The market downturn is far more significant than most people projected and in turn is causing many people a fair amount of pain. Companies that loaded up on inventory or had high cost models of distribution to support never ending sales growth are seriously challenged when the remaining buyers are searching for real savings and value instead of gimmicks. Some of the old business models don’t work anymore and the same inventory that used to be their growth engine is like a noose around their necks.
Real strength in any business model and company is its measure of success in the tough times. Our company, BuildDirect, is completely changing the distribution channel for building supplies and in doing so benefiting from this changing environment. Sure, there are fewer buyers, but the buyers that remain are finding our new approach to the supply of building materials is helping them find success. Out of that, we are still seeing growth.
I say this because sometimes we are compared with iFloor, an online retailer of flooring that recently fell on hard times and declared bankruptcy. iFloor was an online retailer with stores and inventory. The superficial comparison is that they also sold online and we also sell online. Completely different business models. Completely different companies. There are many differences but I will outline two of the main ones:
1) Minimum order size. As an online retailer, iFloor did not have minimum order sizes. BuildDirect does. Why? Because with minimum order sizes we can sell higher quality materials for lower margin. This helps make our manufacturing partners more efficient so they can further reduce the price the very same way Costco does.
2) Free shipping. Free shipping leads to higher conversion rates on Google but ultimately hides the true cost. As more people buy building materials with “free” shipping, companies increase the price of their product to cover the shipping. The truth is, there is no such thing as free shipping. It’s an illusion.
Most online retailers do it because it works in driving up conversion until they have to raise the prices to cover this cost. BuildDirect doesn’t play that game. We are transparent. We show the product, the shipping and the landed cost and let our buyers determine if our offering is right for them before they buy. As our company sells more products, we continually drive down the costs of shipping and pass the savings on. Last year, we shipped over 25,000 loads of products and with that volume, passed on better freight rates which made all of our products more competitive.
The entire industry has been affected by this ongoing downturn of the market. I truly empathize with the pain that some people are going through. iFloor is not the first one to close and it will not be the last. It is not the fault of the employees that these business models didn’t work or could not be adjusted fast enough to ensure viability. I feel worse still for the many buyers caught up in this by paying for product which will never come, and for the manufacturers and their employees there that are owed millions of dollars and will likely also cease operations. I have seen many message boards with comments ranging from frustrated to angry.
It’s true that we are able to sell products more efficiently because of our minimum order sizes. This is one of the things that make us unique and it will not change. However, for a period of 2 weeks, I would like to offer any former customer of iFloor who is caught in this mess a way forward.
We will remove our minimum order size (where we can) for any former iFloor customers who may now find themselves in a position where they cannot get the product they ordered.
As hard as this situation is for many people, we hope that these negative experiences can turn into something positive. We are committed to transforming this industry and building long lasting win/win relationships along the way.
If you’re an iFloor customer and want to find out more about how we can help you, I invite you to send an email to sales@builddirect.com with the subject line “iFloor customer request”. We will do our best to help.
Related posts:
Subscribe via Email
{ 2 comments… read them below or add one }
Jeff,
Great blog! I am impressed with your success and business model. My company does business development, sales, marketing and profitability consulting for many of the same type entities that are your customers.
We find that most of our clients are great at installing, designing, building but not necessarily the best at running a business like a business.
I will share your link and am happy to tell others about Build Direct.
Bobby
PS – I especially enjoyed the part about being married to the love of your life and the joy that brings. Same here!
Bobby,
Thanks a bunch for the comment on the blog post. The other side of challenging times is the opportunity that is presented for the ones bold enough to see it.
I visited your website at http://www.cmconl.com
All the best in your business.
Jeff