Meeting the Internet challenge
The same study, quoted on the Web site of Nua Ltd., an Internet consulting and development company, reports that 69% of those surveyed would use the Internet to promote their products or services to prospective customers and 57% would use it for e-commerce.
Even more telling is a report from the Boston Consulting Group that predicts one-quarter of all business-to-business purchases will be made online by the year 2003.
Hughes Supply (Orlando, Fla.), made an equity investment in bestroute.com, a business-to-business distributorship for constructruction and industrial products, in January.
"Our partnership with bestroute.com will enable us to expand our e-commerce offerings while maintaining our strong commitment to traditional distribution," says Stewart Hall, Hughes' president and chief operating officer.
Other wholesalers also recognize the power of the Internet and e-commerce. Gary Daniels, senior vice president/marketing and merchandising at Johnstone Supply (Portland, Ore.), says: "E-commerce is critical. It's a strong focus for us."
Phoenix-based Able Distributing's Web site, www.abledistributing.com, offers a "Partners for Profit" program online, says Mark Vadovich, purchasing manager. "We'll scan the customer's inventory and transmit an order." Customers online with Able can log on to enter orders and access information, he says.
First Supply (Madison, Wis.), is investing heavily into e-commerce, says Joe Poehling, president. "We know that over the next several years we will need an effective Web site able to accept customer orders and help us do business with our manufacturers."
However, some contractors still prefer to use pad and paper as opposed to a computer, Poehling says.
Plumbing product Web sitesThe importance of the Internet to plumbing product manufacturers is demonstrated by the investments and activities of a number of companies. Delta Faucet and American Standard, for example, have introduced expanded Web sites in the last few months.
Delta's site, www.deltafaucet.com, is more than just an online catalog, says Ray Kennedy, vice president/Delta Business Unit. "We're taking our Web presence to a new level."
The site has a remodeling center with links to www.hometime.com, where visitors can find home improvement tips and trends, and www.improvenet.com, which provides access to a database of contractors, architects and designers.
"Some wholesalers don't fully understand the value of the Internet," says Fred Barendt, Delta's director/marketing services. "What they get is a better informed consumer. We can put installation instructions and warranty and parts information on the site."
In an area for the trade, professionals can find a catalog of maintenance and installation sheets, code compliance information and a regional locator system to find sales reps.
American Standard has enhanced its Web site, www.americanstandard-us.com, with a product showcase; a design center; frequently asked questions; a where-to-shop section; and a section where visitors can request a free copy of "The Collection," a book of products and ideas for the bath and kitchen. A "Quick Search" feature for trade professionals has product information, specs and list prices.
In-Sink-Erator views the Internet as a tool to leverage its distribution strategy, but it won't change the company's customer base, says Dave MacNair, vice president/marketing.
"We want to improve the way we do business with our wholesalers," he says. "We can use it to help our customers manage their physical assets and inventory turnover, improve our service levels and help them take costs out of their business."
Although e-commerce may seem futuristic for this industry, wholesalers, manufacturers and contractors will have to embrace it, says Jon Dommisse, national marketing manager for Bradley Corp., a manufacturer of commercial bathroom fixtures.
"Bradley has made a major commitment to its online presence and now has the capability to offer many promotional and customer service tools electronically," he says. "Requests for online information are now at the same level as requests for printed literature."
To sell or not to sellMost of the manufacturers contacted are not selling product over the Internet at this time, but some say they are investigating the possibility.
Elkay Manufacturing is looking at future options that could accommodate online purchasing without having a negative impact on the wholesale channel, says Alan Danenberg, director/marketing services. Since 1997 its sales reps have had access to an order-entry system that allows them to place orders, check order status and check inventory electronically on an almost-live basis. An upgraded version was installed in 1999.
Both Barendt of Delta and MacNair of In-Sink-Erator say their companies will not sell direct to consumers from their Web sites.
Gerber Plumbing, which does not sell direct to homeowners off its Web site, is working on enabling wholesalers to place orders online, says Ron Grabski, vice president/marketing.
Schaul Specialties, a division of Federal Process Corp., has introduced a Web site, www.schaul.com, where wholesalers can purchase from its entire plumbing catalog online. Users can search the site in three ways: by category, part number or competitor part number. Also, wholesalers can research old orders, track deliveries and obtain sales rep information. The site offers Web-only specials and contains a "bargain hunter" area that features discontinued or overstocked inventory.
Not everyone is convinced of the efficacy of the Internet. Dave Herbert, vice president/marketing for Coastal Industries, says his company does not see the Internet as a good way to go to market at this time.
"People who are just browsing will visit our Web site and order one shower door or ask us to send them a catalog," he says. "We don't sell direct to consumers. It costs more to deliver one shower door by truck to some out-of-state customer than the retail price of the door itself."
Eventually, though, contractors will want to shop on the Internet, Grabski of Gerber says. "A one- to four-man operation doesn't have the time because they are always putting out fires. The more advanced firms have people as knowledgeable around computers as the people at the big wholesalers and manufacturers."
Danenberg of Elkay concurs with this view. "The next generation of contractors in smaller firms entering the family business will be more comfortable with computers," he says. "Smart wholesalers will look for opportunities to serve that channel."
B2B e-commerceAnalysts describe the business-to-business market as one of the most fundamentally sound segments of the Internet. Forrester Research predicts that B2B e-commerce will grow three times faster than business-to-consumer.
Boston Consulting Group, quoted on the Web site of Nua Ltd., says that by 2003 three times as much online business-to-business e-commerce will be conducted over the Internet as through EDI.
The report identifies industrial equipment as one of six sectors that will constitute more than 65% of online business-to-business transactions.
Daniels says the HVAC industry is behind in e-commerce. "Manufacturers and wholesalers use a chicken-and-egg approach to e-commerce: manufacturers want wholesalers to start first and wholesalers want manufacturers to start first," he says.
"E-commerce is inevitable," says John Rynecki, vice president/marketing at Sid Harvey Industries (Garden City, N.Y.), "but the major impact is unknown. On our Web site (www.sidharvey.com), about two-thirds of the hits are people in the industry accessing the site from home. They are not business-related searches but more discovery-related.
"Our site is not a true e-commerce site. When a compelling reason arises for us to upgrade, we will go from there. But it has to be profitable for us."