Kyle Shelley was the sales director at Turn 14 Distribution, a warehouse distributor of performance parts, when he talked with host Kevin Dubois in early 2016. Turn 14 had started in the sport compact market and had grown into diesel and gas trucks, modern muscle and European performance.
The topic hit close to home for Kevin's own shop. Customers could find the same part online for close to what a brick-and-mortar shop paid wholesale, which made it hard to earn anything on parts. Kyle explained what Turn 14 was doing about it, from vetting the shops it sold to, to enforcing manufacturers' pricing policies.
This article covers how Turn 14 grew from a dorm room, how minimum advertised price and unilateral pricing policies work, how Kevin's shop ended up on a manufacturer's do-not-sell list, and Kyle's ideas for how an installer can still compete on parts.
From a $100 dorm room business to two warehouses
Kyle's childhood friend John started the business in his college dorm room with about $100 as a school project. It began as a parts retailer called JC Speed, run by John and his partner Chris Candido. Kyle hung around while they took customer calls, and his friend talked him into buying a 2002 WRX. A downpipe and a blow-off valve later, he was hooked.
Kyle left college after a short time and sold shoes for a while. In 2004 the business moved from a basement into a 4,000 square foot space in Ivyland, Pennsylvania, near Philadelphia, and Kyle became the first employee. He shipped packages, picked up lunch and cleaned the bathroom before moving into sales and adding products to the website.
Turn 14 Distribution launched in 2007 alongside the retail business. Around 2011 the owners sold off the retail side, bought a 52,000 square foot facility and put everything into wholesale. A second warehouse in Reno followed in 2014, and a 37,000 square foot corporate office opened in 2015. Kyle said that at the time, the two warehouses reached 83 percent of the US in two days or less and the whole country in three.
Location mattered from the start. Kyle saw no real go-to sport compact distributor on the East Coast and believed Turn 14 filled that gap.
How minimum advertised price and UPP work
Under a minimum advertised price (MAP) policy, a seller can charge whatever it likes, even its own cost, but it can't advertise the product below the price the manufacturer sets. Under a unilateral pricing policy (UPP), as Kyle understood it, the seller can neither advertise nor sell below the set price.
He described jobber pricing as a number each manufacturer makes up for its own price levels. A shop calling a manufacturer direct might get jobber, while a distributor might sell at jobber less 10 percent. He said a lot of manufacturers were moving away from it.
Kevin had just seen a newer tool in action. When he went to order from a brand he bought from every couple of weeks, Turn 14 required him to get authorized by the manufacturer first. The manufacturer checked that his shop had a real website and storefront before he could see pricing. Kyle called these authorized programs the manufacturer's way of knowing who sells its product and making sure they represent the brand well.
Enforcement is the whole game
Kyle kept coming back to the point that a pricing policy only helps shops if someone enforces it. Turn 14 had just created a brand equity specialist position. Part of the job was adding shops to manufacturers' do-not-sell lists, with the goal of making Turn 14 the most compliant warehouse distributor in the industry. Kyle wanted to match each manufacturer's own level of enforcement.
Pricing policies are good for everybody, I think, but the enforcement part of a pricing policy is the key.
He was blunt about the other side of it. If a manufacturer set MAP but had no plan to enforce it, Kyle said he couldn't really recommend shops follow it, because he hated to see shops lose sales to sellers matching the market price.
He also described services that crawl the internet for MAP violations. A manufacturer hands over its part numbers and MAP prices, and the service saves a dated screenshot of every listing below MAP. One useful feature showed who dropped below MAP first, since one seller cutting price tends to trigger the next. Fixing that first seller could stop the chain.
Kevin's year on a do-not-sell list
Kevin shared how enforcement had hit his own shop several years earlier. His website was about five years old and he had never updated a price on it. A large clutch manufacturer had put a UPP in place that January. It emailed him a screenshot of a clutch listed below its price and barred him from buying that brand anywhere for a year.
Kevin had his wife remove that brand from the site right away, but she missed one throwout bearing. When the year was up he came off the list, and about a month later he was put back on because of that bearing. Kevin had recommended that clutch to his customers for about five years, and he had to sell a competitor's clutch for roughly two years. He took the blame for the mistake. After he complained on Facebook, the manufacturer's owner came to the shop and talked with him for about two hours, and said his lawyers required the policy be applied by the book with no exceptions.
Kyle said policies had softened since then, and that part of the brand equity role was to speak up with manufacturers for good shops that made an honest error. He didn't want shops that added value to a brand punished like bad actors.
Who Turn 14 would sell to
In mid-2015 Kyle tightened the requirements for new accounts. He wanted a commercial location, a business focused on the automotive industry and the right state paperwork. In his experience, sellers without a commercial location were the ones who tended to ignore pricing policies. He personally reviewed every new account the company opened.
I want to support the small businesses, to give them the tools to be able to compete with the large guys and win the sales on good service and good support.
Turn 14 also matched price levels to the value a shop added. A shop that was strong in sport compact might get an extra discount there and not on a truck bumper. On the supplier side, Turn 14 kept a small line card and stocked deep on each brand. It would only take a brand on if there was enough room in the pricing for its customers to compete. Kyle said the problem that frustrated him most was manufacturers giving large retailers big discounts, which cut small shops and their distributors out.
At the time, about 60 percent of Turn 14's volume shipped to shops and 40 percent was drop shipped to end customers. Drop shipping had been growing but was holding steady. Kevin's guess was that margins on pure drop shipping had gotten too thin to live on.
How a shop can still compete on parts
Kyle offered several ideas, noting that shop owners would know better than he did:
- Quote the part and the install together as a package, with discounted labor on parts bought from the shop.
- Pass along a no-hassle return policy to the customer.
- Use the distributor's flat-rate shipping to the shop, which was $9.99 at Turn 14 at the time, and pass the savings on.
- Run a loyalty program, such as points toward a 10 percent off coupon.
- Market to the customers you already have, since their contact information is already in your hands.
Kevin added that a shop has to be the expert in what it sells. He works on Mitsubishi Evos, so he adds no value selling a truck bumper and has no reason to list one. He also shared that of about 2,500 shops in a database he had built roughly four years earlier, around 30 percent were gone within two years.
Kyle's action items were to unplug on vacations and evenings so you come back fresh, and to get to know your distributor sales rep. Turn 14 kept a small number of accounts per rep so the reps could do special things for their customers.
Key takeaways
- MAP limits the advertised price only, while a UPP limits the selling price too.
- A pricing policy only protects shops when the manufacturer and distributors enforce it.
- Clean up old website listings, because one stale price can put you on a do-not-sell list for a year.
- Sell parts where you add real expertise, and bundle them with the install.
- Keep your existing customers coming back with loyalty offers and direct marketing.
- Know your distributor rep, since a small account load means they can go out of their way for you.
Earning a margin on parts with My Shop Assist
Kyle's advice comes down to selling parts as part of a job and making sure every one gets billed. In My Shop Assist, parts and purchase orders live on the job next to the labor, so the part, the install and the price go on one quote and one invoice. Text messaging keeps customers in the loop, payments can be taken through the system, and the invoice exports to QuickBooks.
See how My Shop Assist works for distributors and part suppliers, or start a free 30-day trial.
