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Hearth & Home January 2014

Mike Rupp, president of Empire Distributing.

Failure Is Not an Option

By Bill Sendelback

Mike Rupp and his family have taken two-step distribution to another level with their philosophy of doing whatever it takes to make their dealers successful.

Mike Rupp, president of Empire Distributing headquartered in Arcade, New York, has spent 25 years as a two-step distributor of hearth products in New York State and now throughout New England and Pennsylvania. He has coupled that with many years of retail experience to remain a growing, successful distributor, even through the recent economic and hearth sales downturns.

Besides his “family” of dealers, Rupp includes his own family, his wife and two sons, in the Empire Distributing organization. His absolute dedication to the success of his dealers made for this insightful interview describing the success of Empire Distributing as an example of what it takes today to be a successful two-step distributor.

(L to R): Mike, Lois, Jason and Jeremy Rupp.

Hearth & Home: Let’s start with a description of your business and the areas you cover.

Mike Rupp: “For the first 23 years of distributing, we were strictly in New York, but in the last two years we’ve expanded our territory to include New England and Pennsylvania. Our primary lines have been Travis Industries and M&G DuraVent, plus all of the supporting hearth products such as hearth boards, accessories, glass doors, all kinds of venting, toolsets and steamers. You know, the typical things that dealers normally need to have in their showrooms.”

Do you distribute products such as grills and patio furniture?

Rupp: “We do not, and it’s interesting that you should ask that, because at our meetings we ask ourselves, ‘What can we do to help our dealer network? What are we missing?’ The market on the West Coast is completely different than what we have here in the Northeast. We have such a short window for outdoor products, but we wonder why more dealers aren’t selling outside products? Where and how can we help them grow, or try to get them out of the syndrome where they are so dependent on four to five months of profitable business? What are they doing the other seven months of the year?

“We are continually striving to bring products to them that they will embrace and want to use to expand their year ’round business. So that is exactly what we have looked at in considering bringing in patio furniture and fire tables. There are already so many grills out there, but that’s not to say we’re not going to move in that direction.

“In fact, I believe we are, and we’re probably late in coming to the table with adding grills, grill islands, kamado-style cookers, pellet grills, things like that. We’re slowly working into it. But I think the best and quickest move for our dealers right now is to take a look at patio furniture and fire tables. It seems like these are growing markets.

“I went to the Casual Market in Chicago and was just blown away talking to different dealers about the dollar volume and the quantities that they do. I realized there is a great opportunity there for our dealers. We struck a deal with Agio and shortly will begin selling their furniture and firepits.”

What do you see as the function of a two-step distributor?

Rupp: “The greatest asset that we can be to our dealers in two-step distribution is aligning ourselves with that dealer, being a partner with the dealer as much as a supplier. We must understand their wants, needs and desires, but mainly what their needs are.

“There is no secret that in buying through distribution you’re going to pay a few more points than buying direct through a buying group or from a manufacturer. Our pluses are the size of our warehouse, the amount of product that we stock, our commitment to having everything that a dealer needs and when they need it, and our fast turn-around time.

“There has been a whole change of business philosophy over the last 10 years, where early-buys are a thing of the past. Dealers don’t want to tie up their money, and don’t have the space to tie up those inventory dollars. That’s what we do. That’s why, seven years ago, we went from a 30,000 sq. ft. facility to 110,000 sq. ft. purely for the reason that it was what we needed to do to be a successful distributor.

“It all boils down to having the product when a dealer needs it; that’s the service we provide. But it goes a lot deeper than that. We are the dealer’s business partner. We have a strong retail background. Throughout many years of successful retail experience, we’ve made mistakes. So we try to encourage our dealers to follow our lead and not make those costly mistakes. We learned a lot, so if we can help them avoid those mistakes, then we’ve done a good job.”

It sounds as if you offer a lot of advantages to the manufacturers as well.

Rupp: “We like to think we do. In a dealer-direct program or a buying group, I can’t fathom how a manufacturer or a dealer working directly with a manufacturer handles warranty issues, turnaround time, order processing and things like that because we basically do all of that for our dealers and manufacturers.

“We handle all of the warranty issues. We stock the parts for absolutely every product we sell. We do the order processing. We do the shipping of the product back to the manufacturer for the dealer. The dealer gets it to us, and we get it back to the manufacturer. We take care of all of that.

“I know that the manufacturers we deal with appreciate it, and we’ve made their lives a lot easier. But our focus isn’t trying to make life easier for the manufacturer, although that’s a good thing. It all reverts back to how we can help the dealers, how we can keep a smooth flow going. Their focus needs to be on retailing and installing and servicing. Our focus needs to be on getting them product in a matter of a day.”

