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Catalog Case Study: J&L Industrial Supply Co.
J&L Industrial is taking a new approach to catalog marketing by leveraging the clout of local distributors in secondary markets.
On the strength of its catalog, J&L Industrial Supply Co. built a powerful national presence as a distributor in metalworking supplies. But in its pursuit of further growth, the company found that it was getting very little of its customers’ day-to-day MRO business. Those purchases went to companies with a local presence. This led the Livonia, MI-based unit of Kennametal Inc. to rethink its business and adopt a different model.
By Douglas Chandler
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On the strength of its catalog, J&L Industrial Supply Co. built a powerful national presence as a distributor in metalworking supplies. But in its pursuit of further growth, the company found that it was getting very little of its customers’ day-to-day MRO business. Those purchases went to companies with a local presence.
This led the Livonia, MI-based unit of Kennametal Inc. to rethink its business and adopt a different model. Chuck Moyer, vice president of marketing and supply chain management, calls it a hybrid of a catalog distributor and a more traditional multi-channel distribution operation.
In the new model, which J&L has implemented as an evolutionary change over the past three years, the catalog would still be a high-profile marketing tool, but would be used in support of local representation in the nation’s 25 major industrial markets.
A decentralized force of salespeople calls on customers in those primary markets, while inventory, information systems and other back-office functions are handled out of the company’s distribution centers in Chicago and Detroit and a network of five call centers throughout the country.
With those changes underway, the next puzzle was how to increase the company’s sales in 25 secondary markets where there wasn’t enough business volume to maintain a sales presence. “To be both a catalog company and a multi-channel distributor, we have to keep our operating costs very low,” Moyer explains. “We can’t do business everywhere, and it doesn’t make sense for us to focus on secondary markets.”
If you can’t beat ‘em…
The solution they came up with
leverages J&L’s strength in catalog marketing and combines it with strong
local distribution. They’ve selected distributors of metalworking tools in each
of the 25 secondary markets and offered them the J&L printed catalog, to be
wrapped in a cover under the name of the local distributor, and offered these
distributors access to their electronic back-end system for easy ordering,
favorable pricing and terms, and guaranteed next-day delivery to the customer at
ground rates.
“It works for us, because they do it electronically, so the cost is virtually nothing,” Moyer says. “It’s a compelling program, so we demand the best partners and demand a large sales commitment from them.”
Western Tool & Supply Co. had actually gotten out of the catalog business until J&L approached them, says Jerry Gerardot, president of the northern California tooling distributor.
In the midst of the business downturn in 2001, the company decided to lay off its entire graphics department and stop publishing its niche catalog of automated CNC metalworking tools and related supplies. J&L’s deal gave the company a chance to offer customers a catalog again, this time a much bigger, broader catalog, with none of the production costs and headaches, and much lower per-book set cost.
“We wrapped our cover around it, but it’s still clearly J&L’s catalog,” Gerardot says. The partnership has been good for Western Tool & Supply, he says. “It gives us a larger basket of products to sell our existing customers.”
One reason the relationship works is that both carry high-end metalworking supplies, so there is quite a bit of overlap in those vendors. “With some vendors, because of their size J&L can buy cheaper than we can, so they get a longer deal,” Gerardot says. In those cases Western buys the products through J&L. “With vendors where we’re already getting a longer deal, we take the catalog orders and fill them off our shelves.”
The back end systems have been integrated with Western’s business systems so ordering is seamless, he adds. The partnership program has been attractive enough that J&L had little trouble filling the 25 slots in its secondary markets. “We have all the partners we need now. We’re not looking for more,” says Moyer.
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