Richard Glikes, president of Azione Unlimited, counts this month as the fourth anniversary of the buying group of integrators, dealers and vendors he founded, when he signed his first dealer in February 2012.
After heading HTSA for 15 years and leaving in September 2011, Glikes thought he would take some time off. But he found that wasn’t for him, and came up with an idea for a group “that addresses integrators… and is truly vendor friendly. I thought there was a big void in these areas that wasn’t covered. So the first thing I did was target integrators.”
He went to CEDIA Expo that month to pitch his idea and in the process he became the first executive to start a buying group in this business from scratch. Today Azione has 140 dealer members as of this writing, and has a goal of having 200 by the end of 2016.
Glikes confirmed that 93 percent of dealer members are integrators, they have over $450 million in combined annual sales and a surprising 85 percent of Azione members have never been in a buying group before.
TWICE caught up with Glikes recently to talk about Azione’s business philosophy, current plans and his views of today’s industry.
TWICE: Over the years I have heard of buying groups having “core vendors” or “strategic partners” but how did you come up with idea of making vendors members of Azione?
Glikes: I felt that in most buying groups… there was a one-way relationship: the vendors gave and the dealers took. I thought that the big picture is that we are all in this together.
I wanted to deliver profits to our members and the twist is if our vendors are members too, they will get profits. So if our vendors are making money and our dealers are making money then everybody wins. Then you have this symbiotic relationship where integrators and dealers really care about the vendors, and the vendors care about them.
The other thing is I knew that the other groups had too many vendors. They would look at each other and ask, “Why am I the fifth receiver vendor? What’s in it for me? Why are they slicing the pie so thin that I can’t get any growth?” I wanted to have the least amount of vendors possible to cover all the categories and not divide the pie.
TWICE: You have been able to change the dynamic by going after profits versus going after market share. And in an interview we had about a decade ago at an HTSA meeting you said in effect, “Many of the wonderful brands that got to the industry at this point will not be around in a decade.” Why did you feel that way?
Glikes: They were playing a market share game. This is why so many Japanese TV companies don’t exist anymore. I have this slide I show dealers and vendors. It illustrates it is now how many sales you have it is how much money you make. The chart shows costs going down, while sales and then profits rising.
Our No. 1 goal is to deliver profits to ensure our members long term success. [Azione’s other goals are] to create a group of the leading entrepreneurs; to deliver a place where you can share best practices, best execution etc.; and that vendors support dealers, and dealers support vendors. And we have stayed true to that course.
Selling items at cost or below is not a recipe for success or longevity and that is what was happening in the TV business [a decade ago]. Even though we were selling 24 million TVs a year we were not making any money. It goes back to my number one goal: You have to make a profit.
Now you have companies like Sony, who are not chasing share, they are chasing profit. They don’t have as many SKUs as they used to have, they have higher price points and are going after niches, like what we have to do in TV.
TWICE: Getting back to your group, you say that 85 percent of Azione’s dealers and integrator members have never been in a buying group before. How is that possible?
Glikes: There is not a single tactic or a way that has happened. Our dealers have recommended other dealers. Our vendors recommended dealers and we are very rep friendly, I go to as many rep conferences as possible, and they have recommended many dealers to me.
We get a fair amount of media, make it easy for them to contact us and we follow up. I must spend at least 50 percent of my time on dealer acquisitions and 50 percent on everything else. I recruit every day.
TWICE: Last year Azione put in place a new health care plan for members that saves dealers 15 percent or more on their insurance. What new member benefits are you working on for 2016?
Glikes: We will introduce very soon a marketing plan for dealers and integrators for them not to just get new business on referrals, but to get [business leads via] Facebook, develop good websites, have blogs, have effective search network optimization (SEO), do Google ad words and be up in front of new clients in what I think will be a soft economy.
Another project that we are working on is to partner on a software platform for the entire group so we will all be on the same operating system. We will be able to share with vendors [what is in inventory] without guessing… what products we need next. The system will also go from proposal to ordering, to operating system and accounting. That will be a tremendous innovation.
We have a committee interviewing three potential companies and all three are ready to give us an equity position in their company as part of the deal … and we will get a perpetual discount.
TWICE: How was last year and what are the prospects for 2016 for Azione?
Glikes: I think that like everyone else, 4K was a winner [last year], as well as control and home automation. Those are the three biggest categories. Also outdoor is a nice category. We do lighting, we do shades, a huge profit center, that didn’t exist before. We continue to morph into categories we have never done before. One of my pushes now is to get recurring revenue up. We are getting big on security and surveillance and have at least half of our dealers in security. I’d like to get that to 75 or 80 percent. I think that is recurring revenue.
TWICE:And about 2016?
Glikes: Right now I think it will be a tough year. I just had a call with our board members and I said China, low oil, the Stock Market, crazy things in the Middle East and a Presidential election year can make for a slow year.
But during a board meeting members said business is good now. A couple said, “You know Richard you are preaching doom and gloom,” which is out of character for me because I’m a glass is always half full guy.
If a sales slowdown is going to happen it will be six months from now because they have plenty of business booked. Good news is by mid-year, if our marketing program kicks in, we will take share. And if we do that, business will stay good.
Steve Smith is editor at large with TWICE and was its longtime editor in chief.