Spinning the Web
Looks can be deceiving. A first glance at Leep's Supply Co.'s office and warehouse in Merrillville, Ind., gives the impression of a small, basic plumbing wholesale business with a contractor counter, a good-sized showroom, a typical warehouse and courteous personnel. Nothing extraordinary, right?
But a second look reveals that this independent company of 49 employees is doing something many of its colleagues in the PHCP industry are not: It's jumping modem first into cyberspace with an impressive Web site and even more impressive sales figures. Leep's Internet guru is Doug Van Der Weide. Originally a Leep's showroom salesman with a background in advertising and marketing, he was selected by company owner and President Allen G. Leep (nicknamed Sam) to build a Web site for the firm.
"I knew nothing about the Internet at that time," Van Der Weide says. "For the first year, everything was by trial and error. I spent the first six months just trying to find a program to help me build the site!"
With average monthly sales of $20,000 attributed to the 45-year-old company's Internet site for the first five months of 1999 and a 279.29% growth increase from last year, it seems that Leep's made a wise choice to jump on the Web.
And it's in good company: According to a study by the University of Texas Center for Research in Electronic Commerce, the Internet economy generated an estimated $101 billion through electronic commerce in the United States in 1998. While Internet revenue is overshadowed by the U.S. economy of $8.6 trillion, it has already outpaced the energy industry ($223 billion in 1998) and is catching up to the auto industry ($350 billion in 1998).
Another study, this one from ActivMedia Research, projects that global e-commerce revenues will exceed $1.3 trillion by 2003, according to an article on Internetnews.com. The study, titled "Real Numbers Behind Net Profits," also reports that 92% of e-commerce is generated through U.S.-based Web sites, and 9 in 10 revenue dollars come from product and service sales, not advertisements.
"Make it happen!"The catalyst for Leep's leap into the unknown was the 1996 American Supply Association convention, where Bruce Merrifield conducted a seminar on strategic planning and the Internet. Allen Leep attended that seminar.
"I shared his vision," Leep recalls. "I believed in my heart that things were going to change and change rapidly. I came back from that convention committed that Leep's was going to build an Internet site. I talked it over with Doug and told him to make it happen!"
Van Der Weide attributes his success in developing and building Leep's site to Leep. "Everyone has to find their own way to drive themselves," Van Der Weide says. "It's difficult to sit down at the computer when people think you're playing when, in fact, you're actually teaching yourself about how the Internet works. But Sam has always allowed me to have the freedom to get the job done." Another major player in Leep's Internet dreams is SurfNet, a local Internet service provider. "They were instrumental in getting our site up," Van Der Weide says. "It took us a long time to find a provider to allow us the latitude to do what we wanted."
Leep's initial investment in its Web site was $80,000 to $100,000, Leep says. That included salaries, computer hardware and software, Internet hookups and plug-ins.
Eventually Van Der Weide learned enough to start building the site (www.leeps.com). On June 6, 1997, it went live. At first the site only contained a manufacturer's catalog, but different items were added periodically to enhance it.
One of the key elements Van Der Weide wanted to include on the site was pricing - almost every item listed on Leep's Internet catalog has a price attached to it.
"When customers walk into a store, the first thing they want to know is the price," he says. "In our business it's almost impossible to have prices on items such as fixtures, because they come in different colors with different accessories. Even manufacturers don't put any prices in their catalogs. But you can on the Internet, and that is what we do on our site - we allow customers to have all the information they need to make a buying decision right away. >"If they're looking for Delta faucets, but they're on the Leep's Supply site, we don't kick them to Delta's site. We put all the information they need about Delta faucets on our site; we don't want to send them to a different location. The customer can log on, find the product and the pricing information he needs, make his decision and buy the item without leaving the site."
In fact, Van Der Weide notes that Leep's had a leading fixture manufacturer's full product line with pricing online before it even had a Web site. "A lot of manufacturers were that way," he says. "And for some, we're still the only representation online that they have."
Leep's recently bought a second domain name, www.toiletseat.com, because of the tremendous amount of toilet seat orders it receives. This added domain makes it easier for con-sumers searching for toilet seats on the Web to go directly to Leep's home page.