Rupp in his 110,000 sq. ft. facility.

We’ve heard you are a different kind of distributor, and your business philosophy is different. One phrase that was attributed to you by a dealer is, “We will not let you fail.” Is that your philosophy regarding your retailers?

Rupp: “We’ve already made many mistakes as a retailer. We’ve had dealers start off very young in their career, and then they have a couple of good years and they start bringing in product from manufacturers X, Y and Z. They just expand way beyond their means, and all of a sudden they find themselves in a financial situation that can get pretty stressful.

“We help them understand how they need to pull back the reins and get focused again and just keep it simple. It’s not good for us to work for two or three years with a dealer and get them really running strong, and all of a sudden they take a turn and go downhill. It’s our time invested as well.

“We can’t afford to have a dealer fail. It just wrenches our guts.

“We’re fortunate because, from my point of view, our dealer network is made up of our business partners. They are more like family. I’ve had dealers call me up on a Saturday evening after a successful day, or maybe not a successful day, and they’ll say, ‘Mike, I know you don’t get these calls very often, but I’m just calling to say thank you because of what you guys do for us. There’s nobody else that does the things that you do, that helps us in business, that guides us along, that goes out of their way for us like you guys do.’

“I’ll tell them, ‘We understand. We know that we are important to you but you’re important to us.’ It really comes down to a relationship.

“Here’s an example. A dealer came to me to schedule his Grand Opening in another seven days, and he said, ‘I’m never going to get it done.’ I asked, Well, where are you? What do you need to do?

“Literally, we will send our team in there, myself, my sons, our warehouse guys, and we’ll go in with our tool belts, and we’ll help design the showroom, lay out the showroom, build the showroom, set it with products.

“That happened three times this year where we were up against the gun for opening dates for open houses, and we made it happen. There is just nothing in our mentality that says we can’t make it work. We’ll figure out how to get it done every time for our dealers.

“I could go on for hours about different things. Basically, what it comes down to is that the devil is in the details, and we never want the devil to rear his ugly head. So we watch the smallest, minutest things all the time, from the way we answer the phones, our phone etiquette, to the cleanliness of our warehouse. Our warehouse is cleaner than many of the retail operations out there. You could put a dining room table in the middle of our warehouse and feel you are in a high-class restaurant. That’s how clean it is.

“Dealers appreciate that and it all flows down. Our dealers know how hard we work for them, and they in turn work that hard for us. I never want our dealers to feel that they are working to support a distributor. We’re there to support them, and as long as we continue that philosophy, I know that our dealers will be successful, we will be successful and the manufacturers that we work with will also be successful and enjoy working with us.”

With all of your local knowledge and help that you give the dealers, are the manufacturers using your intelligence as well?

Rupp: “Our manufacturers are so removed from the dealer network. Not that this is a problem, and not that they are doing anything wrong. But a manufacturer’s job is to create product that works, to maintain a good supply and get it to market at a reasonable cost.

“A distributor, like us, brings that product in, has it in inventory and has a closer relationship to the dealer. Our philosophy every day when we get up in the morning is to think about how we can make it easier for our dealers. If we’re doing that on the front end, that also makes it a lot easier for the manufacturers because they know we are taking care of things out there.”

What changes in two-step distribution have you seen in the last few years?

Rupp: “I’ve thought about this several times, but two-step distribution has become somewhat of a commodity – some distributors view their dealer network as a commodity. They’ll encourage dealers to load up on product or put a lot of inventory in when it’s not needed. Then, when a dealer needs help, they are really not there for them the way I think they should be.

“We’re very proud that we’re going into our 25th year of distribution. When I got into distribution, I was just a young guy 38 years old. I had one product line, Travis Industries. They were a young manufacturer at that time as well, and we’ve grown together and been able to grow our businesses and be profitable.

“DuraVent is another one. Even though they are a huge, huge company, they keep it grounded. Everything is more on a personal level, and it makes a difference doing business; it’s easier for us. Therefore, we can pass that philosophy down.

“The other part of it is the team we have at Empire Distributing. I might be out on the road calling on my dealers and a dealer will say, ‘I got a call from Joe in the warehouse on Saturday. He just texted me wondering how my week went, and how sales were going.’

“That shows me that everybody in our organization is on board, whether it’s the girls in the office taking the orders, or our salespeople on the road or our warehouse guys. Empire Distributing is continuing to be successful because of our dealer network. We work with them; they work with us. As you said earlier, failure is not in our cards. We have a ‘can do’ attitude.”

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