Schneider estimates that 90 percent of the activity on his Web site is to obtain pricing information. The number of actual purchases taking place online isn’t overwhelming at this point, representing less than 5 percent of annual sales. One reason that’s the case, Schneider says, is that commissioned salespeople remain vital to selling high-value, high-margin items that can be unique to individual construction jobs. “The Web is best for selling commodities where product performance is average,” he says, such as 2x4s and plywood.
Other dealers agree that the Web and other computer automation efforts have a clear place in their businesses but don’t represent a panacea for customer service. Still, savvy building materials dealers aim to apply automation to offload mundane tasks from the people they employ, in turn allowing them to focus on tasks like customer service, developing custom quotes for complex products, and negotiating pricing. “My goal with technology is to do more with the same number of people, not really trying to reduce people,” says Virgil Cox, owner of Houston-based Cox Hardware and Lumber, which has 30 employees, under $5 million in revenue, and nearly 60 years of family ownership. “I want to free them from repetitive, self-evident tasks and let machines do that.”
Cox Lumber also has a Web site and is selling a fair amount of products online. Cox employs a freelance software programmer with whom he communicates exclusively by phone and e-mail on site development and other tech initiatives. The site—and its inclusion of Cox Lumber’s product catalog—has allowed big organizations such as the United States Secret Service to buy products directly from the dealer. (The Secret Service buys walkie-talkie batteries online.) Cox says that wouldn’t necessarily have happened if such customers had to come to his bricks-and-mortar store. “The Secret Service found us online, called us, opened an account, and they’ve done the whole thing in a virtual sense,” he says. While Cox says he can’t tie a specific sales increase figure to his Web site, one other big customer increased its purchases threefold. Those are results worth bragging about.
Pushing Information Dealers aren’t just opening internal systems and data to their customers. Some are also using automated systems to push information—most notably invoices and electronic statements—out to their customers, usually by e-mail. Their goals: cut down on the redundant, error-prone paper trail typically associated with these processes, get information out to customers faster, and, ideally, get paid faster.
In recent months, for example, Bremerton, Wash.–based Parker Lumber Co., a 165-employee firm with $51 million in revenue, has rolled out electronic invoices and statements to its customer base. Before electronic statements, contractors would often come into a Parker Lumber location to get a copy of an invoice; however, often that invoice would get lost before it made it back to the customer’s office, so the customer wouldn’t or couldn’t issue payment. Then the process would have to kick off all over again.
When a customer signs up for electronic statements at Parker’s Web site, by contrast, an invoice is e-mailed to the customer’s specified address within minutes of a transaction, and the customer can then input the invoices directly into their systems, which can result in faster payment. “The other big benefit is we don’t have to keep a manual list of those that want invoices mailed daily or weekly,” explains Kyle Kincaid, vice president at Parker Lumber.
Another dealer that has brought electronic statements to its customer base is Ballston Spa, N.Y.–based Curtis Lumber Co. The company is using a document management system to give customers account summaries, invoices, and other information at the intervals they request.
“A customer receives a fax or an e-mail because something’s being generated by the system overnight,” explains Rich Walker, director of information technology for the 400-employee,$97 million dealer. “There’s no human interaction, no person getting paid to do that job.”
Like most good computer systems, the benefit of this one grows as its reach expands. “Once you’ve made the investment to set it up, it’s a simple matter to say, ‘Here are 10 more customers that are good candidates.’ You flip the switch and the investment grows in value,” says Walker.
Parker Lumber’s document management system captures—for archiving purposes—reports generated by its transactional systems. Those reports are offloaded to an outside vendor, eliminating the need to keep paper files for seven years, and the costs and space consumption associated with paper. Parker is essentially leasing the system, so instead of spending $50,000 to $75,000 plus hardware costs to purchase the system, the company paid an upfront fee of $4,000 and is spending $1,300 per month in rental fees, which cover storage and management of records across the company’s seven locations in two states. That’s a capital outlay and cost structure any CFO would appreciate.