As technology changes, Van Der Weide adds as much as he can to the site to make it more accessible to customers. At first only an 800 number was used for taking orders, but now online ordering is available through a secure Internet ordering site. Customers are still able to phone in or fax orders if they prefer. Leep's also added a search engine to the site to allow customers to search for a particular product or brand name and go directly to the information on that product. One of the unique sections found on Leep's site is the "Building the Web" page. It is a list of resources available on the Web about the Internet and building Internet sites, including domain registration, Web site hosting, HTML editors, FTP programs, security, graphics, advertising, e-mail, search engines, plug-ins and e-commerce-related sites. Van Der Weide also has northwest Indiana links on the site, highlighting local businesses, builders, remodelers, Internet providers and community links.
Other interesting pages include a section on bath care and cleaning (proper cleaning techniques for porcelain-enameled cast-iron tubs and sinks, faucets and accessories, shower doors, vitreous china sinks and toilets, fiberglass and acrylic tub and shower units and whirlpool bathtubs); a section with gift ideas (padded toilet seats, wall-mounted hair dryers, cowboy and football hardhats and lighted showerheads); and a section that translates product information into five languages.
"The biggest new things coming up in Internet technology are translation of pages into foreign languages and handicapped/special-care applications," Van Der Weide explains. "Studies indicate that some of the large uses of the Internet are by those who are disabled; people who can't type or are paraplegic and use the Internet for their shopping and buying options."
Broken territoriesAs more and more orders came through the site, Leep's was surprised at where these Internet customers were located.
"One of the biggest advantages of the Internet is availability," says Brad Gossman, Leep's operations manager. "People don't know where to go to get product anymore. They may have a brand name that they want, but they have no idea where to find one locally. Or it might not be sold in their market area. Now they can find it on our Web site."
Case in point: Internet salesman Chet Kwiatkowski sold a Pearl whirlpool tub to a customer in Minneapolis; however, Pearl's whirlpool factory is in Minneapolis. The customer surfed the Net and found what he needed at Leep's rather than search through his local area.
"It's kind of interesting," Van Der Weide says. "The Internet has broken the traditional sales territories. You pick up the phone, and you never know who's on the other end."
Not only is Leep's finding a new clientele in the United States, but it's going global: Leep's has sent product to China, Australia, India and Canada. However, it stumbled over shipping problems along the way.
"Shipping is key," Van Der Weide notes. "You can have all the product you want, you can have the right price and you can have the great service, but if you're on the Internet and you don't have the proper means to ship the product, then you're in trouble. That was one of the hardest growth spurts for us."
For example, Eljer came out with a one-piece toilet featured in a leading consumer magazine, and suddenly Leep's was receiving quite a few orders for it. So it began shipping a large volume of the product out via UPS.
"But everything we were sending out was getting to the customer broken," Van Der Weide says. "UPS said there wasn't much they could do, so we had to change shipping companies."
Leep's has since gone back to UPS and still ships some product from its warehouse, but about 70% to 80% of orders are now direct-shipped from the manufacturer.
"We've learned to restructure our shipping and to work deals with the manufacturing plants," Van Der Weide says. "In fact, Gerber's manufacturing plant just bought a foam-pack machine to help address this problem."
But for those items shipped from its warehouse, Leep's added a new feature to its Web site: package tracking.
"We were spending a lot of time tracking packages for customers," Van Der Weide says. "The customer can actually go onto our site and track his own package. That's been a real benefit."
When an order is shipped to a customer, the receipt is delayed for one day. That delay enables the tracking department to retrieve the tracking number and attach it to the receipt.
Another innovative idea was teaming up with Do It Best Hardware, a member-owned cooperative of local hardware stores and lumberyards. The company used to be a distributor but has now become a retail business. Its online site (www.doitbest.com) is linked to its associate sites, such as leeps.com. Each associate is assigned a code; sales from each associate's site are tracked with that code. Members receive a percentage of the profits resulting from those sales.
"I don't know how many sales we're going to have through this site, but it looks like it will be a real asset to belong to it," Leep notes. "Do It Best is committed to being the biggest on the Internet. And it's great for us, because we don't handle any product - the customers just come to our Web site."
