That drip-drip-drip you’re hearing isn’t just the ice melting in the spring. It’s also the sound of potential sales dribbling away as your customers increasingly buy online. It’s time to confront the issue before your Web rivals do serious damage.
Already, between 12% and 16% of builders and remodelers say they buy hardware, home improvement, and building material online every day, according to a 2018 Home Improvement Research Institute report. Ninety percent of the builders putting up fewer than 20 homes per year said they buy construction goods online at least once per week.
This doesn’t mean Amazon is going to put you out of business, as research by The Farnsworth Group found that none of the pros it surveyed named online stores as their top supplier. But several signs point to internet purchases by pros becoming more common.
As an example, look to The Home Depot, where online sales in the 2018 third quarter ending Oct. 31 jumped 28% from the year-earlier period, to total nearly $2 billion. Given that pros (including maintenance crews and painters as well as builders and remodelers) account for 45% of all the dollars spent at The Home Depot, it’s logical to assume pros played a major role in that 28% sales jump.
Meanwhile, Amazon Business says its annualized sales have topped $10 billion, with customers at 55 of the Fortune 100 and 40% of the biggest local governments. Perhaps most notably, Amazon Business sells products from nearly 150,000 customers and says wholesale suppliers and distributors figure in more than half of all global sales. For some manufacturers, the day could come when they conclude that dealing with Amazon produces more revenue and less hassle than trying to serve you and thousands of other independent dealers.
The rise in online purchases of construction products suggests pros already feel that way. Smart dealers recognize the problem: As Robb Wilson, president of 2018 Dealer of the Year Wilson Lumber, put it: “It is literally easier for me to order a 24-pack of K-Cups than it is for me to order 10 studs to finish a framing package. So if I have a customer who’s used to and likes ordering from Amazon, I’m failing that customer.”
Dealers certainly fail at providing a complete online experience: Just 11 of the 83 members of the 2018 ProSales 100 who answered the question said they had an online store where you can buy products and pay for them at the same time. That’s understandable: Most online products sell for the same price everywhere, while what a dealer charges varies for every customer.
Just because you don’t offer a full e-commerce experience, however, doesn’t mean you can’t go part of the way. Explore enabling online access to your customers’ purchases, payments, and invoices. Find ways to let them pay bills electronically. If you have a dispatch and delivery (D&D) system, make it possible for customers to track an online order. If you don’t use D&D, promote the ability to buy online and pick up a product in your store (as The Home Depot does with 48% of its online purchases).
These services will only get you a seat at the table if you want to participate in online sales. But you have one trump card: your people.
I’ve never met anyone who had an easy time finding and then talking to someone at Amazon when they needed help. But lots of LBM transactions are too messy to be left to machines alone. Ramping up your tech capabilities while continuing to promote the human connection is your best way to survive in an increasingly online world.
