The lumber and building materials (LBM) industry might be made up of physical products, but digital strategies are just as important as bricks and substrate. You’re stuck in the middle between suppliers and consumers in an increasingly digital space. Customers want to shop online to easily hunt for the best bargain. If you’re stuck doing things the same way as ten years ago, you’re missing sales.
For pro dealers and retailers alike, there has been a clear shift and strong interest demonstrated for buying building materials online. The Census Bureau reports that Lumber & Other Construction Materials eCommerce grew from 2% of all sales in 1999 to 13.4% by 2016.[1] That’s more than the general average of 9.3%--too large to ignore.
Boston Consulting Group (BCG) says it best with their advice for suppliers, “Although building materials producers have thrived in the past by following a conservative strategy that did not chase the latest trends, such an approach could become a recipe for failure in the near future. Simply put, sticking with the traditional distribution model is no longer an option in the digital economy.”[2]
The Four Themes That Will Shape LBM Digital Transformation – From BCG
- Mobile and Real-Time Information: The ability to access information about products, stock, and deliveries from the jobsite—anywhere, anytime
- Multichannel Customer Journey: Access to information at any physical location—by phone, on the web, and on mobile devices
- Quick, Direct Access: Fast in-store and online access to information
- BIM in the cloud: Building Information Modeling (BIM) accessible by anyone on browsers or mobile devices
Winners Tend to Be Disruptors—Not Disrupted
In a transforming marketplace, the winners tend to be the disrupters. The right solutions partner pushes you to the front of the line by offering insights, advice, and capabilities to help you navigate digital transformation.
There are multiple paths to going digital. Listening to advice from experts and seeing examples of successful digital implementations will help. When going digital in your operations, it’s important to think about two prerequisites:
- Relationships: Your personal, one-to-one relationships with the people up and down the supply chain are critical to the success of digitization initiatives.
- Platform: The right computing infrastructure is the foundation for your digital initiatives and helps improve those critical personal relationships.
Improve Relationships with Digital Technology
Effective communication is key to good personal relationships. It involves listening to and understanding a person’s needs. It requires accurate, thorough, and timely information with quick responses. Automating your business through digitization is all about capturing that data.
A good digital platform can help your company strengthen the buyer-seller relationship. It builds more loyalty in the personal relationships you have with customers. Your digital platform will better engage with your potential buyers—the general contractors, builders’ staff, and the DIYers who decide whether to buy your products and services. It’s a tool to give your customers the same excellent service you always have, but with modern tools. Retail giants like Amazon treat all their customers the same, but you don’t have to.
Capture the Online Searchers and Shoppers
“Investing in their digital presence is one of the best things LBM dealers can do,” says Kristie Vincent of Therma-Tru. “So many customers start their search online for product information and to find stores to visit, so it’s critical for LBM dealers to show up in that initial search.”[3]
With online wholesalers like BuilderPro and BuildersChoice, it’s easy to find product information and retail pricing for most building materials. Your customers—and potential customers—shop this way. The challenge is making it easy for people to find you to see both the products and the special benefits your company offers.
“Investing in their digital presence is one of the best things LBM dealers do.”
Your digital strategy for eCommerce should include a website that’s accessible from various devices. It needs product descriptions and pricing clearly displayed. To make your customers’ decisions easier, provide easy-to-use shopping carts, delivery or ship-to-store options, and payment options to help complete a good customer experience. And remember, embracing eCommerce doesn’t mean abandoning the superior service you give in-person. There are many ways to develop superior customer experience with online commerce.
Don’t forget to put some effort into search engine optimization (SEO) techniques—this is what makes it easier for people to find you! Though SEO has many different components that add up to a high search engine ranking, there are action items you can take to increase your organic search results. The title and URL of the pages on your site should include keywords specific to your industry and products. You can also write company blogs or information pages that not only share your expertise, but also provide key information for search engines to crawl. Additionally, you can use targeted social media and online advertising to improve search rankings and drive the right traffic to your website.
Open the Gatekeepers’ Gates
There are gatekeepers in your builders’ inner circle. They decide on construction methods, select the materials, and cut the purchase orders. Their influence on purchasing selection comes early and is difficult to change. It’s important that you foster good relationships with them and communicate regularly about how your products and services—including digital capabilities—will make their jobs easier.
Don’t ignore the architects, engineers, and designers involved in home building and renovation. They often specify modular components, energy efficient/green products, architectural structures, and finishings. Michael Tobias puts it this way, “A successful pro dealer needs to formally target engineers outside the project, drawing attention in a passive way to information about products.”[4]
LBM companies should also make a point of selling to a builder’s purchasing manager. They are also a gatekeeper who looks for new ways to differentiate their company’s latest offerings, be more cost-effective, and minimize loss.
Differentiate your business to gatekeepers by demonstrating your strengths in:
- Product knowledge and local service
- Take-offs and estimating
- Value-added services such as precutting, pre-hanging, and panelizing
- Fast and accurate orders through seamless interfaces with door, window, and kitchen ordering tools
- Better pricing and mutual benefit due to Customer Stratification analysis
- Digital capabilities that will make their jobs easier
Impress the Construction Manager
The construction manager may not select materials, but they may have a say in which suppliers are selected. They know a great supplier makes their job easier in countless ways. Construction managers are happy when they get the materials to the right jobsites, in the right quantities, at the right time. Digital capabilities make it easy for you to impress them and quickly become their preferred supplier.
Since construction managers may be responsible for cost control and accounting for materials consumption, helping to reduce loss is valuable. Precutting and packaging or kitting materials can help reduce jobsite waste. Your digital capabilities can help you provide these services—plus coordinate deliveries.
Construction managers are bound to inundate field sales reps on construction sites with questions. Be sure to arm your sales team with mobile devices and access to real-time information on your business system to answer questions immediately without having to make a call or promise to send the information later.
Making Your Digital Transformation Happen
Once you’ve decided to take advantage of the benefits digital initiatives offer, it’s time to set the groundwork for change. BCG lists five imperatives for success in your digital transformation:
- Make digital transformation a C-level priority
- Establish an independent digital unit
- Become agile to innovate
- Implement digital ideas effectively including cloud-based analytics, augmented reality, tracking technologies, and more
- Measure the results
With the right technological partner and a strategic plan, there’s no limit to the growth your company can achieve. Now is the time to become a tech-forward leader in the industry.
[1] Salandro, Vincent. “E-Commerce: The Future of LBM?”, ProSales Magazine, Sept. 17, 2018
[2] Burfeind, Heck, Gross, and Rahne, “Bringing Digital Disruption to Building Materials—Reinventing the Customer Journey,” Boston Consulting Group, Nov. 2015.
[3] Five Questions with: Kristie Vincent, Therma-Tru Corp.” LBM Journal, Oct 22 2018
[4] Tobias, Michael, “Improve Relationships Between LBM Pro Dealers & Engineers,” ProSales Magazine, July 8, 2019.