Building a futureIn 1954, when Allen Leep's father, Nick Leep, founded the company along with Allen Leep's older brother, Dave, and associate Margaret Yothment, little did he realize what his company would become at the beginning of the 21st century.
Nick Leep had started out in the sheet-metal and heating industry but soon became fascinated with the plumbing aspects of the boilers he was selling.
"My father, he had guts," Leep says. "He didn't have a lot of money, but he knew how to manage it. I really respect the first generation, far more so than my generation - those who fall into a business or are born into it. The first generation is willing to sacrifice, work the hours and dedicate themselves to making a success. They're the pioneers, the ones who really had the vision.
"Not that it's easy for me or for anyone else. If you're going to make a success out of any business today, it's hard work. I can bring different skills to the table than my father could. He knew everything about everything. We hire people who know everything about everything."
The company started out in a small warehouse in Highland, Ind. In 1989, Leep's opened up a satellite showroom close to the warehouse. Brad Gossman, who started with Leep's at the age of 14, says the showroom "enabled the company to expand its base and get more plumbing contacts, to a point where we outgrew our facility. We had talked about expansion for years, but out of necessity we opened a second location in Merrillville."
That was July 1991. At that time, a flood of new construction was going on in the area. Leep's continued to add to its product lines, some customer-suggested, and began to take on more and more commercial projects. "We were being introduced to new plumbers at the same time our existing plumbers were growing their businesses - as their work expanded, we expanded with them," Gossman says.
Another plus: working with custom builders. Van Der Weide notes that quite a few high rollers from Chicago began moving into northwest Indiana and building beautiful, high-end custom homes. Once Leep's began sending salesmen out to that area, the custom-design builders started to send their customers to Leep's showroom.
John Hamstra, the firm's treasurer, manages the Highland branch. Because new construction is limited in the area, Hamstra says the primary customer for this branch is the repair and remodel plumber. Leep's split its operations to accommodate the markets that each branch serves. Highland is also Leep's "service station" - all repairs to sump pumps are made at this location.
As the firm grew, executive management changed. Allen Leep took over as general manager in the fall of 1993. In December 1995, Nick Leep retired and turned over the stock to the family. Allen Leep became president of the company at that time.
"That's when I had full freedom to do what I wanted to do," he says.
Right away he joined the American Supply Association, where he learned more about the industry and where it was going. "I needed the industry insights so I could benchmark the business. Since we joined ASA, we've gotten stronger in every area because we know where we have to be."
One of the first goals Leep had was to build a future for the firm. His older brother, a "behind-the-scenes guy," is not interested in management. Allen Leep has no sons; his daughters are not interested in taking over and his sons-in-law are self-employed. Ensuring the succession of the business became a top priority.
He talked to accountants, attorneys and others in the distribution industry, among them several ASA members who had formed employee stock option partnership companies. And he began to realize that forming an ESOP would be the best way to ensure a future for both the company and its workers.
"Eventually they will buy out all the stock in the company," he says. "That's my idea to 'exit' in an orderly manner. My name may be on the building, but the employees are Leep's."
The firm has completed its second full year as an ESOP, but the employee-owners are still unsure as to how it works.
"It's not like a 401K where you get a printout of your earnings every three months," Gossman explains. "It's a harder concept to grasp. But I think it's great. Whatever you put into the company, you know you're getting something in return. You have a vested interest."
Closed on Saturday?Doing what's best for his employees and his customers is something Leep learned from his father. A religious man, Nick Leep founded his company on the principles of integrity and hard work. Allen Leep has made those principles part of the company's mission statement. And it has paid off: The firm has had a 16% growth average for the last three years. "God has blessed our business," Leep says.
This responsibility toward employees and customers recently resulted in a few changes in the company. Leep and his board of directors, which consists of six of his key personnel, met and discussed the firm's bread-and-butter customer, the plumbing contractor. The decision was made to close on Saturday.
