Shed Cannibalism

Posted on : February 3, 2013

Shedeye has been a keen observer of the Shed industry for a number of years and there are a number of very successful Business Models that have been employed.  A guaranteed model for failure is the Cannibalism model and there is some very compelling evidence that one of the larger players is about to attempt this business model soon.

The cannibalism model is where the Wholesaler uses a distributor network to sell its product, and effectively competes against them within the distributor regions through another brand.

It has come to our attention that one of the larger players is allegedly embarking on this model as we speak.

The alleged company is Sidach.  Sidach has a distributor network through Tasmania and Victoria, and has been losing dominance  over the last couple of years.  The Directors are launching a new brand called www.vipsheds.com.au and according to the website

VIPSheds_Intro

 

Shedeye has confirmed that the site is owned and operated  by one of the founding directors of Sidach (and still remains a director).  Shedeye has also talked to a few of Sidach’s distributors and they have not been told about this new site and hence it is alleged by these distributors that Sidach is  about to become the shed equivalent of Cannibals.  It is all alleged of course, but the circumstantial evidence is compelling.

Taking a look at the Sidach site below you will see they are still actively seeking distributors (re-sellers / dealerships).

Sidach_Website

Will this business model work?  We are convinced if this model is employed by any Shed Wholesaler with an existing distributor network, that they will lose their distributor network, as shed wholesalers are continually trying to poach their competitors distributors (very actively).  If you take out the distributor network, this has the potential to take down a wholesaler.  The internet space is extremely competitive, and it makes entry into the online space challenging, meaning that it will take quite a while and expense to build a successful internet sales channel.

So what models does Shed industry employ.

Vertical integration

Vertical integration involves the  Roll Formers buying the wholesale distribution chains.

  • Roll Formers are the companies that take cold rolled steel coils and bend it into the required components for sheds, such as the C-Section or colorbond(TM) Sheeting.
  • Wholesale distribution chains are the well recognised brands that usually have many distributions that sell sheds under their brand.  The Wholesale distribution company provides the software to design the sheds, the engineering for the shed and holds the contracts with the Roll Formers and other component providers, such as the PA and Roller doors.

The major Roll Formers in Australia that have vertically integrated are

  • Ranbuild was purchased by Lysaght (Bluescope) in 2004
  • Fairdinkum Sheds, trading as AG&S Building Systems Pty Ltd was purchased by Stramit in August 2007
  • Garage World / Shedboss is owned by the same company as Fairdinkum Sheds.  Stramit, also known as Fletcher Building Group acquired the Morinda group (who owns both the ShedBoss and Garage World brands) in May 2008.
  • Titan Garages & Sheds is a privately owned family business that has been around since 1991.  The key difference is that Titan does their own Roll Forming and built this capability to support its distribution network.

 

Distribution Networks

  1. No Distributor Network.  This is usually pure internet plays and is common for garden sheds as the building of  Garden sheds is not complex.
  2. Affiliated Agent Network.  This is when the internet is used to generate the sales and much of the sales process and design is handled by the wholesaler.  The agent network is required to manage the building / site inspection .
  3. Non-Affiliated Agent Network.  This is for commodity based sheds like garden sheds and shed components.  This is when the product is supplied to many distributors across multiple manufacturers.
  4. Distributor Network.  This is where the distributor has a physical presence and usually a display.  The distributor deals with the sales process and the building process.  This is the most common model for custom sheds.  In this case the Wholesaler will provide any internet leads to the distributor for them to handle

There primary networks for custom sheds (C-Section) are

  • 4.  Distributor Network
  • 2.  Affiliated Agent Network and 4.  Distributor Network

The key for Wholesalers is that they derive their profits through volume, fees they put on top of each shed, margins on the components and rebates from the Roll Formers based on volume targets.  In this scenario the successful companies in Australia maximize either their margins per shed or the volume of   sheds sold.  Due to the rebates (more steel sold the better) volume is often a primary driver.   So it is a big risk for a Wholesaler to take on an Internet only approach as the building process requires local attention and they also risk not generating as many sales as using 4 and 2 as these capture more sales than an internet only channel.

