|
California Distributor Selling Windows On Line
From September 2000 Window & Door
Implementation is still limited, but Web-based
systems for business-
to-business transactions are projected to be the norm
within two years
By John G. Swanson, Editor
Few doubt E-commerce is
coming to the window and door business. Talking to a variety
of experts, however, you get different views of what it
might look like.
Will dealers sell to builders, contractors, and even
homeowners via the Web? Will manufacturers? Will the
Internet spawn new distribution channels? Or is the Web
simply another part of the infrastructure used to conduct
business in traditional ways? It depends on who you ask, but
the answer may be yes to all those questions.
Even with the fall of the dot-coms, Web technology is being
adapted in an expanding number of ways. Many window and door
manufacturers are busy developing E-business systems.
Although few Web-based quote systems are in place, many of
the larger manufacturers are looking to develop or adapt
proprietary product configuration and ordering systems for
use on-line. Recent announcements for such plans were made
by Andersen Windows and Nortek. Generally, manufacturers are
looking at ways to improve business relationships with their
dealers and/or distributors by providing them with
E-business tools and an infrastructure to better serve their
customers. Others
suggest other broader market activities may be more significant.
Rather than proprietary systems developed by manufacturers,
E-business may increasingly hinge more on emerging connectivity
systems and the adoption of common exchange platforms which will be
used by distributors, dealers, and even builders. One of the more
well-known examples of this concept is BuildNet, which is rolling
out its exchange platform in several markets around the country.
Applications in this industry can be seen in the example of Texas
Plywood and Lumber, a door and millwork distributor based in Grand
Prairie, TX, which began accepting electronic orders from builders
using the BuildNet system last November.
 Another
notable development in the market is 1stwindows.com. Created by a
California distributor, the site is expected to be used by about
1,000 builders and contractors for purchasing windows and doors
within a year. Contrary to the expectations of many within the
industry, the site has also been selling windows and doors to
homeowners over the Internet since the middle of last year, reports
Douglas Lopez, president of the company. Currently serving customers
on the West Coast, 1stwindows.com will soon roll out nationally with
window partners covering the rest of the country as well, he
reports. Looking at what’s currently available and listening to the
predictions of experts, it’s clear there will be more than one
model for E-commerce in the window and door business. What model
will dominate is hard to predict, but the experts agree whatever is
coming is coming fast, with rapidly evolving technology. Pointing to
software that already allows a window to be configured and ordered
on a jobsite using a Palm Pilot, Richard Boyce, president of Bid
 Master, suggests many of these new technologies will emerge over the
next six months. Most suppliers agree. It is a matter of months, not
years, before E-business practices start to be adopted in one form
or another within the industry.
E-commerce continues to be a topic that everyone talks about, states
Jim Naas, configuration product manager for Friedman Corp. “But the
window and door business isn’t taking a typical ‘B2B’ or ‘B2C’
approach. It’s using the web for leverage to do a lot of things.” He
points to not only transactions, but information exchange. Companies
are turning to the Web to provide customers’ with access to
information about orders, product availability, delivery status, and
much more, he notes. “No one really thought a window could be sold
over the Internet,” states Sherif El-Dibani of Computers Mean
Business. “For the window and door industry, the Internet’s not
about making money, it’s about trying to save money.” This view
helped to insulate the industry from the boom and bust of all the
Internet companies, he suggests. As a result, the window and door
industry is not backing away from the Web, but actively exploring
potential ways it can be used.
Despite last year’s crash of the dot-coms, talk about E-business
hasn’t stopped, agrees Mike Owens, vice president/sales and
marketing for WoodWare Systems. “It’s just become much better
refined.” Like some other observers, he suggests that a
considerable amount of caution exists in the market. “How long is
it going to take to get everybody there?” That’s
the most important question
building product distributors ask, reports Byron Hansen, director of
E-commerce systems for Distributrion Management Systems, Inc. In
answering the question, he states, the software is available to
address a lot of users needs, but not everything is in place yet. In
some areas, there’s no broadband or DSL infrastructure. It may
need to wait until the builder can spec a job on his Palm Pilot. He
notes, however, that using current configuration packages, it takes
about a minute and a half to order the first window for a job. After
that, with default values already in place, the remaining windows
for a project take just seconds. As these tools evolve, there will
be increasing pressure to take advantage of them. “The scratch pad
and the faxed order will no longer be acceptable,” he states.
