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Home Depot vs. "Real store"

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Percival P. Cassidy wrote:

But they only get what is available elsewhere and add their markup. I don't think they understand negotiations. I have tried negotiating with them and have come to understand that they are usually the highest prices for almost everything. I spent over 400,000 bucks this year for materials and I spent 345,000 of it at real stores because they would negotiate a better price on everything, if it wasn't already lower.
Lowes got the rest because they were convenient. I won't shop at Home Depot.
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On Mon, 29 Dec 2008 17:52:28 -0500, "Percival P. Cassidy"

Not about garage doors or doors or Home Depot or really big chains or home improvement stuff, but in general, I've wondered for a long time about the "cutting out the middle man" thing.
Doesn't this sometimes mean more work for the vendor, and so he charges middleman prices instead of true wholesale prices? Or something in between the two, and whether it really makes more work for him or not?
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mm wrote:

If the "middleman" was not an efficient mechanism, it wouldn't be used.
The vendor probably will not charge "middleman" prices to an end user because his costs are not the same. Imagine a publisher that sells 5,000 copies of a new book, "Collecting Locomotives for Fun & Profit."
If the publisher puts all 5,000 copies on pallets and ships them to a book wholesaler, the publisher has one set of costs. If, however, the publisher sells five copies each to a thousand bookstores, he's got an entirely different set of expenses.
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There are no longer true vendors at HD or Lowes. About 6 years ago they told all the manufacturers that sold to them that they wanted the 5% that was paid to the merchandising vendors. HD and Lowes hired their own people to do the job for 2%. I can guarantee the savings was not passed onto consumers.
Kool Seal roof coatings was told to cut their price by $5 per 5 gallon bucket if they wanted to continue doing business with HD. HD then raised the retail price by $5 per bucket, increasing their profit per bucket by $10.00!
The stories go on and on........
cm

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I'm not sure if I'm following your logic correctly - not that I'm disagreeing it - but I'm not sure that it fits the borg situation.
Normal Use of Middleman Mechanism:
1 - ACME Roofing puts 500,000 bundles of shingles on pallets and ships them to MRW Inc. (MiddleMan Roofing Wholesalers) 2 - MRW ships 1000 bundles to each of 500 Home Depot locations
Alternative Use of Middleman Mechanism:
1 - ACME Roofing puts 500,000 bundles of shingles on pallets and ships them to MRW Inc. (MiddleMan Roofing Wholesalers) 2 - MRW ships an average of 50,000 bundles to each of 10 Home Depot Regional warehouses 3 - Each Home Depot warehouse ships an average of 1000 bundles to each of 50 Home Depot locations
Elimination of Middleman Mechanism:
1 - ACME Roofing puts 500,000 bundles of shingles on pallets and ships them to 1 national Home Depot warehouse 2 - That warehouse ships an average of 50,000 bundles to each of 10 Home Depot Regional warehouses 3 - Each Home Depot regional warehouse ships an average of 1000 bundles to each of 50 Home Depot locations
In other words, Home Depot is acting as it's own middleman. With economies of scale, this can be more cost effective than using MRW Inc. It even gives Home Depot the opportunity to be the middleman for other stores. I'm not saying they are doing this, but the opportunity exists.
It's similiar to what my School District is planning to do with for transportation services next year. We currently contract with XYZ Transportation for bus services. We currently cover all costs of XZY to provide those services (gas, maintenance, storage, salaries, etc.) plus they make a profit. Starting next year, our school district will puchase our own busses, build our own depot and provide transportation services "in-house". We're paying XYZ for everything anyway, *plus* paying XYZ's profit, so by doing it ourselves, we save the cost of the profit. In addition, we have an agreement in principal with 2 smaller school districts in our area to provide transportation services for them - at cost plus a smaller profit than they are currently paying their provider. They save money, we offset some of our costs as well as control the use of the services without having to deal with XYZ every time a one-off transportation need arises.
Similiarly, Home Depot can switch suppliers or product lines without having to go through MRW. They can fire ACME or increase their shipments or whatever much more efficiently without MRW in the middle.
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DerbyDad03 wrote:

Sounds good, but you're doomed.
In almost every case where a government service has been contracted to private enterprise, the service improves or the cost goes down or both. In almost every case where a private service has been assumed by a governmental agency, the cost goes up or the service deteriorates or both.
Have you considered:
1. The illegal immigrant bus drivers of the private company work cheaply. Your bus drivers will be eligible for membership in the Teamsters and, if you don't pay them CEO wages, they can shut down your school system.
2. Remember the picture of the 500 school busses under water in New Orleans? You didn't see any Greyhound busses in a similar predicament. It's the tragedy of the commons writ large.
3. Some driver gets pissed at the unruly kids and goes all stabby on the rowdies. The parents can't recover damages from the school district - heck, the school district probably doesn't even have liability insurance!
There will be unanticipated expenses. For example, no one in your school system has any experience rebuilding carburetors, mapping routes, negotiating fuel contracts, training drivers, or even washing the vehicles, let alone maintaining the equipment, securing permits, publishing guidelines, establishing maintenance rituals, recruiting the skills, etc., necessary to do all these things.
In MBA class 101, the first thing one learns is to trade a variable expense for a fixed one - even if the fixed expense is seemingly somewhat higher. Management strives for this because the fixed expense is a known expense. What you're about is the reverse: trading a fixed expense, that is, a single check taking ten minutes of an accounts payables clerk's time, for a multitude of imponderable, unknown, and potentially ruinous costs.
I hope it turns out differently for you, but I predict disaster. If I were the superintendent, I'd have an iron-clad contract, written on a page from the Bible -- because of the old refrain:
I don't own this railroad, I don't ring the bell, But let the train jump the tracks, And see who catches hell!
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HeyBub wrote:

And hopefully by the time the person gets their MBA and gets a real job they will realize there are lots of profitable companies that know when it makes sense to not do that.

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I'm glad you said in *almost* every case. Read on....

We're way off topic here, but the current drivers are not illegal immigrants - most are already teamsters and the salaries were figured into the cost projections.

We don't get floods up in western NY <g>

You can't count on the "private enterprise drivers" to be any better.
Earlier this year, on the very first day of school, a bus broke down. The driver pulled over onto the shoulder of busy highway - the area between the entrance ramp and the right lane - and called his dispatcher. The company sent a replacement bus who pulled up behind the other bus on the shoulder of the highway, and with 2 drivers and 1 other adult, began walking the 50 or so 1st and 2nd graders from bus to bus. Cars were going by on both sides of the buses as the line of kids walked down the shoulder. The school was never notified and they had no police supervision. No one knew about it until some kids mentioned "walking on the highway" to their parents that night.

I wonder what goes on in the district's maintenance building next to where the district's trucks and grounds maintenance equipment is stored. That heavy-duty tow truck and hydraulic lift in the big garage must be for something other than our snow plows, tractors, graders and other heavy equipment. Besides, why do you assume these items are examples of "unanticipated expenses"? Do you think that these items were simply ignored during the planning process? Do you really expect that the district is going to buy a fleet of buses and then say "Oh sh*t! They need gas? How come nobody mentioned that before? Here, use my Mobil SpeedPass, but just this once. Please give them some credit.

No argument, but the plan is modeled after another school district who did the same thing a while back. (I heard a rep from that school district give a presentation about the sucess of the program at a planning meeting . I don't recall the out-of-state district's name, but I could get it if a citation is needed).
The main problem here is that the district is currently paying a higher and higher "fixed cost" for lower and lower service. There have been other safety related issues than the example I gave above as well as breakdowns, delays and personnel issues.

I hope you're wrong, but I respect your point of view. I'll let you know in a few years.