As discussed the cannibalism model is when a Wholesaler tries to employ

  • 1.  No Distributor Network and 4.  Distributor Network / 2.  Affiliated Agent Network

There primary networks for garden and predefined sizes (not custom)

  • 3.  Non-Affiliated Agent Network
  • 1.  No Distributor Network

There primary networks for custom large sheds (structural steel)

  • 1.  No Distributor Network

Shedeye hopes that it has it wrong as this is not good for distributors trying to make a living in a very tough market.  Shedeye predicts that any company adopting the Cannibalism model will last 6 months and then bankruptcy will ensure or the company will be forced into a reversal of the model. Time will tell…

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33 comments

33 Responses to “Shed Cannibalism”

  1. The Shedder said...

    Great pick up Shedeye,

    Why would a large shed company decide to follow this path?

  2. The Roofer said...

    Who supplies their product Shedeye?

    You would start to be worried about payments in the future.

  3. Shedeye said...

    Shedder,

    It is our belief that a large company may do this if their sales are down, and any non QLD companies have experienced a couple of years of reduced shed sales.

    Shedeye

  4. Shedeye said...

    Roofer,

    They have used both Lysaght (Bluescope) and Stramit in the past. I believe they are now using both Apex and Revolution. A strategically smart move.

    Shedeye.

    Correction : They use Apex and Millform

  5. The Roofer said...

    “A strategically smart move.”

    For Sidach maybe – but now the cats out of the bag – maybe some of the rollformers will want more infomation on VIP from Sidach.

    What is the ASI’s view on this through Shedsafe etc?

    Is there only one person involved in this VIP cannibal company – and do the other Sidach investors know about it? Blood on Monday I think Shedeye.

    What can resellers and rollformers do to get more information regarding this. The sooner it is stopped the better.

  6. John said...

    I confirmed this using http://www.whois.com/whois/vipsheds.com. The story is factual.

  7. The Roofer said...

    Shedeye:

    Got this comment on my link to your article and is very interesting:

    Anonymous Tuesday, February 05, 2013
    All of the structural components for Sidach are supplied by Millform using mostly imported steel.

    The interesting part of that is Millform do not have any load tables for any of their products yet somehow Sidach are still Shed Safe accredited. The Steel Shed Group and ASI both know this and are refusing to answer questions on how this can happen.

    I have the details if you wish to contact me?

  8. The Roofer said...

    John,
    You’re right. Who’s Cassandra Dobson?

    A director of Sidach?

    Registrant ID: 354114
    Registrant Name: Cassandra Dobson
    Registrant Organization: Sidach National Pty Ltd
    Registrant State/Province: TAS
    Registrant Postal Code: 7250
    Registrant Country: AU
    Registrant Phone: +61.363346991
    Registrant Email: @sidach.com.au

  9. The Roofer said...

    Transferred from The Roofer: continued from comment 7.

    The reply to 7

    Anonymous Wednesday, February 06, 2013
    let me ask you this? Who the hell are you to dictate how a company runs it’s business and tries to make sales and survive in this tough environment. Have any of you bothered to speak to these companies? No i bet not or you wouldn’t be specualting like this perhaps you should go to these companies and ask for their side of the story. As for Shed safe accreditation you have to go through a rigorous testing program to get the accreditation did it ever occur to you that just because the information is not available to you that it was provided to Shed Safe and is covered by intellectual copyright?

    And then the reply to above:

    Anonymous February 06, 2013

    A company can run any way it wants to run, it just does not mean it is ethical. If they sell an area under an agency and then try selling direct to that area themselves through another company name then the agency has the right to know, and they would not be happy about it.

