Bestbuy Distributors Limited
The story of Bestbuy Distributors began with Harry Torgis and his idea to create an anti-freeze private label. Torgis needed to sign a deal for 50,000 gallons of the anti-freeze. The idea didn’t fly for Torgis as an individual, but brought on the next big idea — creating a buying partnership. The idea grew, and Torgis came together with Roy Webber. They brought together jobbers and focused the buying partnership on engine replacement parts. Bestbuy Distributors Limited was born in 1953 and incorporated in 1955.
With the main warehouses in Mississauga, Ont. and Edmonton, Alb.; Bestbuy Distributors employs some 80 staff, and serves as a full-service, independent auto parts warehouse distributor, offering Direct/Drop ship and warehouse programs to a network of wholesalers across Canada; and even launched their own private label QAP (Quality Auto Parts) brand to the Canadian market. The Canadian Business Journal spoke to Jeff VandeSande, President of Bestbuy Distributors about the auto parts business, and the company’s position in this growing market.
“Bestbuy Distributors Ltd. functions as a buying group. The company is owned by the shareholders, and the shareholders are the distributor members who buy from the Bestbuy warehouses. We have about 60 shareholder members who have about 150 distribution locations across Canada, from Newfoundland to B.C., who in turn have hundreds of employees.”
To the question about the aftermarket auto parts industry and how it’s serviced, VandeSande said, “We are talking about hundreds of thousands of auto parts that need to be readily available to the auto repair industry. This is why it’s difficult for individual distributors to inventory this amount of parts. It’s also very costly to carry these inventories as they are worth millions of dollars. So what we do is carry the largest inventory in our warehouses and ship these to the local distributors. The distributors then sell the parts to the repair centres. This is why we call it a three step industry.”
While most of the competition is a profit-based business, Bestbuy Distributors business model is closer to the one of a co-op, as the Bestbuy profits return to the member distributors (shareholders). “Our members [distributors] receive the profits and benefits of the pricing we can negotiate for them with parts manufacturers. We are not a profit centre per se,” VandeSande explained. Bestbuy Distributors sells parts to its members at the purchase value, only minding to cover the company expenses; however Bestbuy profits through other avenues such as parts sales to non-member parties. “We continue to grow year-on-year, and we continue to invest in our bottom line, but this money does not come directly from our shareholders, it comes from the other avenues of business we are progressing in.”
Bestbuy Distributors offers its members a smorgasbord of programs that help them to add to their bottom line, compete in the marketplace and streamline operations. “If a distributor wants to add to their bottom line, Bestbuy offers programs such as marketing programs, training, online ordering systems, retention programs, flyers, business solutions and many other services that make distributor’s operation that much more easier and straightforward. With our “for-profit” competitors, distributors have to pay handsomely for these programs, they often pay more for the parts, and it costs them more to operate. Our distributors tend to be a bit larger, more independently minded, and often more customer focused.”
The advantage of having more parts on hand is obvious — not turning down requests from technicians, and providing repair centres with parts they can’t get from many smaller distributors. “Just like most wholesale businesses, people buy from people, so this tends to be a very personal business. You have to be able to supply parts in a timely manner, or the customer will go somewhere else to get the part.”
Auto Parts Aftermarket Industry
With rising numbers of car brands in the market, increasing numbers of models within those brands, and the simple fact that there are more and more cars on the road, Bestbuy is obligated to carry the parts to cover repairs of all these vehicles, and therefore the company’s inventory continues to grow. Besides these facts VandeSande noted that as vehicles age, they require more maintenance. “To look at it from the business growth perspective, according to Automotive Industries Association of Canada (AIA Canada), automotive repair industry in Canada is worth about $18.5 billion a year, and there is a market of approximately $12 billion in unperformed vehicle maintenance annually. So this shows how much more growth potential there is in the industry. Besides, with rising costs, people are holding onto their vehicles longer than they used to, so while many car manufacturers have been having a hard time for the past few years selling new cars, our industry continues to grow,” says VandeSande.
The auto parts aftermarket continues to grow, and Bestbuy Distributors continues to provide its members with; parts, pricing, business support, and service that can hardly be matched.