Inside The Number 1 Plumbing Web Site
By Bob Boyles, Principal
Smarter Distribution

The first heyday of the Internet gold rush has come to a resounding crash and taken large chunks of the American economy with it. There have been a few survivors and they are beginning to prosper again. In the world of wholesale distribution there have been only a few companies that grabbed hold of the Internet potential and taken their companies to the bleeding edge.

One of the things that we learned at the very beginning of Internet marketing is that certain goods do well on the Internet and some do not. Those items that are adaptable to Internet sales are high value where the shipping charges are not a significant portion of the resulting sale. Software and computers have done well on the Internet because they are high value. Every software company sells on the Internet and Dell has single handedly demolished the computer supply store business nationwide with it’s internet success. The other range of products that has done well on the Internet is small items. Books and music have done well on the Internet and have led Amazon and Barnes & Noble to success on-line.

Items that have not done well on the Internet are pet food, groceries, clothes and automobiles. There products are either low margin or the shipping cost is a significant percentage of the sale. These classes of products are on the Internet but are now evolving into businesses where their Internet presence is in addition to an existing retailer. For example, the on-line grocery idea has not completely gone away it is not making a slow comeback as an additional outlet for existing grocery chains. The original rule about what works and what does not has blurred a little as today’s auction sites are selling everything.

In the world of industrial products there are a number of goods that fit the bill.

Fixtures are a natural fit for the Internet, they are high margin and relatively small in size. The real key to the success of selling fixtures on-line has been that the Internet taps into a market that normal wholesale distribution has missed, the consumer. Contractors install the least expensive grade of fixtures they can weather it’s plumbing or electrical or appliances. It is not at all unusual to walk into a new $300,000 spec home here in the Dallas market and see low-end plumbing fixtures and cheap electrical appliances. This is not a slam against the contractor. The contractor and the builder are trying to keep the cost of a new house down and often opt for the least expensive trim items. The strategy leaves the new homeowner with the desire to upgrade. This is where the Internet comes in.

Smarter Distribution recently spent time with the creator of the number one web site for plumbing products. Developing their site mostly in-house with some off the shelf components and some interesting software designed for the web-marketer. Their site is now a leading provider of plumbing fixtures to the on-line marketplace. In discussing the journey from wholesaler to on-line retailer with the creator you learn that it not as simple as writing a web page and shipping orders. Discovering that his target market was 95% consumer was a big transition for a company that has traditionally sold only to contractors. Selling successfully to consumers rather than the wholesale trade has involved some learning. Consumers are not interested in substitutes or equivalent brands, if they see an item they like on the website the want that item and only that item. In the beginning there were also some learning opportunities that came from shipping the material across the country. Packaging had to be re-thought since consumers expect a flawless item to show up on their doorstep via UPS.

The surprisingly pleasant part about the web business is that it is a 100% cash business. As with all websites you must order with your credit card. The other pleasant surprise has been that returns as a percentage of sales are larger than with the wholesale end of the business but not as large as you might think given that you’re selling all most exclusively to the do-it-yourself market. Also, since the typical buyer is upgrading from an existing fixture the products that are being sold are on the high end and carry higher margins than the typical range of fixtures sold through a wholesale house.

After you’ve picked the correct product to sell then you must be successful in marketing that product on-line. The staff at this web site has had to learn the hard way about such arcane topics as page-rank and search engine optimization. It is no mistake that going to www.google.com and type in their products that their website shows up. The territory at the top of the search engine results display is hotly fought over by everyone wanting to market on the Internet. In the old days you could drive around town and find all of the supply houses within a few blocks of each other under the assumption that if the competitor doesn’t have the item the contractor is looking for then maybe they’ll stop at our warehouse on the way back to the job site. In today’s on-line world a first page ranking is the corner lot next to the inter-state highway.

The other amazing aspect of their operations is their effective use of Internet technology. Sitting at the control panel the manager can watch every person that is on their site and know what product they are looking at. If a customer has a question the user has the ability to have an on-line conversation with a live plumbing specialist. These types of tools set this site above the others. But the hard work has paid off. Their web-site regularly receives praise from their customers nationwide about their prompt delivery and excellent service.

One of the surprising things to me about their current operation is that they do not show product availability to the customer. This type of information is customary on the Internet these days. Rather they show the average delivery time. The accuracy of this information is not a guess. The products that are sold on-line are stocked in sufficient quantities that they can ship the vast majority of their orders with-in 24 hours.

The success of their web-site has created some new challenges for the staff. Now they are left trying to merge a huge volume of business from their on-line stores with their ERP system that was designed for a wholesale only world. But these are the types of problems that we all wish we had.

This web site has come a long way from the brochure pages that most distributors have as websites today. They are living the success today that we all wanted back in the 1990’s.

Note: This company asked that their identity be withheld. Many thanks for their permission in sharing this information with you.

About Bob Boyles and Smarter Distribution:

Bob Boyles started his strategic consulting business in 2001 and has focused on the change that technology is forcing in the supply chain and how independent distributors can not only respond to that change but also maximize the return they are seeing on their investment. Bob has spent a significant amount of time as an Installation Consultant for several of the big name software companies in the distribution market. Working with hundreds of distributors across the country on installing, upgrading and utilizing their software. Bob also worked as Corporate Systems Manager for one of the largest electrical wholesalers in the country.

Bob is a graduate of Appalachian State University (BS - 1981) and University of North Carolina at Greensboro Graduate School of Business (MBA - 1985).

© Copyright 2003, Robert S Boyles Jr. All rights reserved. This article cannot be reprinted or reproduced in whole or in part, without the express written permission of Robert S Boyles, Jr.