    Millform has tried to sell me their products for several years now and every time I ask for load tables, which they reply they do not have. If they did have them it would mean more sales for them so I would bet if they had them they would supply them.

    As for the Shed Safe accreditation being “rigorous”, who would know, I and others have asked them their process and they never answered. Maybe if you pay enough “membership” anything can happen.

    The Roofer:

    That’s it from me – but just one word from the information above:
    What is the feelings from ASI and Shedsafe on these comments?
    What is the feeling from Sidach existing distributors?
    Where is the statement from Sidach directors?

    A few answers here may solve some problems instead of comments on another webpage link.

  10. Shedeye said...

    Hi Roofer and other posters.

    This site will in no way tell anyone how to run their business. This industry is rife with secrets and backdoor parlor tricks. It is in the public interest for the facts to be made public. We have only presented the facts here.

    It is a fair comment in regard getting comment from Sidach, if they email shedeye I will call them and provide any clarification to the facts that have been presented on this site. If the facts are inaccurate then they have a full right of reply and an apology. I will also email the thousands of consumers that have used the site over the last few years and the 600 distributors.

    Sidach you have a right of Reply.

  11. The Roofer said...

    Any word from Sidach, Shedeye?

    Any word from Shedsafe, Shedeye?

  12. Shedeye said...

    Hi The Roofer,

    Sidach : No
    Shedsafe : No

    ……………………………

  13. Annon said...

    perhaps they do not read your site shedeye why do they have to ring you it is your story and site why don’t you get in contact with them

  14. Reg D Builder said...

    Wow, last I checked, we lived in Australia and any company was free to choose its own business model and marketing strategies.. Seems Sidach made the mistake of not including Shedeye in their strategic planning? What’s next, an irrelevant hamburger place down the road try’s to stop McDonalds from using Lamb in its menu? Declare your statistics on their sales, provide an example of a building not complying to relevant building code, i.e. validate your claims (maybe use spell check prior to posting though?)…I’ve marked my calendar to drop back here (I trust the trolling has stopped by then) in 6 Months for an update of your (dangerously unsubstantiated) claims. (Though i doubt i will see my comment listed)

  15. Shedeye said...

    Reg D Builder

    “Wow, last I checked, we lived in Australia and any company was free to choose its own business model and marketing strategies.”

    They sure are, even unethical models.

    “Seems Sidach made the mistake of not including Shedeye in their strategic planning? What’s next, an irrelevant hamburger place down the road try’s to stop McDonalds from using Lamb in its menu? ”

    Funny stuff. Shedeye would not be interested in being part of Sidachs strategic planning. At over 500 Visitors per day, I will let the public be the judge.

    “Declare your statistics on their sales.”

    Publish you sales and I will be very happy to provide them to the web.

    “Provide an example of a building not complying to relevant building code”

    The article never questions this, please take the time to read the article.

    “maybe use spell check prior to posting though”

    Done, thanks.

    “dangerously unsubstantiated) claims”

    They are facts and are substantiated.

    I wish you all the best and hope you change your mind on a completely unethical business model.

  16. Chris said...

    Widespan are doing this already with their offshoot Sheds and Homes and the various Metroll packages, with the exception of Endurance.

    This approach can give them a couple of agencies in the one town/area increasing the chance of them getting the sale. Unfortunately it is the poor reseller on the ground having to cut the guts out of their price to get the sale against, well, themselves.

    Win for the shed manufacturer, either way they get the sale without having to discount. If the reseller goes arse up they get to sell the area again, blaming the previous bloke of not knowing what they are doing. This has been happening for over 20 years by several companies.

    Not sure how they sleep at night

  17. The Roofer said...

    Anon:

    “I trust the trolling has stopped by then”

    So you’re not going to comment anymore on justifing an obvious cannibalistic business model.

  18. Shedeye said...

    Chris :

    To be fair, Widespan make all of this clear to their distributors, that is there is no hiding of what business model they employ.
    Also the Distributors for Widespan are not charged for their area (i.e. Sheds n Homes do not charge for areas).

