Page 32 - HME Business, April 2018

Standard Power’s Gear Change
“Providers want to keep as little inventory as possible on the oor. So, that’s really where the wholesaler comes in and can basically be that warehouse for them.” — Colton Mason, Supreme Medical
Managing Cost
Of course, these items, both power mobility devices and their related accessories can
get expensive. This means providers need to manage their cost, says Colton Mason, vice president of longstanding HME wholesaler Supreme Medical, which services thousands of companies across the country with a wide range of DME products, including standard power mobility offerings and related items.
Retail businesses must carefully manage their inventory, because if inventory sits too long, it can cut into cash ow as well as margins (see “Making the Right Choice,” on page 22 to read more about inventory turn times in retail). So, with standard power mobility providers trading in particularly expensive inventory, they need to make the right vendor partners.
“With all these reimbursement cuts, providers they want to keep as little inventory as possible on the oor,” Mason says. “That’s really where the wholesaler comes in; basically being that warehouse for \[the provider\], because we buy
in volume like they would in the old days — 18-wheeler loads of product. We allow our customers to buy from us in small volume, so they can stock minimal inventory, but we’re still buying in huge quantities to pass on those savings to them.”
This lets providers keep items on the show oor so that their product can help do the selling.
“I’m huge a huge believer your patience can’t buy things from you they can’t see,” Mason says. “... People need to be able to see what you can offer them. What we tell providers is, keep one. You know, you need to have good, better, best options ... but keep one. Don’t keep ve or 10. Let us hold that inventory for you, and as you sell one, just reorder it that day.
On the ful llment side of that business model, the provider has a couple of options: it can
ful ll the product themselves, or work with the
manufacturer, distributor or wholesaler (which- ever business is “warehousing” the inventory)
to ful ll the retail item. Mason says the product and the provider’s approach to customer service will dictate much of that. For instance, it might want its vendor to ful ll re-supply or disposable items, but opt to ful ll larger items.
“We can do either way,” he says. “A huge program that we do offer as a wholesaler
is patient home delivery for the bulk of the supplies side of the business —the catheters, the ostomy, the wound care. Most providers use our warehouses to drop ship it straight to the patient. It gets there with their name on the box, their name on the packing slip, but they’re not ever touching that inventory. So, on the disposable end of the business, that is a fantastic idea.”
“On the equipment side of the business, when you get into items that do require set up, it depends on the provider. For example, a lot of HME/DMEs ... they deliver everything to the patients’ homes themselves, because they really want to bank on the fact that, ‘Our drivers are going to come to your home, and they’re going make sure they got everything set up before they leave, because we’re selling on customer service.’ A lot of times, if they do that, they can command a slight premium in the market over say just an online website that’s going to drop ship everything”
Even then, Mason recommends that providers still determine how low an inventory they can keep on-hand, given that wholesalers such as Supreme and other vendors can get the product to the provider in short order. For instance, if the wholesaler can get an item to a provider in one or two days, how many units of that product does the provider need to keep on-hand in order to ensure that it can have a unit on the show oor, and suf cient supply
to deliver to a retail customer and provide VIP service and set-up?
“I would veer more to the side of saying, keep very little inventory, deliver it on your vans, set it up for your patients. On any type of set up equipment I think that’s the best way to go,” he explains. “On the disposable side of the busi- ness, de nitely opt for patient home delivery, because it’s the same stuff every month. Usually it’s recurrent shipments. Providers don’t need to touch that.”
Managing Price Points
Price is paramount in retail sales, and that’s especially true for retail power mobility items. With so much competition out there, providers must carefully set their price points.
“The number one marketplace for power scooters is e-commerce,” Mason says. “That’s just where everything has moved. It doesn’t mean you can’t compete with \[online retailers\], but you de nitely have to take that in to account when you’re pricing items in your store.”
Providers or standard power mobility must take the time to set the price points so that they can make a pro t, but also remain competitive. Don’t be shocked by that, because competition from online is a trend that all retailers have had to deal with for at least two decades now. It’s only new to HME, because retail is new.
“The days of marking things up 60 percent in a store are gone, especially on these big ticket things,” Mason says. “Take medical equipment out of the equation: if you’re spending $2,000 on a TV, you’re going to look that TV up online and make sure you’re getting the best deal.”
This is where leveraging that local presence comes in. Providers still have customers walking into their store.
“Take advantage of them coming to you, and that you’re the local guy,” Mason says. “You got the product, si use that to your advantage. Make sure it’s priced in line with what they’re going to nd when they go to Google. You can command a slight premium for having it there, so that
they can walk out that day with it, as well as the fact that you have the local customer service if anything happens in three months.
“But you can’t be 10, 20, 30 percent more than what people are nding online,” he continues.
“I would encourage people to do your research, price it fairly, but know where you need to be, and then work with your wholesaler to get your cost of goods where you need it to be so that you can make money.” n
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