Sidach South Ripped Off Customers

Posted on : June 5, 2013

Approximately 12  customers have had money stolen

Approximately 12  customers have had money taken and have not received a shed – Shedeye has been personally contacted by a few and this has seriously affected some people.  Some people have taken out loans to pay for the sheds, paid in full, and will now be left with the sting of repayments.

 

A call out to the Shed Industry to assist the victims

Any shed company or rollformer that aids these victims, with the intention of minimising or neutralising the loss of the consumers, will have free advertising on this site for a year, and the satisfaction that they have helped people out in need.  I will provide a list of the shed sizes and the loss made on each shed next week and who ever can do the best deal will get the advertising.

 

A call out to the any victims that need help getting a Shed

Any person that has paid money to  Sidach North or Sidach South and has not received a shed, can you please contact us using this link.  I hope that the industry will help, as there are so many great players in this industry and this type of behaviour is simply wrong.

 

Some more background

How does this happen when it is backed by a big name in the industry?  There are a few models that are operated in the Shed Industry, and the Sidach model was to brand their distributors with their name even though they are legally separate entities.  There is Sidach National and then in Tasmania there were three distributors that were contracted to provide Sidachs sheds.  Sidach makes money in a number of ways, from a booking fee when the order it place, and markup on the shed and components and rebates from the rollformers.

As seen below these companies are all branded under the Sidach brand.

 

Sidach_South

 

It is clear from the below newspaper excerpts that Sidach is very keen to make it clear that these stores are independent, what they forgot to mention is that they were all branded under the Sidach brand.  Why Sidach  has not simply compensated these victims is completely bewildering to Shedeye.

sidach_national_Onesidach_national_Two

 

The are a number of stories behind this tragedy, this can not become another Shed Warehouse or McFadden Kit Homes.

Much more to come soon…

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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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Shed Distributor Wars

Posted on : February 11, 2011

Who are the market leaders in Australia by number of Shed Distributors?

The Shed Distributor Leader Ladder (by number of distributors per state)

Australian Capital Territory (ACT)

  1. Fair Dinkum Sheds, Ranbuild and Total Span
  2. Others

A three way tie for first place in Canberra.  Commercial land is prohibitively expensive and is as rare as hens teath in the ACT so most of the distributors set up camp in nearby NSW border towns of Queenbeyan and Murrumbateman!

The top 3 have most of the market!

New South Wales (NSW)

  1. Ranbuild
  2. Fair Dinkum Sheds
  3. Wide Span Sheds
  4. Capital Steel Buildings
  5. The Shed Company
  6. Garge World
  7. Allgal
  8. Titan
  9. Totalspan
  10. Sidach Sheds
  11. Sheds Online
  12. Metromax
  13. Others

The top 3  have over 56% of the market.

Northern Territory (NT)

  1. Ranbuild
  2. Sheds Online , Sidach Sheds, Fair Dinkum Sheds
  3. Others

Queensland (QLD)

  1. Ranbuild
  2. Titan
  3. Fair Dinkum Sheds
  4. Totalspan
  5. Wide Span Sheds
  6. Garge World
  7. Tuff-Span
  8. The Shed Company
  9. Sheds Online
  10. Australian Garages and Carports
  11. Capital Steel Buildings
  12. Others

The top 3 have 47% of the market.  QLD is clearly a very mature shed market as is evident by the very equal distribution of distributors across the top half a dozen.  When you take a look at the origins of many Australian Shed Companies, QLD is where it all began.

South Australia (SA)

  1. Fair Dinkum Sheds
  2. Ranbuild
  3. Wide Span Sheds
  4. Garage World
  5. Sidach Sheds
  6. Others

The top 3 have over 75% of the market.

Tasmania (TAS)

  1. Sidach Sheds
  2. Fair Dinkum Sheds
  3. Ranbuild
  4. Widespan
  5. Others

Victoria (VIC)

  1. Sidach Sheds
  2. Ranbuild
  3. Fair Dinkum Sheds
  4. Totalspan
  5. Wide Span Sheds
  6. The Shed Company
  7. Capital Steel Buildings
  8. Garage World
  9. Sheds Online
  10. Others

Top 3 have 74% of the market.

Western Australia (WA)

  1. Ranbuild
  2. Wide Span Sheds
  3. Fair Dinkum Sheds
  4. Garage World
  5. The Shed Company
  6. Sheds Online
  7. Others

There is some real competition in the distributor sector, even when you consider that the big guys own quite a few of the biggest players.  There is clear domination in some state, with others laying the battle ground as brands extend from their founding locations, it is starting to heat up!  Watch this space.

Who exactly are each of these distributors?

Ranbuild started small in 1949 and was then know as the R & N Building Company, and was based in Newcastle, NSW.  Ranbuild was purchased by Lysaght (Bluescope) in 2004 and is now the biggest wholesaler group in Australia.  Ranbuild is a powerful brand in the Shed industry and it easily identified by the muscle bound builder.

Fairdinkum Sheds, trading as AG&S Building Systems Pty Ltd was purchased by Stramit in August 2007.  Fairdinkum Sheds is the second largest wholesaler shed group in Australia and it too has a very powerful brand, the slogan “Get it into your head, get a Fairdinkum Shed” is a classic!  Fairdinkum sheds operates in Australia, New Zealand, the United Kingdom (trading as Contour Steel Buildings) and South Africa.

