Previously known as Audio America — a distributor partner for Nationwide Marketing Group — CEO Jonathan Elster talks about the decision to rebrand as Next Level Distribution, what that means for Nationwide’s network of dealers, and how that’ll impact business moving forward.
Rob Stott: All right. We are back on the Independent Thinking Podcast and I’m thrilled right now to be joined by a guy that’s been a little busy this year. 2020 has been a fun year for Next Level Distribution, and Jonathan Elster, CEO of Next Level, appreciate you. End of year here, I know this is a crazy time for you guys. So I appreciate you sparing a few minutes and hopping on the podcast and chatting with us.
Jonathan Elster: Yeah, Rob, it’s pleasure to be here. Thanks for inviting me. I’m looking forward to our conversation.
Rob Stott: Yeah, absolutely. So, before we dive into Next Level, because I know that name is a new name to people in this space. They may know the previous iteration of Audio America. But before we get into the rebrand, I want to start with you personally. Give us a little bit of a background on your path to Next Level and kind of your journey through the distribution side of retail.
Jonathan Elster: Yeah. So I’ve been in distribution now about 25 years. It feels like a little bit longer, but it’s been an amazing run. I started back in ’94, ’95 in sales for another distributor. I spent, what, 18 years there, really learned a lot about overall distribution. I served in many capacities, but mostly sales and marketing. So spent 18 years at that company. I had a great run, amazing organization, a lot of international distribution as well. More on the computer side versus the consumer electronics side. And came on over to Audio America about eight years ago, and it’s been amazing. Very different. When I say different, smaller company.
I was with a public company in my prior life. So nice to be with a family owned organization. Significantly smaller. And it’s been amazing. Really has been. The growth has been tremendous. The team that I’m able to work with on a daily basis is amazing. I’m all about culture. So I’m all about, we have numbers to hit, we have goals, objectives, of course. But at the end of the day, we want to have fun and what we’re doing and that’s a main driver within the organization and it’s been incredible. We’ve seen a lot of changes. Distribution is always changing, but within the company itself, we’ve had a lot of changes over the last several years. We’re still that regional distributor. However, we have that national footprint from a distribution standpoint.
Rob Stott: That’s awesome. And you mentioned that time in kind of this career history and whatnot, it feels like 2020 has been several of those years in one. I know it’s been a bit of a challenging year, so this feels like five years in one, the way it’s gone. But it’s been a little bit of a different year this year.
Jonathan Elster: Yeah. It’s been an interesting year. Difficult for a lot of people, both personally and professionally. So we’ve tried to do as much as we can for, number one, our employees, of course, to make sure they’re safe, they’re in a safe environment. We’ve been fortunate enough where we’ve been open since day one. As a distributor, we’re shipping boxes. Of course we accommodated where we had several employees, maybe 50 or so out of the 120, that worked from home. Again, our IT department was able to get them set up very quickly. But other than that, I’ve been in office since day one. However, of course we take every necessary precaution. But yeah, it’s been a challenging year, but a lot of positives have come out of it. We’ve become closer as an organization. We’ve gotten closer to our customers in a weird way since we’re not in front of them. But overall, it’s been a tough year, but again, with a lot of positives again that have come out of this. And so far we’re going to end on some really strong numbers.
Rob Stott: The interesting thing to think about too, is that distribution at its heart is, I mean, it’s a business of getting product to and from places, and at a time where people were asked to stay still. So, I mean, not to say you fly in the face of the stay-at-home orders and stuff, but that is your businesses that you’ve got to get to and from places. I mean that had to present some pretty unique challenges for you. Or did it present some pretty unique challenges for you guys as a company and for the distribution space?
