Using the Hybrid Distribution Model

July 21, 2008
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The Envision all-in-one system from WaterFurnace is one of the many products that Oklahoma WaterFurnace dealers can now buy direct from the company.

FORT WAYNE, Ind. - The path of the traditional distribution chain has followed some twists and turns in recent years, especially with the advent of online ordering and consumer-direct purchasing. One HVAC equipment manufacturer has been using a hybrid system to bring its products to market and has enjoyed a great deal of success.

WaterFurnace International Inc. has been selling its products to dealers through a distribution channel and selling direct to dealers as well. In fact, in January 2008 the company announced plans to begin selling direct to dealers in the state of Oklahoma.

The announcement coincided with the closing of WaterFurnace distributor operations in the state and enabled WaterFurnace dealers to buy directly from the factory. “Eliminating the middleman benefits our dealers by placing them in direct communication with factory personnel for technical support and guidance,” said Phil Albertson, vice president of residential sales and marketing at WaterFurnace. “The move also gives dealers access to the complete WaterFurnace product line.”

The latest move is nothing new to the WaterFurnace business model. But the move to dual distribution models has “been an evolution,” according to Albertson. “Roughly 15 years ago, we were dealer direct everywhere in North America,” he said. “Right now about 50 percent of the U.S. geography is covered by distributors and all of Canada as well. We like the model we have now. Obviously the two systems work side-by-side.”

Albertson said his company does not overlap dealer direct with conventional distribution. “Our distributors made commitments to support the geothermal line within their company, especially within their sales force,” he said. “WaterFurnace has great product, technical training, sales training, and technical service to serve both channels.”

In the case of the Oklahoma changeover, WaterFurnace simplified the ordering process by providing each dealer with a factory direct account and an open line of credit. “We’re anticipating explosive growth in the Oklahoma market,” said Bruce Ritchey, president and CEO of WaterFurnace. “As energy prices increase, more and more homeowners will turn to geothermal systems in an effort to conserve energy and reduce their utility bills. WaterFurnace is well-positioned to meet their needs, offering a wide variety of geothermal products that lead the industry in efficiency ratings.

“In fact, in an Air-Conditioning, Heating and Refrigeration Institute (AHRI) list that ranks geothermal products by energy efficiency, WaterFurnace leads the list of manufacturers with our products occupying the top 25 positions.”

That is good news, especially in economically challenging times facing the HVACR industry. “We generate a lot of good leads for our customers through our marketing programs,” added Albertson. “Our residential sales are up well over 30 percent year-to-date.”

Publication date: 07/21/2008

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