Lockport, N.Y.—When NetPlus Alliance opened its doors in September 2002, its founder, Dan Judge, reasoned that the difficult economic times required small- and medium-sized distributors to pool their resources.

Judge seems to have been proven correct. NetPlus now has 130 distributors, 15 business service suppliers and more than 70 manufacturers as members.

Judge has been involved in the distribution industry for several years. In that time, he says he has seen companies grow, or try to grow, too quickly, frequently adding to their staffs and incurring heavy costs and expenses. Watching this happen has shaped the philosophy he brought to NetPlus.

"We decided to have this pure buying group model and pool our members' purchasing power, talk to the suppliers about increasing their market share, and returning a rebate to our members," he said.

As it has from day one, NetPlus charges a one-time fee of $100 to join. Judge said he has no plans to change that.

"By reducing a lot of extra activities… we've reduced our costs substantially," he explained. "We only have two full-time employees, besides myself, so we are able to return a high percentage of the remains to our members."

Cautiously, Judge said the economy is beginning to show signs of improvement.

Though a return to better times is good news for distributors, he adds that the need for buying groups remains.

"Distributors will always need a way to improve their net profit," Judge said. "Certainly, the margin squeeze that's been going on for the last 10 years or so is going to continue. So distributors still need to pool their resources and get better pricing and earn some rebates along the way."