Randy Horshok
Whether by accident or design, IBPI has become the largest buying group in the office technology industry, representing more than 350 independent commercial copy, print, and IT dealers across North America. Its members have a combined annual sales volume of more than $4.1 billion.
IBPI was founded in 1987 by a small group of AB Dick dealers who put together their buying power with the goal of buying smarter and better. The buying group still maintains that premise today, however, over the past 27 years it has changed its vendor offerings. Initially, the organization focused on copier supplies and products. Today, its offerings impact most of a dealer’s daily operations and include supplies, software, shipping, and even social media.
Membership in IBPI has its privileges.
“We have the buying power of a $4.1 billion dealer and have the leverage to negotiate industry best pricing and programs from our vendors, says Randy Horshok, IBPI president. “There isn’t a dealer in the industry that can make that claim.”
Members currently have access to 27 different vendor programs with another two or three more expected to be added in the near future. Savings generated from these programs can be significant, from $25,000 for a small dealer to more than $160,000 for a larger dealer.
“These aren’t my guesses or calculations, but data provided by our members,” says Horshok.
In order to join IBPI, dealers submit a one-page membership application and pay a one-time fee of $500.
“That’s it. No annual fees, no dues, ever,” states Horshok.
In addition, that $500 membership fee buys one share of IBPI stock, which makes that dealer an owner of IBPI. If the dealer sells their business, or for whatever reason, decides to terminate their membership, they get that $500 back.
It almost sounds too good to be true.
“When we say $500 membership fee and the savings, the instinct is to wait for the other shoe to drop,” notes Horshok. “Sorry folks, you’re not going to hear the other shoe drop because there aren’t any hidden secrets or fees. If anything, there are more features or benefits to belong to IBPI than the savings on their purchases.”
It helps that the discounts they receive are often better than what they may be getting by dealing directly with a Parts Now or a Katun.
IBPI’s target market is small and medium independent dealers, but membership is open to larger independents as well. “When one of the larger dealers join it allows me to go back to the smaller dealers and say, if these $50 million dealers find value in belonging to IBPI, imagine how much savings is on the table for you?”
Members have annual revenues of $1 million dollars to more than $50-million and during the past four years the typical new member had revenues of $8-$10 million annually.
Even though IBPI has enjoyed terrific growth over the last few years, Horshok isn’t satisfied with current membership numbers. “We’ve been averaging two new members a month, but know there’s greater potential out there.”
The biggest challenge facing IBPI members today, according to Horshok, isn’t all that surprising and that’s competition with OEM direct operations. “That’s become a source of angst for all independent dealers as well as conflicting relationships with their own OEM when competing for clients,” states Horshok. “This love-hate relationship has been the basis for many discussions at our membership events.”
Other challenges faced by members and all dealers for that matter is the need to broaden their product and service offerings while maintaining or strengthening their core programs.
Here’s where MPS comes into the discussion.
“Everybody was told five or six years ago they had to be offering an MPS program if they plan to survive,” recalls Horshok. “Well here we are six years later and we know that’s not true because there are very successful dealers not offering MPS. On the flip side, there are successful dealers offering MPS. It’s a matter of looking down the road and trying to figure out what’s best for them and what other products or services they can offer such as Managed Network Services, 3-D printing, VoIP, that don’t take them out of their comfort zone or core strength too badly.”
It’s often a challenge negotiating discounts with the manufacturers and service providers, but Horshok says as IBPI increases its number of members and buying power associated with membership, vendors recognize the potential to work with the buying group and assemble a great package for member dealers.
“It’s never easy to negotiate discounts and nobody wants to give up anything more than they really have to,” states Horshok. “It’s just a matter of convincing them they have to in order to become a member of IBPI. What makes it easy is we have a basic tenet that’s been with us since day one when we discuss programs with the vendors; the vendor must provide IBPI dealers with their best pricing in our industry. Not the best price on the street, but their best price. We know someone is always going to offer a less expensive product or service somewhere out there, but we must maintain the integrity of our program by having our vendors provide their best pricing and program to recognize the strength of our organization.”
IBPI typically adds two to three new vendors per year while two to three fall by the wayside.
“When they fall by the wayside, it’s typically a program that’s no longer of use for our members or a program we added thinking it would become popular and it just wasn’t,” says Horshok.
From the very beginning when IBPI negotiates programs with its vendors not only does it require the best price in the industry, it requires they provide IBPI with a small percentage rebate on every single transaction. The rebates are another perk of membership.
“That’s how we get away with not charging fees or dues,” explains Horshok.
IBPI receives the rebates, pays its expenses and with the money left over, distributes those profits via a ‘rebate pool’ back to its members. “For 27 years we’ve collected more in rebates than our operating expenses,” adds Horshok.
The biggest difference from when IBPI first started doing that to today is that the checks have gotten much bigger. “The checks we write pale in comparison to the actual savings the dealer enjoys throughout the year, but that check is very tangible proof of their IBPI membership,” states Horshok. “We track all purchases and rebates. If you’re a dealer in Pennsylvania and we calculate you’re responsible for 1 percent of the rebates we collect in a calendar year, you get 1 percent of whatever is in that rebate pool.”
IBPI is always watching for new program opportunities for its membership and the IBPI Board of Directors that evaluates and approves every vendor program. Horshok finds them and brings them to the Board, but it’s usually the Board that points him in a particular direction. For example, if he’s asked to look for shipping and freight programs, he goes out and opens discussions with five or six different companies and brings back two or three to the Board for review.
IBPI is also on the forefront of trends sweeping the industry. “Just like MPS six years ago, we started seeing some interest by our dealers in Managed Network Services about two to three years ago,” notes Horshok.
Seeing that trend, the organization found a vendor, N-Able Technologies, and now has an MNS program in place.
“Having said that, we’re keeping an eye on 3D printing,” says Horshok. “It sounds like a natural extension although it requires a different mindset from a service standpoint. But from a consumer point of view it’s a natural extension for the office technology dealer to offer these things.”
Meanwhile, he’s talking with four different product and service sectors in areas where IBPI does not have any vendor programs. “I’m looking for those little voids we don’t currently touch but it’s something the vast majority of our dealers need or will need in the not too distant future.”
Members also find the regional meetings that IBPI offers quite helpful. Those began about nine years ago in Cedar Rapids, IA. That event surprised Horshok by drawing dealers from all across the country. Today, IBPI moves the meetings from region to region and last year had 40 percent growth in participation over the previous year.
A highlight of these events is a roundtable session with 15 vendors—the first 15 that sign up. Dealers spend 20 minutes with each vendor and learn about that vendors programs and services. “It’s also a networking opportunity,” says Horshok. “That’s the beauty of this program; the old NOMDA shows are no longer around and there isn’t the opportunity for the independent dealer to get out there and see competitors to their own OEM and products and services not at their own OEM event.”