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On 12/30/08 12:14 pm HeyBub wrote:

For decades most state governments in Australia -- no matter what their political "complexion" -- ran enterprises that competed with private enterprises: e.g., banks and insurance companies. The govt. enterprises, not needing to make a profit, kept the private enterprises from being too greedy; the private enterprises, possibly having a less burdensome administrative structure, kept the govt. enterprises from being too inefficient.
In one particular area, motor vehicle insurance in Queensland, the private companies gave up writing policies for the mandatory death or bodily injury insurance because they could not compete with the State Government Insurance Office's rates.
Again, when it came to construction projects, govt. departments figured out what it would cost them to employ people directly to do the job, then called for bids with the provision that no bid might be accepted at all, if they figured that they could do it for less themselves than the lowest-bidding private contractor.

So you would be in favor of buying extended warranties/service contracts/"performance guarantees" for cars and household appliances?
Perce
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Percival P. Cassidy wrote:

Do you have insurance on your home? If so, you're trading a fixed cost for an unknown, variable cost.
I once bought a mouse pad at Circuit City for ninety-nine cents. The clerk asked me if I wanted an extended warranty. I said: "Let me think about it. You do the same." We stared at each other for about ten seconds and, without another word being spoken, he completed the sale.
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On 12/30/08 02:41 pm I wrote:

As for quality of service.... Every Post Office was an agency of the Commonwealth Savings Bank. So the inhabitants of Woop-Woop (pop. 57, a significant proportion of whom were drunk at any given moment) -- with a general store (with a "sub Post Office" occupying a few feet at the end of one counter), two pubs and no churches -- had banking facilities. Nobody cared whether the "banking business" done there showed a profit; it was a service to the public.
Since the privatization of the Commonwealth Bank, any location that didn't show a profit was closed, so many communities have been left with no banking services.
Perce
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Percival P. Cassidy wrote:

Had customer call me about a leak at their washing machine hose bib. Had them go to HD to get 2 replacement angle valves because I was busy at another job. I removed the 2 old angle valve and tried to install the new one, no go. I looked at the tag on the valve and it all matched up. The only problem it was made in China. The threads for the copper compression are cut on USA made valves, molded on China built crap. Had him go to a "Real Hardware Store" and get the same one and it threaded right on. Talk about a waste of freakin time. When will you people get it??? You get what you pay for!!! You buy crap you get crap, not to mention wasting my time so I can charge you more. Or a major leak that would have been blamed on me!
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but you can\'t make them THINK"
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Percival P. Cassidy wrote:

Wow! That was GREAT discovery by you. Support local business always.
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When the mom and pops are open late and open Saturday afternoon and SUNDAY for WORKING folks I'll shop there.. They aren't of course which is why they are hurting and most of my money goes to HD or EBS (regional semi-bigbox). I'm not missing work time to get my weekend project materials..They are refusing to change with the times and are being left behind..The blame is entirely theirs...One other thing I like is , at HD you can walk around and look at stuff and get ideas..The small mom and pops the stuff is all out in various buildings and it must be gotten for you , if you know exactly what to ask for. I'm tired of feeling stupid trying to explain what I want and being laughed at by contractors and yard help...The mom and pops could also carry cheaper tools...Not everybody wants or can afford a 600 dollar Makiti tablesaw when a 100 dollar Ryobi will do for most weekend warriors..
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benick wrote:

It all depends. There are times I go to local store, there are times I go to HD, there times I go on-line shopping.
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re: I'm not missing work time to get my weekend project materials.
But it's OK with you if mom and pop give up their evenings and weekends to stay open for you.
re: They are refusing to change with the times and are being left behind
There's a big difference between "refusing" to change and being able to afford staffing for evenings and weekends, along with the benefits and other costs of doing business.
re: I'm tired of feeling stupid trying to explain what I want and being laughed at by contractors and yard help.
That sounds like a personal problem...or perhaps a problem with the places you shop.
Personally, I'd rather deal with contractors who know their business than the staff at the borgs who were flipping hamburgers or let go from their accounting job yesterday. I spend more time explaining how things work to them so they can figure out if they carry what I need. Many times I find it on my own 'cuz they don't know what they carry or - worse yet - don't know *why* they carry it.
It's at the "real" stores where I can toss out a general idea and get suggestions from them on how to get it done - and I don't feel stupid, just like I wouldn't expect them to feel stupid if they ask me for advice related to my line of work.
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This is a little off topic. One time I was servicing the staple gun display at a Las Vegas HD and a customer walked up with a jammed staple gun. An employee walked up and listened to the customers problem and then took the gun and pointed it at his face while pulling the trigger to see why it was jammed. He did this several times against my pleas to stop. Dumb Ass
cm