    Shedeye’s big issue is with the transparency, and Widespan are clear with their different channels and believe each channel services a different part of the market.

    I will leave this to Widespan agents and Sheds N Homes distributors to comment.

    Shedeye

  19. Len said...

    Hi Shedeye,

    I think you guys have done a great job letting the cat out of the bag. Having been apart of sidach some years ago. I have seen their company slowly going down the the drain. They have been through suppliers like metroll, lisaght, stramit now there going cheap and nasty with imported rubbish. To do that to their distributers ( who have paid around $10,000 ) to be apart is disgraceful, I think what there plan is, as its hard legally to get rid of the distributers is to get them off side so they ( the distributers pull the pin)
    They all have families to feed and school! Abit of luck they will shoot them selves in the foot and go bust.
    Thanks Len

  20. Aussie Consumer said...

    I think it’s appalling that a company that used to pride themselves on selling quality all Aussie products can not only choose not to support the Aussie steel industry but to also choose to turn their backs on their own Aussie distributors. We all know in these difficult times we should be supporting our local economy and not adding to the problems of unemployment etc in our own country. I feel for all the Sidach distributors who I’m sure will eventually have to deal elsewhere, or worse have to close their doors. Shame on you Sidach.

  21. Shedder said...

    Who’s the Australian body that looks after the shed industry?

    The control to prevent this sort of “cannibalism” is already in place – it’s called economic failure. What worries me is a national shed company can be approved by a ASX listed company (BSL) body called Shedsafe (through ASI) that has nothing to say? Is it all about the money.

    This is only the start of the decline of the ASI run Shedsafe accreditation when their income flow gets reduced to a trickle.

    Sidach are in charge of their own money, they can do what they want, but if it is stamped for approval by a so called Shedsafe Accreditation program, then they too are tainted by the rubbish displayed currently above.

    Shedsafe should respond to this business model – and can Sidach use the new VIP Sheds as Shedsafe acredited manufacturer.

    If you have any enquiries about these questions – ask the CEO, manager, director etc of Shedsafe here: shedsafe@steel.org.au

    Come on ASI and BlueScope – tell us the answers?

  22. Chris said...

    Waste of time asking Shed Safe anything as they do not reply.

    I have been asking questions of the manager of Shed Safe since June 2010 and have even sent the questions to the general Manager of the ASI. They have not answered one question.

    I have even pointed out one of their accredited members could not possibly meet “their standards” or that of the Australian Standards or the BCA. Still nothing.

    Nothing to hide?

  23. Jim said...

    The Sidach reseller in Launceston (Sidach home town) shut his doors on Thursday 14th of February 2013.

  24. Cat said...

    Your facts are skewed why then in Tasmania is there ads running by the Sidach Resellers advertising VIP Sheds. How confusing for a genuine shed customer looking for advice and seeing contradicting info on a supposed unbiased shed site. You say the industry is full of secrets and backdoor parlour tricks and how does your stroy help that when it doesn’t even tell the truth or a complete picture as I see no mention in your story that you spoke to the company you are alleging behaviour about

  25. Chris said...

    Another example of cannibalism? Look up National Sheds (www.nationalsheds.com.au). They display the ShedSafe logo but do not appear on the ShedSafe website.

    Subsequent inquiries reveal they obtained ShedSafe accreditation under Fielders Endurance engineering. Exactly the same products retailed under a different name in the same areas, no disclosure.

    You have to love this industry. I am so glad the Steel Shed Group is out there “upholding the standards”. All they have done is legitamised the race to the bottom. Thanks guys!

  26. The Roofer said...

    So Shedsafe is a privately owned body – run under the Australian Steel Institute ASI and then in the sub-group called “The Steel Shed Group” who have many members. But under this body is the Shedsafe Group – mainly run by a Queensland based group of people sprouting the importance of this brand? What are they talking about – only a brand – pay lots of money and get our stamp.

