The Benefits of Partnering with a Distributor
In a fiercely cost-competitive market, it may seem counterintuitive to purchase solar products from a distributor. However, experienced solar professionals know that the right solar distributor can be a key partner in success and provide risk protection, buying power and market guidance. This support is critical in allowing installers and resellers — regardless of size — to be more responsive to customers and ultimately more profitable.
A primary benefit to purchasing product from a distributor, rather than manufacturer-direct, is risk protection. A majority of manufacturers have MOQs (minimum order quantities) that require solar installers and resellers to purchase product in quantity, store it, prepare for transport at the appropriate time and then ship to the jobsite. This process carries significant inherent risk. For example, if module prices fall, warehoused inventory is now worth less than the amount paid, putting the buyer at risk. This impact is compounded if jobs are cancelled, leaving product that must be sold off at a loss. Had a distributor relationship been in place, product would have been ordered only after the job was contracted and shipped directly to the jobsite. This approach isn’t only simpler and safer; it’s often also more cost-effective given the reduced need for warehouses or storage facilities, reduced time spent on logistics and lack of inventory risk. All-important personnel costs are also reduced, with the lack of need for staff to manage purchasing, receiving, warehousing and shipping.
Second, experienced distributors will offer valuable market guidance. Given the solar industry’s rapid growth and sensitivity to policy changes, current knowledge regarding market opportunities and challenges is imperative. A good partner should make it easy and convenient to stay informed on market conditions, via customer-only webinars, e-mail updates and workshops or trainings to keep their customers apprised of market trends, legislative happenings and sales opportunities.
A third key benefit distributors bring to the table is buying power. By purchasing in large quantities and warehousing the product, distributors benefit from an economy of scale, securing vast amount of product for the lowest possible cost. Couple this with teams dedicated to negotiating the lowest-possible prices, more cost-effective warehousing and shipping and product testing, and the result is often top-quality products at unbeatable prices.
With increased downward pricing pressure throughout the industry, a good distributor should do more than ship quality products on time; they must be a partner in your success. Whether it’s providing sales and marketing tools, training, technical support or market insight, your distributor should have the skills and experience needed to adequately support your team. Regardless of which company you choose, allowing a distributor to take on risk, cost and logistical burden which would be borne by your business often contributes significantly to your bottom line.
This piece was written with assistance from AEE Solar. See our additional story on common myths associated with solar distributors here.
