mark ups

hi yall, doing research for an article...is there a standard figure, or a consensus on what percentage mark-up a distributor imposes on their chemicals? ball park figure? any info would help

Chad
What is your article on? Where will it be published?

To answer your question you have to take the different types of distributors/manufacturers into consideration. They have systems in place with dramatic differences to overhead. As we all know overhead affects the pricing to the end user.

1.Who makes it?
Are they the manufacturer or buying the product from another source and reselling it? Does the manufacturer have to keep their pricing (to the end user) higher to accomodate the distributors? Is the manufacturer the only source?

2.How is it getting there and who is paying for it?
Is it a local manufacturer? Does the local source have to freight the product into their location? Do they deliver it on their own trucks(with all their own costs)? Is it freighted? Is it "free" freight(which is not free it is just overhead figured into the cost)? Do they charge the customer freight?

3. Advertising?
Do these companies provide advertising, signage, national campaigns, shirts, hats, ect. for your customers to recognize? How do they promote themselves in order for you to know their name and buy their products? Tade shows? Magazines? Are their trucks painted with extravagant advertising or simple factory paint?

Each one of these questions has an impact on the supplier's overhead. As in any business these costs go into the pricing. So to answer your question the different companies can have vast differences in their mark ups that need to be considered. Each type has it's place in the industry, the real question is which type has a place in your wash? Do you need the added services and advertising to sell to your customers? Or do you need the lowest costs without the face to face services? Or are you somewhere inbetween?

article is on the advantage of using a local chemical supplier vs. national brands...cost is only one aspect of the article, albeit an important one...professional carwashing and detailing is the magazine im writing it for.

Chad please let us know when the article is published I would love to see the end result on your findings.

Some other aspects you may already be looking at is familiarity with local/regional requirements. Many areas have restrictions on the chemicals, storage, containers, and quantities allowed. Another is MSDS compliance, many companies are not diligent in availability and updating of this important requirement. National brands have vast product lines where information can be overlooked. Smaller companies can face financial burdens with updating being pushed to the side in their smaller markets.

A local chemical supplier vs national brands? Thats like saying a local shoe store vs a large shoe company. I don't get it?

I agree with Homer. I work for a national manufacturer. This type of comparison is dangerous because local suppliers don't have the same manufacturing costs as national brands, distribution system, support and generally speaking may have inferior products depending on their R&D
capability.

If you are not a manufacturer or supplier to the trade I might be skeptical of your credentials.

Stuart

hmmm, homer and stuart, your input is much appreciated...im not sure i comprehend the "local shoe store" analogy, as they generally dont make the shoes...as well, in the small town where i grew up, the local shoe store was more expensive than big national chain, whereas here, i am proposing and investigating, the small guy with lower overhead is going to be less expensive...i can easily see how this is getting the hackles up on the big name suppliers, be sure, no offense is intended, obviously there are disadvantages to using a local guy, but that is not the information im researching at this time...im researching the advantages...stuart, the specific chemical guy i am basing my hypothesis on has been brewing chemicals many years, has several chemists dedicated to r and d, ive toured the place and its top notch...skeptisism i understand, its a healthy way to approach any new idea

I am an operator for over 20 years and a distributor of chemicals as well. We try to be competitive, but do not try to compare our pricing to national brands. Our pricing and costs of operation is logically lower. Smaller manufacturers can tweek the chemicals more so to the desires of the operator and often at no extra charges. The larger suppliers won't do that, since they mix larger quantities of chemicals and is a dramatic shift from their normal day to day operations and it will cost you. I dealt with the bigger suppliers for many years. If an operator can hook up with a smaller manufacturer that can modify blends to the desires of the operator and his operating conditions - such as water quality, etc., then this is way to go - in my opinion.

Joe
www.crowncarwashinc.com

Chad

You are right the local shoe store doesn’t make the shoe. You said local chemical supplier vs national brand, I guess you mint local bath tub blender vs established chemical manufacturer with a network of national/international network of distributors or direct sales force. I sell a “national brand” but I am a “local chemical supplier” to all of my customers. If you want some input on the topic from a “national brad” guys side I would be happy to share.