Jonathan Elster: Absolutely. There was initially, providing a lot of networking product, more and more people are working from home. So networking is a big category for our customers. And obviously the consumer demand on networking product was huge. So we were able to secure a significant amount of inventory on networking products to provide our dealers on the IT side. Laptops, they were going fast, but we were able to provide laptops. And then of course people were staying home. So the whole home entertainment. Sports were canceled initially. People were staying home. The people that usually would spend money on going to games or going to live events were now wanting that experience in their home. So we’ve been fortunate enough to take advantage of that.
However, on the flip side, we made it very easy for our customers to procure product. We had curbside delivery, we had local delivery, we have 24 hour pickup at all seven locations. So dealers are able to come to our locations in the middle of the night, before work, after work, before church, after church, whatever it is. So we made it as easy as possible for our customers to be able to get product because most of our dealers relied very heavily on distribution. They want that just-in-time inventory feel, and that’s what we provide as a distributor. So we were able to accomplish that.
And there were other dealers that were really challenged. They were closed. They didn’t have the financial resources to pay their bills, quite honestly. So what of course we did, we stepped up, we extended their terms. Our customers that have supported us for years, we’ve been there for them, we continue to work with a lot of them. Because they’ll pull out of this, they’re strong and they’re survivors, especially in this industry. So again, it’s really rewarding. The team has worked really hard to make sure we take care of our customers and of course take care of our employees.
Rob Stott: Any unique challenges… Obviously as you’re going through something like COVID and everything, we’ve all faced. It’s been unprecedented, unique to say the least. Is there anything… You try to, forecast isn’t the right word, but you try to prepare for anything that you could face, obstacles, hurdles, things like that. Anything that sort of caught you guys off guard that you had to tackle over these last 10, 11 months?
Jonathan Elster: I would say obviously inventory in certain categories. We didn’t foresee the allocation issues that we’ve seen. Luckily we have extremely strong vendor partners that we’ve worked with very closely. So definitely allocation of inventory has probably been the biggest challenge, trying to make sure we can support our dealers. So that would be one of the biggest challenges. And of course the next thing is we’re so used to being in front of dealers. We have inside and outside sales reps in all of our territory. So we like that.
We’re not just salespeople that sit inside a room and make calls. Again, that’s part of it, of course, but it’s getting in front of the dealer. So we had to adapt, and so it’s more video calls, more virtual trade shows, kind of like Nationwide has done with PrimeTime, the success that was fantastic. But we had to adapt to those types of things. And we do a lot of Zooms on a daily basis with our customers, and in a weird way, like I said earlier, we’re getting closer to our customers, because we’re seeing them every day, literally on Zoom. So again, it’s been interesting to say the least. And we’ve been very successful and our customers have appreciated the things we’re doing for them to go that extra mile.
Rob Stott: Yeah. Well, it’s funny, you mentioned it’s kind of very similar, I think to… Nationwide we have obviously our field team, the member support managers that go out to the regions and talk to the dealers that are in their network that they support. And I’m sure it’s a very similar sort of situation that they’re in, where they’re used to going to these retailers stores and talking directly with them and getting face-to-face. And you hear so often in this space about just the importance of a handshake and getting to see someone. But awesome to see obviously too that technology is something that can support this kind of space and the work we do on both sides, distribution and from a member buying group like Nationwide to still be able to support these members and these retailers, despite all these challenges that they’ve been going through.
And I want to circle back. You mentioned inventory, that’s obviously been a big thing that our retailers, our members have struggled with and they’re looking for product, especially during these, as we talked, during the holiday times. What are you seeing from a distribution side? Is it getting better? Is there a light at the end of the tunnel as far as these issues of getting access to products?
Jonathan Elster: So I think certain categories are more challenged than the other. You look at our car audio business, as we refer to as 12 Volt, which is our legacy business from 25 years ago. It’s still 10 to 15% of our business. There’s major allocation issues in that channel of business. So that’s something that we don’t see the flow until maybe February, March. So that’s become a big challenge. However, on the flip side, on the video side, we’re seeing improvement every day with suppliers like LG, Samsung, and TCL, we’re seeing the flow of inventory get better.
