their member owners, vendors, the organizations they support or the end consumers, Bestbuy Distributors continues to demonstrate their service commitment to the community.
“The business that we’re in is very personal. People buy from people. It’s not just about price or brand. People deal with the distributor that they like to deal with, who services them as best as they can. We’re very focused because each of our distributors is independent. There’s no obligation for them to buy from Bestbuy, and we have to earn every penny of business we get from them. We’re very customer-service oriented when it comes to dealing with the aftermarket,” says VandeSande.