Local “bath tub blenders” mainly sell on price. In my area there are 2 main “local” companies we will call them company A and B. Company A sells strictly on price. The guys sales pitch goes something like this “soap is soap, here are my prices” This is what I have been told by a few prospects/customers. Company A makes a very low quality product, but they are very consistent with their low quality. He sells to mostly self serve operators, but does have some tunnel and automatic customers. Company B might be on the brink of becoming a “national brand” but they still have truck drivers mixing products at their shop. All this is taken from what I have been told by customers (mine and company Bs)/prospects. This guy show up with his product in a spray bottle sprays some on the side of his truck, and absolutely wows the potential customer with dirt that just starts “melting” off the side of the truck. But when they order the product for some reason it just doesn’t work like it did during this “WOW! Demo.” It’s funny though a lot of their customers know they are getting screwed. When I hit on quality control they admit that they get a “bad batch” on occasion.

That to me is one of the main advantages to a national brand you get a consistent quality product, every time. As far as margins goes, that doesn’t really matter. The manufacture has a published price, and you work for there. Our company has been the largest distributor for one of the top national brands for the last few years. We probably have higher margins than other distributors selling the same chemical, because we buy so much more from the manufacture than those other distributors. Just like me as a sales man, I am not going to give a self serve the same discount as a tunnel wash.

Let me ask you, or any other operator on here what they think are the advantages of a “local supplier” over a “national brand”

sorry for the mistake in terminology homer, should have said chemical manufacturer. Your bias is understandable, and i appreciate your position...the chemical manufacturer i know has no bathtubs in his facility, and is a professional to the nth degree. To answer your question, there are two huge advantages i see in using the local manufacturer. One is pricing...due to lower overhead, the local producer is able to achieve a lower bottom line, and is able to pass that savings on to us...i have never seen an advertisement for him, and he is not selling to a distributor, but rather directly to the user. the second huge advantage is the ability to call him up today, request a "more yellow" polish, or to tweak the formula in the bug juice, and have that delivered tomorrow. try that with a national manufacturer and see where it gets ya. Are there advantages to using the "brand name" chemical companies? Without question...that is simply not the area i am researching...i would be glad for any input that would help me write THAT aritcle as well. Believe it or not, we are all on the same team here, our biggest challenge is to bring the driveway washer to our doors, creating a big enough pie for us all to share. Have a great day.

Homer

Your bathtube blender terminology is an interesting. I've never met one, nor have I been approached nor have I ever received any advertising in the mail ? Where are they ?? When I refer to locat manufacturers - I am not referring to bath tub blenders. In my 20+ years in the business, I have found never found a national brand to compete with local manufacturer I work with now. Alot of the national brands promote fragrance, colors and fancey names. All of these nice things do not clean cars. This is not to say that you cannot get effective and good chemicals from national brands - but there are the "bath tub blenders" as you call them, local legitimate quality driven local manufacturer and national quality manufacturers as well. Several years ago I departed from purchasing a very well known brand (I won't mention the name). They advertise heavily, are sold by alot of the car wash distributors across the US. Cleaning ability on a scale of 1 to 10 is 5. I could write my name in the film on a car after the wash - and this is after the chemical salesman did all of the adjustments. I've tried alot of national brands in all of these years. Some are good, some are sold on the name alone and just do not clean. The biggest fraud from a lot of manufacturers is the dilution rates on the label. The point is - find a manufacturer you can work with, someone who can modify the blend if necessary to clean your cars. Someone who will take a geniune interest in your operation.

Yall are acting like it is a bad thing that a company advertises. fragrances, colors and fancey names don't clean cars, but they make you money! How many self sere car washes use a true polish/wax (that causes water beading) in their tri foam or single foaming gun. I will tell you the numbers that I see about 95% do not, that number is almost just as high for tunnels and automatics. So that red, yellow, and blue stuff coming out that has a fruity smell and a fancey name like tri gloss application is basicly colored neutral soap. but hell customers dont mind pumping those extra quarters in the machine or tacking on an extra 3 bucks to the wash ticket to extend the wash process for this color, smell, fancey name display.