On the receiver side, it’s been a challenge getting audio receivers. We’re hearing January, February should pick up. So overall it’s improving, but again, we’re reaching out, we’re working extremely closely with our suppliers, whatever it takes to get product. And again, I think by January, February, things should clear up a little bit. But again, we continue, our buyers, like I told my buying team yesterday on a call, they’ve done incredible things by securing product. If they can’t get it from one brand, get it from another brand. So kudos goes to my purchasing team for what they’ve been able to do in a very difficult situation.
Rob Stott: Yeah. Flexibility, whether it’s clearly on the distribution side, as you mentioned, but retailers as well, it’s been a time of needing to adapt and just be flexible and willing to adjust on the fly. So like you said, I’ll second it, kudos to everything that’s been happening.
Jonathan Elster: For us on the… I’m sorry to interrupt. The biggest thing we’ve been able to do from an inventory standpoint is we want to make sure we’re taking care of all of our customers. So we’ve been very clear, if we get X amount of units in, that doesn’t all go to one customer. I mean, we want to support our larger customers of course, but we have thousands of dealers that we work with. So we’ve put maximum number of units sold to each customer because we want to take care of that smaller customer who he or she has a smaller business. We want to make sure we support them as well. So that’s been a challenge at time with sales reps, they’re aggressive, they want all the inventory. But at the end of the day, I want to support more than one customer. So we’ve been able to do that. And again, there’s been some hiccups along the way, but we feel like we’ve been able to support a lot of customers in tough times.
Rob Stott: And I think that’s a message that Independents, feel like backs are up against the wall a lot of the times against, whether it’s just others in their areas. Big box versus Independent and kind of how they see things going. But certainly something I think they would appreciate hearing, for sure. Are there any changes that you’ve noticed that you think will sort of be… It could be as simple as, you mentioned the Zoom meetings and being able to meet with your dealers kind of virtually. Are any other areas where you think there’s sort of lasting change that we’ll see because of this, everything we’ve gone through?
Jonathan Elster: I do think there’s going to be the overall, your travel budgets will definitely go down. I don’t think we’ll be traveling as much to visit customers, at least outside of the territory. I do think the whole trade show business will change. Quite honestly, I’ve always been a huge fan of the PrimeTime events. Again, I don’t say that because we’re talking to you. Trust me, I tell everybody they’re amazing events because these are buying shows. So hopefully we’ll go back to normal with that. But I think overall, I do see change from that standpoint. I think we’ll see less of those shows. People will rethink the spend because those shows are awfully expensive.
But the one thing we do want to get back to is, in our local territories, is getting in front of these dealers, building those relationships. That’s the most important thing for us. And again, obviously long-term, people will be working from home. So we have more working closer with our customers or to help them support the end consumer on solutions such as Office in a Box. So we have solutions we’ve come up with that make it easier for our dealers when they’re selling to their customer. So that’s been a big win for us and our dealers appreciate it. Try to help them create solutions versus just selling one item.
Rob Stott: No, that’s awesome. And certainly, the getting back to in-person is something I know we’re all looking… A lot of pent up wanting to get out of the house type of feelings, for sure. So I know the feedback, you mentioned PrimeTime, the feedback on the virtual I know has been very positive and something I know is likely to kind of stick around in some form or fashion. Obviously we want to have some in-person angle to these meetings going forward, but the fact that we can pull off a virtual show and have it still be engaged with, a platform engagement I know is something that a lot of the people that worked on that were proud to see and want to at least have some sort of hybrid feel to kind of what happens going forward.
Jonathan Elster: Yeah, we were quite skeptical. I’d been involved in a few of them and I wasn’t sure what to expect and it actually went off really, really well. We were very impressed. We got a lot of great feedback. We talked to a lot of customers. The team that we work with from Hank, Lee, Randy, and everybody, they were tremendous throughout the whole process. So actually was, again, going into it very skeptical. It actually worked out really well. My sales reps wrote some nice business. They were happy. So kudos to whoever came up with the concept, and the technology was fantastic.