    Well the reality has finished for the Shedsafe mob, it is nothing but a self promoting group of people justifing their own existance. It has no relevance in the real world of shed design, engineering, construction, or safety. The biggest problem is once certification is given by Shedsafe, the money banked and the LOGO stamped – they leave. They don’t answer any questions, they are not a government body with transparency, they are not liable for any structural or personel injury to anyone that they endorse.

    The original idea by the ASI was very good and could have even been recognised by industry standards – ASI, BSA etc – but now with only money from accreditation that supports them – this little group may well dissappear. ASI should take responsibility for letting this sort on “illegal” misrepresentation by the Shedsafe Group by inferring accreditation is some sort of Government standard – which it clearly not.

    Where is there commitment to shed workplace health and safety during construction. Sorry – they don’t have it.

    ASI – you need to clear this Shedsafe mess up before it comes back to bite you in a big way. Think insurance.

  27. Shedeye said...

    Cat, are you affiliated with Sidach?

    ‘Your facts are skewed why then in Tasmania is there ads running by the Sidach Resellers advertising VIP Sheds.’

    Given that we have now talked to a number of distributors and they were all clueless of VIP sheds, I am confident of the facts. If this is the Launceston distributor I don’t think it counts as Sidach National have taken back the distributorship.

    I am trying to find the the Sidach Resellers that are advertising VIP sheds. What medium are they using? I will find it and publish it on the site.

    ‘How confusing for a genuine shed customer looking for advice and seeing contradicting info on a supposed unbiased shed site.’

    What exactly is the contradicting info? How is the site biased?

    ‘You say the industry is full of secrets and backdoor parlour tricks and how does your stroy help that when it doesn’t even tell the truth’

    How is this article not factual? What is not truthful?

    ‘or a complete picture as I see no mention in your story that you spoke to the company you are alleging behaviour about’

    Sidach have been emailed this link, twice now, and have been asked for their reply.

  28. doc dogg said...

    Hmm, I wonder if this has anything to do with the fact that Sidach wont reply to my emails about a quote they were writing up for me. I got halfway through discussing options with them and then they stopped replying to me. I thought they might have shut up shop, but perhaps they are going to shunt me over to VIP Sheds when it is ready.

  29. doc dogg said...

    Here is an update for all.

    VIP Sheds are selling sheds on ebay. In the photos it shows a shed pack wrapped in Sidach branded plastic. Also the email address used to reply in ebay is from Sidach, so it is definitely a Sidach company.

    I made some enquiries into the materials used in the sheds, The corrugated cladding on the roof is .42 bmt with .35 bmt wall sheets. The purlins and wall girts are tophat and you can’t pay to upgrade them to c-section.

    So looks like they have gone from selling what seemed like a good quality product at a good price, to average quality goods at a cheap price just like everyone else(I assume paid up-front in-full if selling over Ebay).

    I’m a bit disappointed…

  30. Reggie said...

    I can also let you know that the Sidach Dealer in Hobart is no longer working for Sidach. She has closed down (after taking my deposit)and is not returning calls. Can Sidach be held liable for the money I have lost?

  31. Peter said...

    As of today I have resigned as an agent for Sidach and yes vipsheds are managed by the same directors as Sidach. Let me say that they are far from nice to deal with and for the past nine months as their Albury distributor I have found the people at Sidach Headquarters arrogant and frustrating. If the balance of there agents are as ticked off as I am they won’t have them for long. PS know any shed manufacturers looking for an Albury agent??

  32. Simon said...

    I didn’t do enough homework on VIP at all, after reading your article, and now dealing with them, on a shed I am still waiting for….. 10 weeks later, they are unprofessional and unreliable. Do not use them!

  33. Wallace said...

    Another post on Friday said the court had ordered him back in and the euth
    date is November 20 (??). His attorney will appeal.

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