Also you have to remember that MOST local manufactures goal is to become a national brand. They are just as big of a whore as anyone else, they want to sell their product to as many washes as they can. So if you have fond one that you live near that is so great, and care so much about you and how dark your yellow polish is at your own wash. Then that is great that yall have that relationship. There is no doubt a value in that.But with any company that grows and again if your local manufacture is worth a flip they will grow and they will have growing pains. Their growing pains may mean that they cant "twek" your soap quite as quick as they use to or at all. A national brand does take imput for us that is why most dont just have a hi ph and lo ph pre soak a clear coat and a tire and wheel cleaner etc... They have a very diverse line for different cleaning conditions across the nation down to across town. This grade on a 5 out 10 after the guy set up the wash is a joke. I have set up washes before not knowing what the hell I was doing (now that may of only been twice, but still) everybody has a first day but that is the only way to see what works is to get out there and do it. Luckly I have the backing of a nationsl brand. If I have a problem cleaning somewhere I can call up to this "big name national brand" talk to the head chemist and tell him what is going on to get some advice. That is a good thing for me and my customers, I become more and more dangerous everyday (in the good why, you know what I mean) and as far as price goes, I am not really going to get into that, but like I said national brands have very diverse lines if you dont mind mixing your own products ultra concentrates liquedand/powder you would be surprised in the price to quality you get. And I will leave it at that.

You've set up two washes - impressive ?? Alot of the operators on this site have set up their own washes "many times" and have made adjustments many times over. How many washes have you owned and operated? I've talked to many salesmen who have never owned a car wash - this may not be important from National brand salesmen's point of view, but I would rather talk to an operator/salesperson before I talk to anyone else. Let me add one other thing to my earlier e-mail. The local manufacturers will not just service local washes with special blending - they will provide this service to anyone - anywhere. This is their unigue advantage. I have not used a "wax" product in my washes that containes "oil" for many years, though you are correct, that alot of drying agents sold do contain oil. The wax I use is a "true wax" - used in my tunnel and self serve operations. I've often been asked about dilution rates and what "really works". My response has always been. Do you want the chemical to clean well and bring your customers back ? I tell them to start with the dilution rate the container indicates then come down until you find it works for you. The sad part about it that many operators buy chemicals based on the dilution rates noted on the label. Once you find that the chemical dilution is cleaning well and has good visability - then calculate your chemical costs.

I set up 2 washes when I didnt really know what I was doing...that was when I first started this job, thats why I said everybody has a first day. I have set up plenty of washes since then. And yes I have operated a car wash for six years. I am 24 years old and have had 2 jobs in my life Worked at a car wash, then went to work for the distributor that built that car wash. You say alot of national brand sales people have never owned/operated a car wash. That is very true, I dont think that is really a big deal. Its more of a big deal that there are people with a multi million dollar investment in a car wash that they know nothing about, never even tried to learn the business first. Got some money from the bank and threw a wash up. At least I had been dealing with customers/employees and a actual car wash for six years before I got into sales. I know there are alot of chemical guys out there that are snakes in the grass for the lack of a better term. It didnt take me long to see how the previous salesman was really screwing a few people. I always set my washes up to use the least amount of chemicals while still putting out a clean dry car. My goal is always a long term customer, and thats the only way to get one.

Well Homer, you sound like a fine young man who is off on the right direction. Sorry I've been a little rough on you. I have a son older than you so you can guess how old I am. Please feel free to e-mail if you think I can ever offer some off line advice. I may be coming to also in the future for some advice as well - I'm never through learning. I know you will do well.

Take care my friend

Joe

I thought I was the only 24 year old carwashaholic! I have also been in the business for 6 years now!

I have to agree with Crown. Homer it's great to see young people like yourself developing a passion for this industry. If you ever get tired of doing what your doing and would like to do it on your own please contact me.

Stuart

thanks for the kind words guys

Homer and Mike,
I started in this business when I was 19yrs old fresh out of High School. I went to work for the largest "local" chemical and parts manufacturer in So Calif. I started in the warehouse and 3months later out of necessity they made me a salesman I will be the first ot admit I was HORRIBLE and had sooo much to learn. 5yrs later I was there top salesman and stayed there. 5yrs after that I started my own company as a distributor filling a need I saw within the industry. This industry is HARD as anyone here will tell you. It chews up more then make it (I have my share of teeth marks from it) but there is no better place to learn it than in the trenches like you two are doing now. "Old timers" in this industry will teach you more then you can ever imagine. Hell I still ask them for advice! I'm not quite an "old timer" yet LOL but feel free to email or call me for advice anytime I am more than happy to help and have been where you are now.

Danny Umbrell
www.WASHWAYUSA.com