United Buyers Group
By Bill Sendelback
Put together a group of dealers who want to be more competitive and more profitable in their markets, and you have a buying group – make that 290 hearth product stores throughout North America. Now add in almost four-dozen top hearth and grill manufacturers, and service providers, and you have the United Buyers Group (UBG).
“The concept of a buying group exists in many industries,” says Dominique Pagé, UBG’s director of Business Development and Canadian Affairs. “Dealers unite together to negotiate better agreements with manufacturers and suppliers, not only to save money on purchases but also to give them access to programs that may not be possible to obtain as an individual dealer. The buying group benefits the manufacturers and suppliers by helping them grow their marketshare faster and more efficiently. Plus it brings a higher level of loyalty between our dealers and our supplier-partners.”
Hearth products are the foremost product emphasis for the UBG. “Every dealer we bring into the group is in the hearth business,” says Roy Mjelde, UBG’s chairman and director of Membership. “However, grills and outdoor living products have become growing categories for us, and we’re seeing that dealers in hearth products are now recognizing growing sales opportunities with grills.”
L to R: Dominique Pagé, Rick Lapp and Roy Mjelde.
Photo: ©2018 Amiee Stubbs Photographer. www.amieestubbs.com.
Also available exclusively to UBG dealer-members is a wide range of private label hearth products and grills under the Ambiance brand. These include gas logs, gas, wood and electric fireplaces, gas grills and fireplace accessories. UBG also has added residential photovoltaic or solar power products to its product mix. It also offers a consumer financing program for its dealer-members, allowing them to offer terms to their customers that compete with the best financing options in North America.
In the mid 1990s, Mjelde was and still is a hearth products dealer in Wisconsin. He and George Breiwa, now retired from UBG management but still a hearth products dealer and a UBG member, and a few other Wisconsin dealers began buying venting and fireplace accessories together as a group.
“We found that by buying together we got a real discount, and that made us more money,” says Mjelde. Then in 2001, a large hearth products manufacturer began setting up consumer-direct retail stores in Minnesota and Wisconsin. “Their discounts to the consumer and the builders were so great that it was hurting our businesses. They were going after builders as well as consumer customers at margins we could not compete with. So in 2001 we decided to form UBG, a real buyers group, to gain backers and stave off competitors.” Joining the effort at that time also was a small buying group in Canada.
“In the beginning, it was difficult because when I talked to suppliers, we had to admit we didn’t yet have many dealer members,” Mjelde explains. “And dealers asked who our vendors were, and we didn’t yet have many. But we just kept plugging away at it. Until 2005, dealers who became members joined us on faith. But early vendors including Selkirk Canada, HPC, Kingsman Fireplaces, Minuteman, and others, joined to really get UBG off the ground. Stove Builder International (SBI) was among those suppliers that joined UBG a few years later, further strengthening us.”
L to R: Front row: Jacob Pagé, Véronique Vézina, Dominique Pagé, Dan Green, Sunny Djonne, Kirsten Djonne, Sheila Green
Back row: Rick Lapp, Kyle Mjelde, Pam Mjelde, Roy Mjelde, Mark Gilligan.
Today, with more than 290 dealer stores, UBG’s membership is growing at a steady rate of 10 to 15% a year, and in the last four years the number of dealer-members has grown more than 60%. “In that last four years, the total dealer-member purchases through UBG more than tripled, and in 2017, those purchases were up 24%,” according to Pagé.
“The commitment by our dealer-members has grown even faster than our membership,” Pagé told attendees at the recent Buyers University, an annual gathering of dealer-members and supplier-partners (see sidebar on Buyers University); rebates to dealer-members were up 19% over 2016.
UBG certainly is not top-heavy with personnel. Only four people run the entire operation. Mjelde, still a hearth products dealer, is chairman and director of Membership; Pagé handles Business Development and Canadian Affairs. New to the management group is Rick Lapp, a long-time hearth products dealer who handles UBG’s member-dealer support.
Véronique Vézina “keeps us all in line,” says Mjelde, while she oversees Operations and Accounting. UBG headquarters is in Baraboo, Wisconsin, and Canadian operations are located in Quebec City, Quebec. Dealer-members in the U.S. are 75% of UBG’s total membership, with Canada representing 25%.
While Mjelde and Lapp brought decades of hearth product retail experience to UBG, Pagé brought 13 years of experience with a large hearth product manufacturer to the UBG table. While owning an office cleaning company that included Stove Builder International (SBI) as a client, Pagé and SBI president Marc-Antoine Cantin discussed working together. Cantin saw promise in Pagé and hired him. Pagé began with SBI in Sales and later Technical Support before rising to director of Sales. But in 2014, Pagé longed for a new challenge and left SBI to join UBG.
UBG uses its dealer-members’ combined purchasing power to negotiate special deals with selected manufacturers and suppliers. “But an important operating philosophy for us is that we will only have one dealer-member per trading area,” says Pagé. “In short, we have protected market territories.”
Pagé points out that every market is different, so UBG doesn’t have set rules for determining a territory such as specific miles or population. “We meet with a prospect to see if it’s a good fit with our group. Then we consult with our dealer-members in that region to get their approval on the potential member, to validate that they know and respect the prospect. It is super important to us to have dealer-members who are comfortable working together, sharing ideas, and helping each other, so we need dealers who get along and trust each other.
“We look for the “A” dealers, really nice store owners with quality brick-and-mortar stores and who have a good track record in their market area,” Pagé explains, “people who care about our industry, have a great reputation, pay their bills, treat their suppliers well, treat their customers with respect, are able to work well with other dealers and definitely have the same business philosophy as we have.”
Accepted dealer-members pay a flat annual membership fee to UBG. UBG dealer-members purchase directly from supplier-partners, and pay for those purchases directly to those suppliers. UBG never touches the product since it is shipped from the manufacturer directly to the dealer.
“This makes for a cleaner, closer, and more solid relationship between the supplier-partner and our dealer-member,” Mjelde explains. “We don’t interfere in the transactions between the supplier and the dealer. We create a business environment where our dealer-members communicate directly with the suppliers.”
The UBG University gathering in Dallas, Texas, April 2018.
UBG’s goal is to have as complete a product offering from its partners as possible, but it tries to limit it to not more than two suppliers per product category. “We directly negotiate agreements with the suppliers on behalf of our dealer-members,” says Pagé. “We want our supplier-partners to really gain market share by dealing with us. We favor long-term, successful relationships, and if our relationship with a supplier is growing and going well for both of us, we probably will not invite another supplier in that product category to join us.”
Supplier-partners pay an annual sales volume rebate and an administrative fee to UBG based on their purchases by dealer members. Much of the volume rebate from supplier-partners is passed on to UBG’s dealer-members as rebates.
UBG considers its marketing strategy to be more dealer-direct than that of a two-step distributor. “If we have done our job right, the pricing should be better with the UBG program,” according to Pagé. “And we offer a business environment where our dealers communicate directly with the manufacturers and suppliers. With our Buyers University trade show, and as many as 13 regional events, we’re trying to solidify those relationships and build a stronger bond between the dealer and the manufacturer.
“We love this industry, and we’ve been blessed to work with quality people to whom we are grateful,” Pagé says. “We believe in this industry, and we support it by actively being involved in the HPBA and the HPBA Canada with our time and energy to make this a stronger industry.”
As one UBG dealer-member exclaimed, “Any dealer who is not interested in joining the UBG must be crazy! There are lots of advantages and no disadvantages.”