Rob Stott: I think I’d be lying if I didn’t say we all were a little… You don’t know what to expect with these virtual events. And I know something else you combat is we’re doing this over Zoom, but kind of that Zoom fatigue. So you don’t know what’s sort of the feedback’s going to be, or the level of engagement. But no, it was all pretty cool to experience. And like I said, something I think we’ll kind of see in some form or fashion moving forward. But I feel like we’ve buried the lead here because when I reached out, we wanted to talk about the rebrand. And that’s obviously been the big news for you guys here, September, October timeframe. Switched over from Audio America to Next Level Distribution, and I want to dive into that with you. We’ll start with sort of the desire to rebrand it, as it were. So let’s start there with kind of what led you guys to want to rebrand and take on this new name of Next Level distribution?
Jonathan Elster: Yeah. So, we’ve been Audio America now for 24 years. And like I said, I’d been with the company eight years and audio is an important part of our business. Of course it always will be. But we’re not just an audio company. We’ve changed, we’ve matured, we’ve gotten into other categories. So that’s what really drove the name change, excuse me, to Next Level Distribution. And Audio America will always stay with us, again. But now we’re operating under the Next Level Distribution. So, we’re the same company, like I said earlier, we’re still that regional touch, but we have a national footprint. So now we have additional locations. We’re opening up in Dallas, Texas on January 1st. We just enhanced our website, best-in-class website, incredible what the new website does.
So we’re in other categories. Today, audio, again still important, but from video, automation, networking, IT products. So we don’t want to be pigeonholed just as that audio company. I’ve spoken to vendors over the years and said, “Well, should we be talking? Aren’t you just an audio company?” And I heard that one too many times. So we felt like we’re Next Level Distribution. We’re really excited. The team is really excited. And I couldn’t be happier with the transition this year. Again, a lot of people said, “Hey, do you want to wait?” No, we felt like this was the right time to do it. We’ve expanded our business. As you’re aware, we did an acquisition back in February. That integration has been fantastic. We acquired 40 incredible people, three locations in the Midwest, in Chicago, in Minnesota, Wisconsin. So again, we’re a little bit bigger. We’re stronger. We have additional brands that we’ve brought on board. But overall it’s been an incredible integration. The name change has been a huge win. We’ve gotten great feedback from our customers. But again, we’re the same people just branding ourselves as Next Level Distribution.
Rob Stott: I bring kind of a unique perspective to this because, as you know, you and I go back a little bit prior to my Nationwide days. And being part of a media company, and then even prior to that, working in editorial, have seen a couple of rebrands of whether it was a publication or website. I know what those meetings are like and sort of what the creative process that goes into that. So I want to kind of get your take on what were those talks like as you’re coming up with a name, coming up with a look and feel. What was it like to go through that process?
Jonathan Elster: Luckily, we had a great team. It was myself and six others that literally met every week. First of all, coming up with the name, coming up with the logo, working with an incredible marketing company down in South Florida. So those were interesting long meetings. A lot of differences of opinions, but that’s what we wanted. We wanted to throw everything against the wall and see what made sense. At the end of the day, everybody was really proud of what we’ve produced. But a lot of support from the entire company. Of course, everybody’s really excited about getting all the new swag, the sweatshirts, the hats, and all that stuff. That was kind of cool. New business cards. But no, we had some incredible meetings. Again, the team worked really hard to make it seamless.
The biggest thing was we don’t want to stop our business. Even from a business perspective, we are still Audio America. However, the DBA is Next Level Distribution. So even from a credit app standpoint, from vendor contracts, we wanted to make that seamless, which is why we kept as a corporation, it’s still Audio America, again doing business as Next Level Distribution. So we’ll continue to brand under Next Level. We have a Next Level Innovation company now that we’re exploring new products, new categories under other brands. So a lot of cool things going on behind the scenes for ’21 and ’22.
