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Online Sales Percentages in the Construction Industry (US Market)

• Hi, I am interested in the percentage of net sales (and also the absolute numbers) that is traded over web sites in the construction industry. The companies which I would like to focus on is normal retailers that sell to dealers, constructions companies and do-it-yourselfers. My definition of construction industry is pretty general: building material, tools and consumables. As far as possible, please try to separate the sales from the web site from backend-to-backend integrated EDI-type of transactions. Examples of companies that are of interest: Diamond Products, Milwaukee, Weka, Dixie Diamond, 3M, STI, Tremco, Nelson Firestop, Ramset, Hilti, Fastenal, Bosch, Dewalt, Makita, Hitachi, Home Depot,Cooper B Line, Tolko, Erico, Viking Electrical, Grainger, Confast, Powers, Remington, Levelite, Toolz, Spectra, Staples, White Cap, Sears Tools, My tool store, True Value, Coastal Tools These are just to give you an idea of type of companies, if you find others, it is just great! Of interest is also, of course, trend values (over the years), investment figures in e-business and/or short e-business strategies (target segments etc) of the respective company. Focus is the US market, but many of these companies act globally, so if you "happen to find" any figures on a global level or for other countries, while you are looking for US numbers, please add them as well. If you need any clarifications, please let me know! I am under no great time-constraint, so speed of the answer is not important. Best Regards, Thomas

• Answer:

  Tornell - Well, at long last I have a list of about 15 companies. Given the pattern that's developing, I think 15 is probably sufficient for a snapshot. After my discussions with these firms, I've realized most are investing money into this, and very little sales are actually happening. This is true at least for the construction companies in the traditional definition; office product type companies are doing a bit better. It's probably for a few reasons, not the least of which is people's resistance to change in ordering methodologies. If a rep from a company has been ordering over the phone for 8 years, he may not be too enthusiastic about changing his method for ordering. One company I spoke to said a lot of these guys just want to talk on the phone for one reason or another. Important note: This answer is not finished until you're satisfied with it. If you choose to rate this answer, I ask that you do so *after* asking for any necessary information/clarification. Thanks for your understanding. I contacted a good portion of the companies on these lists that have an online sales presence in addition to their normal sales methods: Retail - Building Materials & Gardening Supplies Retailing & Wholesale http://www.hoovers.com/industry/description/0,2205,6350,00.html Manufacturing - Industrial Equipment & Products Distribution http://www.hoovers.com/industry/description/0,2205,2290,00.html The numbers below are actually "net" sales as you had originally requested; "net" defined as total sales without sales tax. These total net sales figures are also from Hoovers. Even though I had originally used the term "gross" while on the phone with these companies, the term "gross" as normally used by a company would be the total revenue without sales tax. A Hoovers editorial rep told me this, and I confirmed it when I asked the rep from Radio Shack the meaning of what she referred to as "gross sales" -- the total revenue without sales tax. This makes a lot of sense, since tax is not considered revenue at all. COMPANIES ========= Lowes Phone: 336-658-5239 [Paul] 2003 Gross Sales (mil.): $26,491 "Significantly less than 1%" Jewett Cameron Trading Company http://www.jewettcameron.com Phone: 503-647-0110 [Don boon] "Fraction of 1%." 2003 Net Sales (mil.): $43.6 Never expect it higher than 1%. Started a couple years ago. Moen Fortune Brands Parent 847-484-4400 2002 Net Sales (mil.): $80 "Less than 5%." DoItBest Phone: 260-748-5300 [Dave Dietz] 2002 Net Sales (mil.): $2308 ".1%" Radio Shack 817-415-2909 [Leah King] 2002 Net Sales (mil.): $4577.2 "Less than 3%." Target Phone: 612-761-6735 Susan Conn 2002 Net Sales (mil.): $4390 "Some unknown fraction of 500M." Lawson Products http://www.lawsonproducts.com/website/main.nsf?Open Phone: 847-827-9666 [Jeff Spencer] 2002 Net Sales (mil.): $387.5 "Less than 3%." WhiteCap http://www.whitecapdirect.com Phone: 714-850-0900 [Bill Jacoby] 2001 Net Sales (mil.): $375.0 "Less than 1%" "Website is mostly for marketing, but is being overhauled for more web-based sales." Independent Electric Supply, Inc. http://www.iesupply.com Phone: 650-594-9440 2002 Net Sales (mil.): $270.0 "Basically 0." North Coast Electric Company http://www.ncelec.com Phone: 503-630-2770 2002 Net Sales (mil.): $225.0 "Under 1%." SUMMIT Electric Supply Company Luciano Mase Phone: 505-346-9000 Sales figures can be purchased for $5 at this link: http://www.hoovers.com/cgi-bin/offsite?dn=108379744&site=HBN&url=http://dodge.hoovers.telebase.com/cgi-bin/dandb.cgi?P=P0020HM&Q=HOOVERSNOCHG&service=HOOVERS&U=%5BIP%5D&r=HO0 "In the 1% range - still under development." Turtle & Hughes, Inc. http://www.turtle.com Phone: 732-574-3600 [Julius Salakewicz {might be wrong spelling}] 2002 