Totalspan is part of the Versatile Buildings group and is a major player in the shed wholesaler game.  They have numerous distributors spread throughout Australia and NewZealand.  The Versatile group also owns Spanbilt Sheds.  Totalspan sources its materials from Lysaght (Bluescope).

Wide Span Sheds is another big player and was founded in Queensland (most of the shed companies in Australia started in QLD, see why here) in the year 2000.  They have an even spread of distributors around Australia.  Widespan Sheds sources its materials from Lysaght (Bluescope).

The Shed Company is a shed wholesaler and distributor franchise system founded in late 2004, effectively the same as most of the other players with more discrete boundaries for its distributors.  The Shed Company sources its materials from Stramit and has a good coverage of distributors across Australia.

Garage World / Shedboss is owned by the same company as Fairdinkum Sheds.  Stramit, also know 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.  Titan is unique to its peers in that it has complete verticle integration in the shed supply chain, being the distributor, wholesaler and manufacturer.  They are very strong in QLD and are starting to make inroads into other states.

Sidach Sheds is another privately owned family business that started from the opposite end of the country, in sunny Tasmania.  The have grown aggressively and dominate Tasmanian and Victoria.  They currently source their materials from Lysaght (Bluescope).

Metromax is one of the few distributors that does not pay ball in the rollforming arena of Lysaght and Stramit.  The have a “close association” with Metroll and source their materials from them.  They don’t have a great deal of distributors, however they leverage Metrolls network of sites.

Tuff-Span is a player in the QLD market and unlike their competitors they deal with Fielders to source their materials.  Fielders is a small player in the shed market relative to its massive peers, however Fielders does have is own brand called Fielders Endurance Sheds & Structures.

There are still a few missing from this list, they will be added shortly.

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The Shed Duopoly Monopoly

Posted on : January 27, 2011

Shedeye has conducted analysis[1][2] on Australia’s Shed Distributors, and their link to wholesaler’s and manufacturers.  The results are surprising and show that while there is a good degree of competition in the distributor[3] and wholesaler[4] sector, the manufacturer [5]sector is exclusively tied to Bluescope as a source of their steel.

The graph below shows that Bluescope has dominance on the shed distribution chain and hence will have significant pricing power.   The “Unknown” comes from ambiguity in some of the manufacturer company reports as they source some of the Cold Rolled steel from Bluescope, however it is not clear how much they source from China or elsewhere, it could be the “Unknown” quantity falls to Bluescope.  As you can see there are few distributors that do not directly or indirectly source their products from Bluescope.

This graph shows that even in Roll Forming Bluescope has significant market dominance across the distributors of Australia.  This again shows that the competition is almost limited to a duopoly and the barrier to entry is very high due to the vertical integration of the supply chain and the high capital costs associated with this process.   Titan Sheds and Garages has made successful inroads into this arena, using its distributor network in QLD and NSW to successfully become a specialized shed roll former in their own right.

This looks much more promising from a competition point; however when you take a closer look into who actually owns the largest distributors, some layers of the onion start to unfold…..  Stramit owns both Fair Dinkum Sheds and Garage World, while Lysaght (Bluescope) owns Ranbuild.

This shows that the independents own just less than 50% of the distributor market and the two big players have slightly over 50%.

An extremely interesting market when you look at this.  Bluescope has vertical integration from the production of their Cold Rolled Steel, Roll Forming to distribution.  However, nestled in each stage of the supply chain they have a wholesaler division that is servicing other companies.  A very interesting and a very powerful pricing position indeed.  Micheal Porter would be proud of Bluescope for ticking off each one of his competitive advantage points!

There are quite a few things in Bluescopes favor regarding price rises and sheds

  • Sheds are still a multiple cheaper than the substitute products of brick and steel.
  • Steel is well suited to Australian climate
  • The supply chain with steel sheds is sophisticated and impressive
  • The simplicity of erection is hard to beat and results in quicker time to completion.

Does this indicate that sheds are more expensive than they need to be?  Are Steel price rises that are being passed onto the distributors reflected in the international steel prices and even iron ore spot prices?

Do you want more detailed analysis than this report provides?  Shedeye has a detailed report that gives state and geographical information on the shed distributor market in Australia.  Please contact support@shedeye.com.au to request this report.


[1] This report is based on the number of distributors and may not accurately reflect true steel volumes.  For example one distributor may be selling as much as 3 distributors by volume.  Comprehensive steel volume data is not available and is very difficult to ascertain accurately.  That said analyzing the links in the supply chain to distributors does give you a very good idea of market control and dominance.

[2] This applies only to custom designed sheds; prefab sheds such as Abasco and Spanbuilt are not included in the analysis.  Even though they do represent a good percentage of Shed sales in Australia.

[3] Distributors are the retail outfit of the Shed Wholesalers.

[4] The Wholesalers are the Brands or buying groups (Fairdinkum, Ranbuild, Garage World, Sidach, Titan) and they handle the sourcing of shed components, ordering from the manufacturer, the software and engineering.

[5] Manufacturers are defined as a company taking the raw Cold Rolled Steel product and Roll Forming it into a product.  Also commonly called Roll Formers.

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