Rob Stott: And without diving… Obviously you don’t want to give away anything that you guys might be doing or what might be coming, but what is sort of the impact from what you guys can do as Next Level that maybe you couldn’t just as… You’ve already touched on it a little bit, but maybe dive a little deeper on what might be possible as Next Level, as opposed to just Audio America.
Jonathan Elster: Yeah. I think it’s mostly around categories, categories of products. Again, the days of just selling audio, we’re in so many other categories right now, and so many of our customers that we work with. So we have four channels of business. We have our core custom install business. We have our car audio business. We have our buying group business, which is obviously under for the Nationwide Buying Group. And then we have our e-com fulfillment business where we ship direct to consumer on behalf of large multinational customers, roughly about a million orders a year.
And what we’ve seen happen is we have experts in each channel of business, but it’s not just one category. Now it’s multiple categories across IT, across consumer electronics. We have some home office products. We have some small appliance products, so allows us to get into other categories. And again, it made it a challenge with Audio America. And now with our new website, like I said earlier, it’s incredible. Makes it very easy for our dealers to access product, buy product, pay for product, whatever they want to do within our new website. So really excited about that.
Rob Stott: Yeah. I think you’ve kind of dispelled any questions that members might have about this, but as far as doing business with Next Level, is it any impact on Nationwide members as far as how they work with you guys or anything like that that they’d have to consider?
Jonathan Elster: I think from a day-to-day mechanical standpoint, no. Same sales rep, same credit application that we have in place, same agreement that we have in place. But the benefits are we have additional distribution centers, we have additional brands, additional categories. We have that dedicated sales force focused literally solely for your members. Just in time inventory. So now we have seven distribution centers, seven 24 hour pickup locations. As I mentioned, Dallas is opening up next month. So again, from mechanical, again, no major changes, just additional resources and services that we’ll be offering. And of course, more to come that maybe we speak about on the next one. But again, that’s really the major change for your members.
Rob Stott: No, that’s awesome. And I see what you did there, a little plug about future episodes of the podcast. Now I got to invite you back. So that was very smoothly done.
Jonathan Elster: Of course. Looking forward to it.
Rob Stott: We will certainly have some fun. But no, I think it’s always cool to see rebrands happen. And obviously the outcomes… You kind of, as you’re going through the process, I know internally the nerves about, “Well, how will it be received? And, “Did we do this right? Are we thinking of everything?” They’re very interesting processes to go through and I know how difficult they can be. So just again, kudos to you guys for pulling it off. I think it all looks great. You mentioned the website, just a phenomenal website to dive around and kind of get to know you guys a little bit more and it’ll be cool to kind of see where you have it going. As you mentioned, a lot of different ways it can go and things in the works. So it’ll be cool to follow going forward. And I do, I look forward to having you back on, so we can plan that out for early next year.
Jonathan Elster: I’m looking forward to… We’re optimistic 2020, like we said, has been a challenging year, but we’ve had some… Last four or five months have been incredible. We’ve been very fortunate. Again, everybody’s working extremely hard to be able to take care of our customers. And we expect big things in 2021. I mean, we’re extremely optimistic about the growth with all four parts of our customer base. So excited about the next several months. We still have, what, 17 selling days left this month. So again, it’s been an interesting year, but 2021 is going to be an incredible year for all of us in the channel, I think.
Rob Stott: That’s awesome. And fingers… Well, I’d say fingers crossed, but I think we’re, like you mentioned, we’re on a good path and it’ll be really fun to follow as we flip it and say goodbye to 2020 and get into this new year. But Jonathan, I appreciate the time and awesome diving into not even just the rebrand, but everything else and kind of getting a glimpse at how you guys have navigated this interesting year, to say the least. But appreciate it. And like you said, look forward to having you back.
Jonathan Elster: Yeah. Thanks so much. I appreciate it. I look forward as well and happy holidays and speak to you soon.