"We needed to look at our business, identify our niche and refocus on who our customer is," Gossman says. "If we close Saturday, then five days a week we have a full staff. When we spread our people over six days, everyone's workload increased. A few people were getting burned out. But if you shrink your work week into those five days and concentrate on the professional contractor, everyone benefits. It's made a big difference, especially for the showroom people."
Leep adds, "They were giving me some high fives when we decided to close Saturdays!"
At about the same time, two of Leep's employees developed serious illnesses, and morale was low among a few other members of the firm.
"Everybody has to pay a price for success," Leep says. "Work ceased to be fun and challenging for a small percentage, those who were crucial to the operation of the whole."
A five-day work week would give Leep's employees more time to spend with their families.
"We needed to focus more on people and their needs and less on sales," Leep explains. "I believe that we can grow just as much as we did before. We'll become a stronger company, a better company. After all, we're in the people businesss - we want our customers and our employees to be happy."
And that decision has not hurt the business, as Leep's management speculated it might. Profits for Leep's Supply are up 11% already this year.
Leep notes: "To me that's the acid test. We saw no fallout from the decision; we saw increased sales. We're happy with the way everything is going."
Gossman relates an incident where a couple wanted to visit the showroom; when they were informed by one of the saleswomen that it was only open from 7 a.m. to 5 p.m. Monday through Friday and closed Saturday, they were upset. Since both worked until 5 p.m., they couldn't stop by during those hours.
"I thought we were going to have to make special hours to accommodate these people," he recalls.
But the saleswoman told the couple that the company made a decision that family and people are more important than money; if customers had to go somewhere else because of the hours, that would be their decision.
"The man talked to his wife, came back to the phone and told the saleswoman it was a gutsy position to take in 1999 to put family and employees before income," Gossman says. "The couple took time off work and came in early Monday morning. That reinforced our decision. Sometimes when we make those changes they aren't always going to work, so it's good to get reinforcement from the customers."
Another decision the firm made was to hold off adding to its sales force. "Another outside salesperson would drum up more business, but we didn't want to jeopardize our existing business," Gossman explains. "We wanted to make sure we could take care of the customers we already had and maintain and improve those relationships."
Just as Leep's takes care of its workers, it prides itself on its customer service. Leep's spends no money on advertising; its reputation is spread by word of mouth or through promotions such as its annual Vendor Day.
But with big-box retailers such as The Home Depot and Menard's moving into the area, it's been a little more difficult to convey the service concept to the customer.
"The biggest difference I see with the big boxes is that there's much more price awareness now than there ever was before," Gossman notes. "People can get an immediate price now instead of waiting on phone calls. They can send a fax out to four different supply houses or check the Internet. Unfortunately for the wholesale trade as well as the retail trade, the buying public focuses on the purchase price of an item and forgets about that total package, which includes the service. The extra services we do, such as same-day deliveries and free deliveries to the surrounding area, are going to be our strength in the niche. But it's amazing to me how many times you have to sell that to the customer."
Whatever the competition, Leep's continues to flourish. Its Merrillville warehouse is practically bursting at the seams; product is stacked almost to the ceiling and several buildings outside the warehouse were constructed to store inventory. The Highland branch has a steady influx of remodel and repair work that will see it through to the next century.
"We have an exceptional team here," Leep says. "If you do things right, pretty soon word gets out that you're pretty good to do business with."
Sidebar: Corporate profileLocation: Merrillville, Ind. Main office with warehouse, counter and showroom. Second branch is located in Highland, Ind.; services repair/remodel plumbers. Also repair shop for sump pumps.
Employees: 40 full-time, 9 part-time
Management team: Allen G. "Sam" Leep, president; David Leep, vice president; John Hamstra, treasurer; Brad Gossman, operations manager; Cheryl Golden, office manager; Larry Mitchell, showroom manager; Joey Bielak, plumbing counter manager; Shane Smith, warehouse manager; Bert Yothment, inside sales/commercial bidding manager; Joe Yothment, outside sales manager; Bob Lubbinga, systems manager.
Territory: Lake and Porter counties in northwest Indiana; Cook and Will counties in northeast Illinois.
Markets served: residential and commercial plumbing contractors, mechanical contractors, custom builders.