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Whenever Electrical Wholesaling’s editors have the opportunity to survey electrical contractors on what they want from electrical distributors, we are always amazed at how much business basics still matter in this age of competition from AmazonSupply, Home Depot, Lowe’s and other big-box stores and Grainger. Electrical Construction & Maintenance (EC&M) and Electrical Wholesaling recently surveyed EC&M’s electrical contractors readers on their online purchasing habits, and the 523 responses offer some terrific insight into how and where electrical contractors now purchase products.
To no one’s surprise, online purchasing is a well-entrenched fact of life in the electrical market, and approximately 63% of the respondents currently make some of their electrical supply purchases online at the websites of vendors like Grainger, Amazon Supply, Home Depot, Lowe’s Econolight and Fastenal. And it’s also probably not surprising to see the top three reasons they purchase online are price, convenience and selection, in that order (see chart). Many of the survey respondents said the best way for distributors to compete with online sources of supply is to focus on the service basics that have worked for decades.
“Customer relations, speed and efficiency of delivering products is key,” said Nathan Northern, Waters Electric, Solon Springs, Wis. “Time and time again I turn to online due to people not caring to put the effort in. When I have to find the new products I will probably not purchase them through you.”
Bill Hyman, Hyman Electric, Silver Spring, Md., wants distributors to offer competitive pricing that’s comparable to what online merchants offer. “Match online prices, deals, and rebates from other companies to encourage business owners to use one sole source for materials,” he said in his response. “Need more competitive pricing… We want to give business to the local guy or the small distributor rather than a big box store/website, but we cannot currently do that as online prices often beat out the distributor. If not for next-day delivery that allows us to meet short deadlines, we would probably purchase even more stuff online because of the pricing. It would also be helpful for most distributors to have online stores that are user friendly for smaller residential contracting companies where only a few people share the business responsibilities. This would make it faster for us.”
While many distributor execs in the electrical wholesaling industry have problems with inaccurate or incomplete product data from electrical manufacturers, contractors are frustrated with the lack of timely, complete and accurate online product data available from electrical distributors, too.
Said Ken Johnson, Eastpoint Electric, Clinton, Conn., “More data should be available. Cut sheets, etc. would be a good start. Local distributors are increasingly stocking fewer items and offering next-day service. This doesn’t work well for a contractor needing material to finish a job immediately. I tend to go to the big box stores instead to avoid the waste of time at the distributor. Many online sources offer next-day delivery to my door. The local distributor will not get my business if they can’t stock the material I need. Wasted time is a huge cost to my business.”
Michael Meyer, who works for Continental Electrical Construction Co., Oak Brook, Ill., one of EC&M’s Top 50 Electrical Contractors with $112 million in sales, and he wants electrical distributors to offer online purchasing capabilities along the lines of what’s currently available from AmazonSupply and W.W. Grainger. Said Meyer in his response, “Work with existing ERP system to provide us web-based access that would allow Amazon/Grainger like capabilities. Provide search tools that yield relevant results, and provide information on products, including price (our price), shipping info, product availability, and product links to manufacturer data such as submittals, brochure, catalogs, installation instruction, warranty, and CAD info. Providing a link puts the onus on the manufacturer to keep data up-to-date and relevant. Creating supplier versions often leads to out-of-date information and adds unnecessary cost.”
On the West Coast, Bill McAlister, McAlister Electric Inc., Canyon Country, Calif., would like distributors to maintain more accurate online inventory data. “Keep an accurate inventory to eliminate back orders,” he said. “Make sure your order desk personal have all the product information and inventory in front of them on the computer and that they have access to all the company branches’ personnel and inventory so they can provide customers prompt and complete deliveries.”
Online vendors need accurate inventory numbers,” added Douglas Winston, Winstonz Electric Dreamz, Waukegan, Ill. “It’s very annoying to have a retailer list ‘25 in stock,’ get to the location and find 10, or none. The search filter parameters or product descriptions also need more sophistication, or perhaps standardization, as identical products by different vendors are often listed in fractional or decimal sizes, as well as varying product descriptions. For instance, a search for ½-inch EMT results in incomplete results, the others being listed under 0.5-inch or thinwall.”
