Making It in Mexico: T&P Refrigeracion Succeeds in Two-Step Distribution

As a contractor, Tadeo Peralta Johnson often found it difficult to find the right HVACR parts and supplies for his business. Tired of running around looking for parts in his home city of Hermosillo, the capital city of the Mexican state of Sonora, Peralta decided to do something about it and opened his own distribution business. He convinced his brother-in-law, Oscar Tapia, to join him in this venture.

Seventeen years later, the wholesale distribution business that the two men created, T&P Refrigeracion, has six branches in four states throughout northwestern Mexico. Peralta and Tapia, who are partners in the business, have recently opened a call center to reach customers throughout Mexico. As the business flourishes, they want to show others, especially HVACR manufacturers, that two-step distribution can work as effectively in Mexico as it does in the United States.

Peralta readily admits that he and his brother-in-law were an unlikely pair to start a wholesale distribution business. While Peralta was a contractor, Tapia worked for the Sonoran government — his job, ironically, was promoting small business in the state. “He got tired of telling everybody else about business, so I said instead of talking about it, let's do it,” Peralta recalls.

The first lesson learned was that they shouldn't listen to what others have to say about the HVACR wholesale distribution business. Peralta says people told him that it was a very competitive, low-margin business. “So we started out in appliance parts,” he says. “And after a few months, we began moving into air conditioning and refrigeration.”

As that side of the business grew, they gradually let go of appliance parts — eventually exiting it altogether about five years ago. “If you want to be a serious HVACR wholesaler, you cannot sell appliances,” he notes. “It's a whole different ballgame. The skills are kind of the same, but the customer and the market are different.” It was, he says, like having two separate businesses under the same roof, and that was not good for either business.

Peralta came to learn that HVACR distribution was, in fact, a very rewarding business, but it required a great deal of dedication and a strong commitment to customer service. Peralta says the learning curve was steep. With neither man having a business background, it took them about eight years to really understand how to stock their store with inventory, hire and train employees, and develop a base of loyal customers. Over time, however, they had a smooth-running operation. “We had a dream team with that one store,” Peralta recalls. “It was very organized, very profitable, very efficient and productive.”

But Peralta and Tapia had greater ambitions. They opened a second store in another state 500 miles away. Using the lessons learned from the first store, they moved one of their top people to serve as manager of the second location in Culican, in the state of Sinaloa.

Why did they locate a second branch so far away from their base of operations? Peralta says some of T&P's suppliers told them that Culican would be an ideal location for an HVACR distributor. As Peralta looks back on that decision, he says it may not have been the wisest move at the time. “We should have started a store in the same city, but we didn't,” he says. But doing it the hard way taught them valuable lessons. “It helped us to speed up the learning process and the skills that have allowed us to build what we have today.”