Net Sales (mil.): $195.0 "Literally 0%." He talked with me a little about it; they've been doing online business for 4 years; construction guys aren't ordering online at all, and they're trying to figure out if the money was well spent on web commerce. US Flow http://www.usflow.com Phone: 616-452-3251 [IT dept.] 2001 Net Sales (mil.): $350.0 "Under 5%." Staples Phone: 508-253-7342 [Katie Nash] 2002 Net Sales (mil.): $11,600 $1.6B in Internet sales OfficeMax Phone: 216-471-6900 [Steve Basten] 2002 Net Sales (mil.): $4,600 "Less than 10%." Companies that never got back to me for one reason or another --either they never returned the call(s) or don't disclose this info. [If I hear back from them, I'll be sure to post any info.] ============================================================= Grainger On vacation Phone: 847-535-1000 Stuart C. Irby Co. Phone: 601-969-1811 Speizman Industries, Inc. Phone: 704-559-5777 R.S. Hughes Co., Inc. Phone: 408-739-3211 Redlon & Johnson, Inc. http://www.redlon-johnson.com Phone: 207-773-4755 IT director RB Auction Phone: 604-273-7564 Production Tool Supply Phone: 586-755-5258 Not disclosed. MSC Industrial Phone: 516-812-2000 http://www.mscdirect.com/mscdirect.process Graybar Electric Company, Inc. Phone: 314-573-9411 Deb Weis DXP http://www.dxpe.com Phone: 713-996-4700 JLK Direct Distribution Inc. Phone: 734-458-7000 GE Supply Phone: 203-944-3000 Mayer Electric Chris Blackwell http://www.mayerelectric.com Phone: 205-583-3500 F.W. Webb Company Phone: 781-272-6600 Abatix Brian Adamson Phone: 214-381-1146 Indeck Power Equipment Company Phone: 847-541-8300 Northern Tool http://www.northerntool.com Phone: 952-894-9510 Sears - 847-286-2500 - ask for construction 214-265-3458 - Contractor - 407-677-3301 -ac 815-790-1446 American Standard http://www.americanstandard-us.com/wish.asp?rf=6202003145217732-980-6000 Ed Sleshinger Ben small 3183 -ac Mary Tuly 6196 Scotty's http://www.scottys.com Phone: 863-297-6136 Kmart No breakout Klein Tools, Inc. Phone: 847-677-9500 -ac Private WoodWorkers Warehouse Phone: 781-853-0900 privately held Lehmans Customer Service 888-438-5346 private Noland Phone: 757-928-9000 No Breakout Smith and Hawken Phone: 415-506-3700 privately held Wal-mart Phone: 479-277-9558 "dont give that info out" Mayer Electric Supply Company Inc. http://www.mayerelectric.com Charlie Klatt Phone: 205-583-3500 Plan on doing online sales soon. McJunkin Corporation Phone: 304-348-5211 Does not disclose this info Applied Industrial Technologies http://www.appliedindustrial.com Phone: 216-426-4000 -ac Not disclosed. Home Depot Not disclosed. Additional Resources [with excerpts] ==================================== Statcan http://www.statcan.ca/Daily/English/030402/d030402a.htm Construction Percentage of companies that use the Internet to sell goodes or services: 2001: 0.7 2002: 4.1 Information on methods and data quality available in the Integrated Meta Data Base: survey number 4225. Managing Risk in e-Business http://www.constructech.com/online_news/columns/010501.asp "Construction companies are under considerable pressure to push their business onto the Internet or at least use the Internet for some part of their business processes. But statistics show that the frequency of security attacks, incidents, and breaches are far higher for e-commerce-based business than for non-e-commerce business. Information leaks increase by more than 50%, and there is a 25% increase in incidents from "trusted partners." ... Ironically, the construction industry has been one of the slowest to embrace technology. However, a number of opportunities have been gaining visibility such as using an external application provider for project management, perhaps shared among many subcontracts or business partners; electronic mail to communicate among partners; and even e-procurement for submitting bids electronically..." Builders Rely On IT For Efficiency, Profit http://www.informationweek.com/754/cont.htm "That tends to drive certain behavior," says John Bailey, manager of computing infrastructure at Bechtel Corp., a $12.6 billion engineering, procurement, and construction company in San Francisco, and a veteran of such projects. Construction companies increasingly are turning to their IT departments for input into executive and managerial directives. They're being asked to participate in planning such projects as instantaneous and reliable communication among employees and partners, accurate project scheduling so firms can win bids while meeting profit goals, and integration of customers into the exchange of drawings and documents. In the past year, IT has become more engaged in the bidding process than we've ever been in the past," Bailey says. "IT is viewed as an integral part of the business." According to John Thomas, CIO at Parsons Corp., a Pasadena, Calif., engineering, procurement, and construction company with an estimated $2.12 billion in revenue, CIOs at these companies are "taking a seat at the management table," and are providing more input into corporate strategy and budgeting. "That's a real change in this industry," he says. Thomas and his staff actually work for Perot Systems, which is Parsons' IT outsourcer, but Thomas reports directly to Parsons' CEO." The Use of the Internet, IntraNet, E-Mail, and Web-Based Project Management Software in the Construction Industry