It slices. It dices. It chops, cuts and juliennes! It trims and slims. And it's the only appliance in the world that slices whole, firm tomatoes in one stroke, with every seed in place! But wait, there's more!

While this may sound like a page ripped out of Ron Popeil's popular Veg-o-Matic selling strategy, the truth is, it isn't that far removed from describing the multi-purpose, multi-tasking buying groups that have become the standard in today's industrial distribution industry. What started out in 1987 with a simple business concept — pool resources to achieve better positioning with manufacturers — has evolved into a multi-billion dollar industry.

That's not to say there wasn't some resistance along the way at first. In fact, I remember that some called the concept illegal and immoral, and said that buying groups surely would destroy the manufacturer/distributor relationship.

How wrong the cynics were. Today buying groups are a recognized part of the supply chain. They traditionally offer their members product pricing and rebate programs reflective of the groups' combined purchasing power. Rebates are generally distributed on an annual basis based on a member's purchases from the suppliers less the expenses to manage the group.

Their success lies in their simplicity, and this is where I fear many of the buying groups in our industry have gone astray. By offering a potpourri of support services to distributors, many buying groups in effect are decreasing the amount of money they can return to their distributors.

Just take a look at the proliferation of "value-added" services buying groups offer. There are groups that serve as a marketing and back-office tool. Groups that supply custom-crafted supply solutions. Groups that provide top-level technical support and proprietary e-commerce software systems. Groups that offer entrée to national contract sales agreements. Internet specialists. Catalog specialists. But wait, there's more!

While I admit that many of these functions may add value, they can significantly reduce the year-end rebate payout to the groups' members as related expenses grow. How ironic is that? By supersizing services, buying groups are undercutting the benefit most distributors seek when they join such groups—to add money to their bottom line.

That's why we're starting to see new back-to-the-basics buying groups emerge, and why distributors are enthusiastically responding. For example, my company, NetPlus Alliance, was launched in mid September, and already we have 60 members representing distributors that range in size from $500,000 to $45 million in sales.

Small and medium-sized distributors are attracted to pure buying groups because they know they focus strictly on negotiating with suppliers for pricing and rebate programs. Expenses for other functions are minimized to provide the distributors with the maximum rebate return possible.

This simple business model also provides a much greater degree of loyalty to the group's supporting manufacturers. Member distributors find that the rebate return from a pure buying group can improve their net profit on a product line basis by two to three times. This, in turn, creates additional incentive to support the buying group's manufacturers.

Kind of simple concept, isn't it? You help me, I'll help you, and we all come out winners. We don't need slicers and dicers and peelers. We need focused buying groups helping distributors to eek out a little more profit — especially in today's economy.