Concept: Some shortline manufacturers are eager to set up farmer/dealers that they believe will passionately work their line based on their own on-farm success with the product. This model borrows from the seed-selling model and how seed companies successfully recruited farmers to represent them in their local area with a mini-sales organization.
Appeal: According to Russell, the attraction of this model are the number of farmers (who are neither large nor small and specialized) who would be interested in an opportunity to make some additional income.
It amounts to a convenience of sales distribution for manufacturers. Glass adds that in some cases, farmer/dealers could bring the same amount of effort that some dealers are currently putting into shortline products.
Limitations: The model wouldn’t provide a high level of service, says Russell; it’s more about a sales representation focus. This will be a challenge of the smaller dealer as we think of it today,” he says.
Consignment-type arrangements would be needed, as Russell says farmers wouldn’t be willing to risk a lot in inventory. “It could work for some, but will be difficult for manufacturers accustomed to the professionalism of the dealer model, credit situation and how and when payments are made.”
Evans says, “The problem with this approach is pretty much the same as it would be if we sold direct. When we ship a planter that’s too wide to go on a truck, there’s a bunch of assembly required when it gets there. Who does that? Do we have to have a crew that follows all this stuff?”
Boak adds that the farmer/dealer approach would be the same as if the manufacturer went direct. “You still have to make a huge investment in staff to take the place of the dealers. And you would need to invest in parts and service infrastructure. And what do you do with the remarketing, how do you remarket and how do you get rid of the trade-ins?”
Another thing that manufacturers need to be sensitive to is protecting the dealers they have in their network and not competing with them, according to Boak.
- Alternative Distribution: How Many Options Really Exist?
- Independent (No Mainline Tractor or Combine) Servicing Equipment Dealers
- Traditional Dealerships Setting Up Separate Entities to Sell Shortline Equipment
- Manufacturer-Owned Company Stores
- Joint-Venture Dealerships Owned by Several Shortline Manufacturers
- Co-Ops Adding Farm Equipment to Their Offering
- Direct to Farmer Sales; Subdealer Model for Service