Tyson Grubb started wholesale trade company Synotronics after spying an opportunity – suppliers of professional electronic equipment such as engineering meters and data loggers wouldn’t let any of their clients sell products online.
Using some key negotiating tactics – and a lot of patience – Grubb has now turned his venture into a successful online business turning over just under $1 million, with four key categories. But it wasn’t easy, he says, and convincing suppliers to go online is still a problem he encounters today.
How’s the business travelling right now?
We’re showing some strong growth at the moment. It goes fairly well up until Christmas, and although we’re in the B2B sector, coming back in the New Year it starts off very slowly and then really builds up over the rest of the year.
When did you first start noticing a problem with suppliers and selling online?
It’s funny, because this was actually part of the reason for starting the business. I was selling my own data logger product, and found that I was going to see distributors. A lot of them were questioning on what people were doing online, and they would say, “you can’t sell this equipment online”.
I could see at that point there was an opening in the online market because a lot of potential competitors wouldn’t be doing it. That’s what made me start Instrument Choice.
So what was the biggest issue when you first started?
The issue then was having to engage with these types of suppliers. I found it hard at first for them to get them to take us seriously, and to put us on as a proper distributor of the product.
How did you combat this?
The first thing we did was just started building relationships with suppliers by finding out what exactly they were charging for everything. We’d have customers ringing up, saying they need something, and I would go online and try to find it, and then negotiate a reseller discount.
I found we were able to get past that stage, but the next step was to become a distributor that gave the products through a website. The suppliers were quite reluctant in allowing us to do that.
What was the mentality there?
They felt it would take away from their other distributors, and people who were out on the road promoting these products. They felt that anyone looking online would just come for the lowest price.
But I guess what these suppliers didn’t understand at first was that online can be used as a tool to get customers better informed about products, and to get them to feel more comfortable about approaching us for advice.
Did they have any preconceptions of what online selling would be?
They believed it was all about customers who were coming for a lower price, which in some industries is the case, but for the most part, the customers not only want the best price but the ability to get the best information and have that peace of mind.
It did take us awhile, but that strategy won them over eventually. I mean, that’s what our entire business is based around, being able to sell this stuff and then provide good advice for our clients.
Are there still any suppliers that don’t particularly like what you’re doing?
We still do have a few suppliers that are wary of all this, and although we’re able to supply their products we can’t put them on the website because they don’t want to compete against other distributors that are out on the road spruiking their products.
We’re still trying to convince them it’s the way to go, and what we’ve found is that if we spend a lot of time selling these products offline, they’ll eventually start to come around and we can convince them to go the other way.
Has it become any easier?
It can be, but it depends on the products you buy from them. If it’s the type of product that you can sell a few of very quickly, they can come around quicker.
Do you think the mentality is changing?
I’ve definitely seen it changing. We’ve been doing this business for four years now, and the level of competition out there has continued to increase as our suppliers start putting products online themselves. Some have seen that potential and are now just moving into the market too.
For other SMEs in the same situation, what would you recommend they do?
Persistence is important. Proving that you have what it takes to actually sell their products is something that you need. Some distributors have wanted us to come back and prove ourselves straight up.
You just need to nurture the relationship – that’s the main way you’re going to get things done.
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
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