http://asceditor.unl.edu/archives/2000/orth00.htm "The Internet is becoming more accessible every day to various construction professionals. It is becoming a useful communication tool and beginning to change the way construction professionals communicate with their own employees, other construction professionals, and clients. This paper presents a survey that was carried out during the summer 1999. The questionnaire contained general questions about the use of Internet, intraNet, e-mail, company websites, and web-based project management software. One hundred contractors, material suppliers/vendors, and owners/developers who have offices in Indiana, Kentucky, and Ohio were randomly selected from Purdue University’s Department of Building Construction Management company database. The results of the survey verify that construction professionals are taking advantage of the Internet, intraNet, e-mail, and web sites." Services worldwide http://www-1.ibm.com/services/insights/ii0208015.html Interior Architects has an IT setup that is similar to Barton Malow in that the New York-based architectural design and facilities management firm also has a Web portal and makes use of Web collaboration software to share documents with other parties involved in designing and developing facilities. Interior Architects says Web technology has helped the company reduce cycle times by 25 percent and save US$7.5 million over a two-year period. E-Biz: Strategies for Small Business Success http://www.ft-cdc.com/down/ebusiness/News_Articles_and_White_Papers/SBAResearchSummary1002.pdf Regardless of size, fifty-one percent of small firms say that business-to-business (B2B) sales account for less than 10 percent of their total Internet commerce. Only nine percent of all small businesses sell entirely to other businesses. Unexpectedly, even within the construction industry online sales are primarily to consumers. Metal Center CEOs Stress Continued Growth http://www.metalcenternews.com/2000/july00/scn072000_1.htm Since 1993, the company has increased revenues 307 percent and earnings 524 percent. Electronic commerce initiatives and further acquisitions will lead to further growth for Reliance, Hannah said. "We believe the Internet will benefit the company through more cost-efficient transactions on both the buy and sell sides, as well as the opportunity to expand our customer base," he said. "We joined MaterialNet.com, making us the largest metal service center supplier in the Network. Internet sales are still in their infancy, but that will change over time, and we want to be in the forefront." Online ordering gives contractors purchasing powers http://www.bidbuybuild.com/news04272000.htm "Online ordering gives contractors purchasing power There was a time when construction companies wouldn't have dreamed of ordering materials over the Internet. The time is rapidly approaching when they wouldn't dream of doing it any other way. Business-to-business e-commerce is the economy; that's where we're all going," says Mike Hartley, director of Grant Thornton's e*tech industry group in Chicago. "Any type of large industrial procurement will be over the Net, because it's faster and cheaper." Online ordering gives contractors purchasing powers http://www.bidbuybuild.com/news04272000.htm "The construction industry has lagged behind manufacturing and industrial segments in adopting information technology, but that is beginning to change as start-up "dot-com" firms obtain venture capital to create an online construction marketplace..." Equipment Buyers Look to Web to Conduct Future Business http://www.aem.org/News/AEMNews/Details.asp?P=78 "In the near future, construction equipment buyers will turn to the Internet more often for many aspects of product purchases and support, often at the expense of more traditional ways of conducting business, according to a preliminary survey of construction equipment customers conducted by the Association of Equipment Manufacturers (AEM). AEM is the consolidation of the Construction Industry Manufacturers Association (CIMA) and Equipment Manufacturers Institute (EMI) effective January 1, 2002. According to the AEM survey, buyers expect to use the Internet more in the future for almost every type of transaction - including equipment purchases, resale, service and support. Whether on their websites or not, the top-ranking services that equipment customers want from manufacturers include direct parts sales and component life expectancy data, as well as field service. Other services buyers rank as valuable include (in descending order) direct equipment sales, trade-in programs, on-site training, equipment evaluations, and factory financing." Search Strategy: "construction company" OR "construction firm" "through the web" OR "via the web" "construction companies are" web construction "web-based sales" OR "interNet-based sales" OR "online sales" consturction industry survey construction industry ecommerce OR e-commerce construction industry e-business OR ebusiness "construction industry" statistics "construction industry" "online * forecast" "online sales * construction" Additional LInks: Hanley Wood Corporate Headquarters One Thomas Circle, NW Washington, DC 20005 Telephone: (202) 452-0800 FAX: (202) 785-1974 E-Mail Directory Manfredy and Associates 847-949-9080 They do custom surveying/report generation.