Features

Aug. 16, 2004 – Hap Jones remakes 70-year-old distributor

Hap Jones has added new blood, new products, and new Web sites and has moved to a new facility. All in the last two years and all in an effort to re-energize the 70-year-old distributor.
“We have the mentality of a younger, more aggressive company, even though we were started in 1933,” says Scott Buntin, vice president-marketing. “We have a lot of experience , but we’re adding new blood in marketing and we’re refocusing on our sales staff.” One of the key new hires is long-time pro Peter Kuipers, who was named regional sales manager for the important Western Region recently.
One of the biggest changes at Hap Jones is its attitude. In a conversation with Buntin and Tim Williams, national sales manager, they described the company’s new, aggressive stance regarding improved dealer margins, changing working relations with suppliers, tougher competition with distributors, and the company’s more innovative marketing using the Internet and direct mail.
The changing marketplace
“We’re really trying to focus on getting dealer margins up,” says Williams. “Their gross profit has to come up. On a big ticket item, people are happy to get 25% or 30%.” Hap Jones is making a concerted effort to develop product lines where dealers can get at least 40%. “And we try to get them 50%,” says Williams.
A growing problem, according to the Hap Jones executives, is the continuing drop in retail prices caused by increased supply out of Asia. “One year ago,” says Williams, “a chest protector was selling for $150 and the dealer was making a decent dollar profit. Now, it’s down to $50 and they’re not making enough to pay the bills. There’s just too much capacity; it’s overwhelming demand. There are more products coming out of China with better quality.”
This situation puts pressure on distributors to increase margins, they say.
Dealer margins also are not really helped by suppliers who sell direct, say Buntin and Williams, even though the opposite would seem to be the case. The manufacturers still have to provide the functions of a distributor — warehousing, shipping, customer service. “It seems simple,” says Williams, “but when you start slicing it down, the dealers aren’t making an additional 30%; they’re making maybe 10% more.”
Changing Product Portfolio
Obvious changes at Hap Jones are the new names in its product lineup. Recently added were Zeus and Zamp helmets, for example. Both are good sellers and both provide good margins for dealers, says Williams.
Hap Jones also has reached agreements in principal with two unnamed manufacturers to handle a boot line and another helmet line on an exclusive basis. The contracts are expected to be completed shortly, says Buntin. The Italian boots are mid-priced street and off-road models. The helmets are mid-priced off-road models; street models are expected to be introduced next February.
House brands also are being reworked: Some are being repackaged and new ones introduced. The MXRx, which stands for Your Prescription for Motorcross, was introduced about three months ago. MXRx products include chest protectors, handlebars and tool kits.
House brand are becoming increasingly popular among distributors as a way to better control their business, especially as relationships with suppliers change.
“You have to protect yourself,” says Buntin. “It used to be that you could work on a handshake, but now you have to write a contract. It’s usually one year to three years with options. And you have to have an exit strategy.
“That’s an important reason why we came up with our own stuff. By putting out our own line with our name on it, we protect ourself.”
The problem is especially difficult, say the two executives, for regional distributors, who sign on a new brand, build it up for several years and then lose their investment to a major national distributor.
“We’re concentrating on things that are more profitable for dealers,” says Williams. “And if we can brand it, we will brand it.”
The move two years ago from San Jose, Calif., north to Tracy, about an hour east of San Francisco, perhaps best reflects the changes taking place within the company. Although products are picked by hand in the five-story facility, it uses state-of-the-art barcoding and computer processing and tracking systems.
Hap Jones signed a five-year lease on the facility that has a 30,000 sq. ft footprint and it has an option to add another 200,000 sq. ft. of space if it wishes. The new facility fits well with Hap Jones’ market area: It’s primary area is about 15 states in the west, plus a big presence in Florida, Texas, New York and parts of the Midwest.
New, more aggressive marketing also is playing a role in today’s Hap Jones operations.
In the past year, the company has spent heavily on its dealer website, dealernet.hapjones.com, that is password protected for its dealers.
Participating dealers can check inventory at Hap Jones, trace orders and control their own inventory through a link with their dealer management system. The entire Hap Jones catalog also is online. Approximately 10% the company’s 5,500 dealers use the system regularly, placing 200-300 orders online daily.
Hap Jones also has increased the emphasis on its sales catalog, adding color and mailing it twice each month to all of its dealers. “These are seasonal items dealers need,” notes Williams, “not discontinued or overstock items.” Sales from the effort have increased nearly 20%, they said. psb

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

Check Also
Close
Back to top button