New buying group thinks they can bring success to the hot tub industry

Wise businesspeople know that reinventing the wheel is a waste of resources. Those same people know that some of the best ideas can be found just by looking around. If an idea works for a similar enterprise, odds are good it will work for yours.

That's what Dave Frakes and Steve Bryant thought. Together with Jesse Roberts of Roberts Pool & Spa, they have launched RecWay, a buying and marketing group for pool and spa businesses modeled on the success of a similar group in the electronics industry. With a focus on sell through, they have the infrastructure to offer a multitude of added services in addition to the price advantages of a buying group.

But can a system developed for retailers of audio systems, refrigerators and televisions work for merchants whose inventory runs to hot tubs, pool chemicals and barbecue grills? RecWay thinks so, and is setting out to prove it.

Familiar Beginnings

Bryant and Frakes are veterans of the electronics industry and both started in the sales trenches where they had a close-up view of the industry's evolution from the early days of yell-and-sell, tent sales and truckload blowouts.

Today, Frakes owns IM³, a design and marketing firm in Omaha, Neb., specializing in all things digital. Bryant now heads up Right Mind Media, an audio, video, Internet and print production company with complete script-to-screen, high-definition video production, streaming media, and pre press facilities in Kennesaw, Ga.

In 2003, Bryant and Frakes joined forces to offer independent retailers the know-how and technology to better compete and succeed in a competitive marketplace. Together they provide a full complement of marketing, advertising and training materials to the 3,000 members of one of the most successful electronics, appliance and furniture buying groups in the country. They produce high-definition, professional-quality TV ads, interactive training modules on general sales and customer service topics as well as training programs for specific products. On top of that, members - independent electronics and appliance retailers - get prices on wholesale merchandise that are comparable to what the big-box stores pay.

Over the years, Bryant and Frakes had discussed the possibility of applying their tried-and-true program to another industry, but they stayed pretty busy with the work that was in front of them.

Then Roberts went to talk to Frakes about having a DVD made for his Omaha-based, family-owned business, and the light bulbs started going off in both men's heads.

"Jesse came in to have us build him an interactive DVD of his store," says Frakes. "I asked lots of questions about his business like, 'How does your industry go to market?' He told me that they go to market with tent sales, signs on the side of the road that say 'Hot Tubs $3,500', door hangers, truckload sales and the like, I said, 'Man I'm having a flash.ack to the electronics industry, 1978. That's what we did.'"

Not long after that, Frakes, Bryant and Roberts began developing RecWay, a buying group with the added advantage of the experience and infrastructure of Frakes and Bryant's businesses.

"The buying group concept is not a new concept - its been done for years," says Frakes. "It's really since the mid-'70s when the electronics business, the appliance business, several other businesses, were in their infancies and the smaller dealers realized that the bigger guys were getting better pricing."

Frakes knows about the buying group concept from the manufacturer side; he was in charge of the buying group program for Panasonic during his 15 years with the electronics giant.

"So each one of the buying groups has their own programs, but no one ever got below what our lowest price was going to be," says Frakes. "How they got to the price was different - some would want extra advertising, some wanted free shipping, some would want an extra 2 percent co-op - but in the end, there's always a bottom and it was a race to get there."

Once the majority of retailers get to that bottom number, there's not much to set them apart from each other.

"When I started my design and marketing firm, I already had a relationship established with Steve Bryant in Atlanta," says Frakes. "His primary client was a national buying group which was one of the largest and more reputable of the dozen or so groups in the country. At the time it had about 330 members. That group realized that they were just one of many that was going after the same manufacturers, so Steve came up with a little different approach. It's changed the concept from buying to selling; it's about the sell-through."

So in the last six years, Steve's client has gone from 330 members to just short of 3,000 members with just under 9,000 storefronts. Now, that growth didn't come from people getting into the electronics business, they came from other buying groups that weren't offering as much.

Buying Advantage

As a buying group, of course, RecWay plans to offer buying power. "A single store just doesn't get the attention of a manufacturer, let alone get the right price," says Frakes. "From a manufacturer standpoint, some accounts are so small that the amount of business for the amount of effort never pays for itself. Even an independent rep can only help with one or two lines. But if I'm paying a call for RecWay, I can talk to them about all of the lines in their store and the way everything looks in the store and the way that they market the business as a store.

"We will initially have two or three of the top available manufacturers per category," says Frakes. "Will we have 30 different tile companies? Probably not at first, but we'll have enough for things to start running."

With their connections in the electronics industry, RecWay already has about 600 inventory items such as plasma TVs, outdoor speakers and high-end massage chairs.

"These nontraditional products give dealers the ability to sell rather than lose the business," says Frakes. "Now they can offer a plasma TV and not walk customers to the Best Buy across the highway. Now Best Buy isn't a competitor for discretionary dollars."

Training Advantage

One of your first opportunities to see RecWay in action may be at the IPSPE show in Las Vegas. Not only will they have a booth at the show, but they will be there with full high-definition production equipment shooting their signature product-specific training videos.

Based on Bryant's successful sales-training program for the electronics industry (since replicated for the furniture industry, as well) RecWay will offer online, interactive training modules for all aspects of sales.

"The concept of addressing a customer, identifying their needs and selling them what they need, that doesn't change whether I have a box that has a hot tub in it or a box that has a refrigerator in it or a box that has a mower in it," says Frakes.

RecWay will offer training for salespeople, for store managers and modules for specific product lines. That last category is what they will be shooting in Las Vegas.

"If you have a story to tell, it's usually going to have more margin in it than if it's stuff that's just about price," says Frakes.

"Our training is online and our trainer will always have a smile on and will always do their best presentation 24 hours a day," he says. "There's no way a trainer that drove for four hours to get from one part of North Dakota to another part is going to have the same smile on their face at the end of the day. There's no way the message will be the same and they won't be able to talk to all the employees of the store."

Get the Word Out

"Once you have a store trained, then you can start driving people to the store via advertising," says Frakes. "An independent dealer would not spend $30,000 to $70,000 to produce a television ad, but when we spread that among hundreds of retailers, it's easy.

"If a buying group that's out there decided they were going to offer the kind of production quality that we have, they'd need to start with $5 million to $6 million to replicate what we have," says Frakes. "But we've had several years to recoup our investment on infrastructure, so now we can go to the street in a very cost-effective manner."

RecWay members will be able to access customized TV spots that won't look like the local cable company did them for free. "At our lowest production rate, you're looking at $180,000 worth of TV ads that will be available to them almost literally tomorrow."

Free Up The Cash

Frakes says that Wells Fargo will create a RecWay-branded finance card. "It will be our own program," he says. "The other side is inventory financing. And we're working closely with a couple different companies for that."

RecWay has big plans, and the principles have demonstrated their success in other industries. But will it work in the pool and spa industry?

"I think we are at a tipping point where it's time to bring a sell-through strategy to this industry," says Frakes. "You've already earned the trust, you have a market share in their backyards, just grow the share."

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