Using an OEM to Build Sales
Wayne Hellman, CEO of Venture Lighting International, in Solon, Ohio, a maker of metal-halide light bulbs, needed to distribute his products. But an army of salespeople would be too costly; stores dealt only with major bulb manufacturers; and Venture light bulbs couldn't compete on price. So Hellman opted to distribute through original equipment manufacturers (OEMs) - in his product's case, the approximately 60 U.S. companies that make light fixtures. By using the OEMs, Venture can reach 7,000 electrical distributors through the 60 fixture makers' sales forces, who call on those accounts regularly.
Before Hellman entered the scene, light bulbs were a commodity, something fixture makers sold their fixtures with or without upon installation. Hellman had to convince them that owning a new application for the metal-halide technology was valuable. So he, along with a team of engineers and salespeople, held brain-storming sessions with the fixture makers. Bulbs were engineered from the ideas generated, and the OEMs designed fixtures to house them. Venture still uses that technique to develop new applications, and it foots the research-and-development bill for each new bulb.
Venture also private-labels its bulbs for two of the three major bulb manufacturers, which own more than half the market and have wide distribution systems. Hellman estimates that every 10 years he'll sell six replacement bulbs for each fixture sold by an OEM. Today 30% of Venture's $30 million in sales comes through OEMs, and Venture holds almost 25% of the metal-halide-bulb market.
- Teri Lammers