re: I'm not missing work time to get my weekend project materials.
But it's OK with you if mom and pop give up their evenings and weekends to stay open for you.
re: They are refusing to change with the times and are being left behind
There's a big difference between "refusing" to change and being able to afford staffing for evenings and weekends, along with the benefits and other costs of doing business.
re: I'm tired of feeling stupid trying to explain what I want and being laughed at by contractors and yard help.
That sounds like a personal problem...or perhaps a problem with the places you shop.
Personally, I'd rather deal with contractors who know their business than the staff at the borgs who were flipping hamburgers or let go from their accounting job yesterday. I spend more time explaining how things work to them so they can figure out if they carry what I need. Many times I find it on my own 'cuz they don't know what they carry or - worse yet - don't know *why* they carry it.
It's at the "real" stores where I can toss out a general idea and get suggestions from them on how to get it done - and I don't feel stupid, just like I wouldn't expect them to feel stupid if they ask me for advice related to my line of work.
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Yes I do expect mom and pop to HIRE help and be open more than 7 to 5 M-F and 8-12 on Sat. if they want my money. I like to work 7-3:30 M-F but some drywall jobs require that I work late and some weekends. Should I require my customer to accomodate my personal life? Perhaps my customer should just close down his business so I can work when I want instead of doing it and making the mess the evening or on the weekend and having it cleaned up and ready for him to open in the AM ? I wouldn't be in business long if I did that and if mom and pop don't change they won't be either...The mom and pops hire the same minimum wage idiots to staff their stores around here , not contractors as you implied...
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re: "The mom and pops hire the same minimum wage idiots to staff their stores around here, not contractors as you implied"
Hey, don't throw that back at me. It was you who said "I'm tired of feeling stupid trying to explain what I want and being laughed at by contractors and yard help"
The contractors I referred to are those that also *shop* at the "real" stores and who often offer advice when they overhear a question - or who I might ask directly. If they're laughing at me, they're doing behind my back, but I don't care 'cuz I already have my answer.
You're also tired of being laughed at by the "yard help". I guess they would be "the same minimum wage idiots" that the borgs hire. So I guess that means they the borg staff is laughing at you also.
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If they want to be a profitable business, they need to do what it takes. By only being open during "business hours" they are FORCING a lot of people to shop elsewhere even if they don't want to.

There's a difference in cost between being open 8AM to 5PM vs. being open from 10AM to 7PM?
What staffing is there to afford? Mom and Pop work for free.

The condescending attitude of the employees at mom & pop stores is pretty widespread. Of course you know the lingo, can talk shop with the good ol' boys, and spend lots and lots of money at your favorite mom & pop, so you've never experienced it. You don't get treated the same when you come in for a faucet washer or a can of spray paint as you do if you come in for a truckload of lumber. I'm not asking for a foot massage, just a little civility. I don't care if you think I'm a waste of your time, but keep it to yourself. Smile, ring me up, and say "thank you." Keep the sneering and grumbling to yourself.

Me too, but I'm not a contractor or a good ol' boy, so the mom & pop shops give me little or no consideration. At least the people at HD and Lowes TRY to help.

I don't feel stupid. I'm MADE to feel stupid when I'm told that what I want to do is stupid. I'm MADE to feel stupid when I get the dirty looks and aggrivated sneers.
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