While much of the industry chatter right now is about online competition from Grainger and AmazonSupply, many respondents said they shop regularly in-store and online at home centers like Home Depot and Lowe’s because they can depend on their product inventory and get competitive pricing. That being said, several respondents also responded that they would prefer to give their business to their local electrical distributors if those companies can provide knowledgeable and dependable service, immediate access to key products and competitive pricing.
“Don’t try to compete with box stores,” said Peter Argyropoulos, Petros Electric, Lancaster, Pa., in his response. “If we’re still coming to you, it’s because we think we get a better product from you, even if the price is slightly higher. Provide us with better products, tools and test equipment.”
Two other electrical contractors who responded anonymously on the topic of buying from home centers offered some real zingers that cut deep. “Carry a little better quality merchandise,” he said. “Our local distributors are carrying lots of made-in-China junk, while our Home Depot electrical department seems to be stocking higher quality material.” Said another, “I am very happy with the help I receive from my wholesalers, but I get unhappy when I can buy from Lowe’s or Menards for less.”
Of particular interest to electrical distributors are the 200-plus responses we got to the question, “If you had all of the electrical distributors whom you usually buy from in a room for 20 minutes, what would you like to tell them about how they could do a better job of providing electrical products or services for your company?” While carrying adequate inventory and providing accurate orders are very definitely on the first page of the Distribution 101 handbook, plenty of survey respondents said this isn’t always happening at their local electrical supply houses. Two electrical contractors from the Mountain states summed up this point very succinctly.
“Maintain inventory, “ wrote John Peterson, Wired Electric Co., Ft. Collins, Co. “One- to two-days from a distribution point does not work for us. We need it now. Double check orders. Way too often we discover shortages and/or parts of the order is wrong size/type. This is sometimes disastrous. Recently we were in the middle of a difficult pull and one conductor was 100 feet short.”
“Keep an adequate stock of items,” advises Brian Baum, Bissing Electric Inc., Appleton, Wis., who added that he gets frustrated when he stops in at a local distributor to pick up a common item and that supply house has to order it from another branch -- when he knows the local big box store has ten of them on the shelf.
“Making sure they had common items in stock,” added Steve Roebke, “Snow Mountain Electric, Stevensville, Mont. “Have a broad selection of newer products. Often items we see in the trade magazines are not in stock.
There was also a thread of concern in the survey about the declining level of product knowledge on the part of distributor sales personnel. Carl Sampsell, an electrical contractor from Mifflinburg, Pa., offered some great insight into how distributor sales personnel can be valuable resources for their customers. “Electrical distributors’ outside sales staff can be an important resource to the electrical contractor,” he said. “New product information, product demonstrations, and product literature are of great importance to the contractor, and the outside sales rep can increase his/her and their company’s value to the contractor by being the source for that information. The outside salesperson who’s consistently engaged with manufacturers and their rep agencies, and who’s consistently aware of new and improved products and present that information to the contractor, is most often the sales person/distributor the contractor will favor. That distributor and salesperson will become more than just a source of supply to the contractor -- they establish themselves as a solutions provider and a projects partner.”
Bill Wedge, Wedge Electric Inc., Orange, Calif., also offered some great advice on how distributors can survive against online competitors, and most of what he had do say gets back to the very basics of effective distribution. “Pick up the phone, make a call, and ask what areas could they improve in,” he wrote. “Whether it’s pricing, communication, back orders, bid package turnaround, anticipated price changes, or nothing......have a proactive conversation.
“We all know it’s difficult to keep up with all the new products and technologies, and we don’t expect our distributors to know the latest and greatest. Take lighting for instance. It’s like carpet and wallpaper -- there’s something new or obsolete every six months”
“Let’s not forget, this is the shoppers’ era. There’s very little loyalty extended towards contractors, and distributors are even more subject to price shopping because of the internet. So pay attention! Each distributor has their own high margin product lines in which prices are no so great. With this in mind, contractors end up purchasing from several sources to accommodate the bid. Unfortunately, the electrical industry operates in a ‘now’ existence and as a result a contractor may have to place an order from a second- or third-tier distributor to find out incidentally his #1 go-to-guy is really great or not so great. It’s troubling for small contractors to find out over time they have been getting hammered on pricing in specific areas by someone whom they thought valued their business. Regardless of intent, begin the conversation and keep the customer for life. Bottom line, it’s simple, open communication.”
And maybe one electrical contractor who responded anonymously was onto something when he said he would tell all his distributors, “Bring a big truck to my house with tons of stuff in it and let me get what I need.”