Manufacturer Efforts
Despite the fact that a
distributor has developed one of the first up-and-running
Web sites that allows fenestration products to be ordered
electronically, suppliers suggest that, within the window
and door industry at least, it is among manufacturers where
E-commerce is being pursued most agressively. “There’s
so much competition with manufacturers expanding and
stepping on each others’ turf,” Naas states. “They see
maintaining or expanding their dealers bases as key.”
The primary interest is in systems which would allow a
replacement window dealer, for example, to go into a home,
take measurements, configure the order, and get the quote.
In some cases, the dealer may be directly linked to the Web,
he states. In other cases, he may dial up only to get
the latest pricing
 information
or to place an order or orders. “Manufacturers see
a real need to create an effective dealer or front-end
platform,” states Naas. “They want to provide
functionality to help lock in their relationships.”
El-Dibani also sees the use of the Web to facilitate the
dealer ordering cycle as the primary area of activity within
the industry. Like Naas, he reports that most companies are
looking at some type of hybrid system, rather than a live,
over-the-Web E-commerce system, right now. The dealer, at
this point, is not going to log on every time he places an
order, he explains. As wireless technology improves and
costs continue to come down, computers will at some point be
on-line all the time. Currently, however, the model being
looked at most frequently, he continues, is the use of the
Web to download updates of a price book to a quoting/order
entry system, and then use of the Web to upload collected
orders to the manufacturer’s system.
“It’s not being done that much yet, but that’s what
people are looking at,” El-Dibani adds, “That’s what
they’re talking about.”
Manufacturers want to make it as simple a process as
possible for their distributors to order from them, states
Jim Brown, vice president of sales and marketing for
eTechLogix. “They see a strong configuration system as
key,” he notes, “yet they want to make it as intuitive
as possible to place an order.”
Brown sees these systems migrating to the Web quickly, not
only as a means to accept and acknowledge orders, but also
to allow transfer of a variety of other information quickly
as well.
Like the other suppliers, Brown reports there’s very
little in place right at the moment, as far as Web-enabled
systems go. Looking at the top 100 manufacturers in this
country, however, he estimates there are at least a dozen
major initiatives underway. Additionally, a still larger
group of companies have said they intend to implement an
E-commerce strategy.
“There’s a tug-of-war going on between what’s the
latest and greatest,” states Chris Ransford, vice
president of marketing for Soft-Tech America, “and what’s
realistic, particularly for an industry with fairly narrow
margins.” In addition to cost issues, he points to comfort
issues as a factor still. But, he adds, the technical
aspects of providing configuring and pricing of simple and
even complex products over the Web have been addressed.
These types of systems, already offered by manufacturers,
will migrate more and more to the Web, he predicts.
In addition to simplifying the order process and eliminating
mistakes, Ransford notes that the use of the Web will offer
real benefits in providing customers with access to a
manufacturer’s latest information and capabilities. It’s
also a great equalizer for dealers, he notes. In non-Web
systems, different dealers are often working with different
versions of a manufacturer’s catalog and price book.
Distributor/Dealer Attitudes
“We see it all growing,
the whole B2B process,” says DMSi’s Hansen. There’s a
lot of interest among his company’s wholesale distributor
customers, but the the actual demand isn’t necessarily
there yet, he notes. “Most know this is the future. There
may be some question of when, but it’s commonly accepted
that this is the way we’re going to do business.”
“The basic needs are still there,” states Woodware’s
Owens, looking at his millwork distributor customers. “They’re
looking for better ways to sell products and handle their
sales channels more cost effectively.” He suggests that
most business owners see the Web as a useful tool and they’re
looking at E-commerce among their long-term objectives. But,
he adds, “They’re just as likely to have higher
priorities.”
E-commerce generated a lot of talk and excitement among
building product distributors last year, and then things
fell off, suggests Bidmaster’s Boyce. He sees the crash of
the dot-coms as one reason, but also suggests that many
companies in the industry have simply been too busy. He
states that traditionally, the development and sales of
quoting tools picks up when the economy is slow. People have
to prepare more bids to get the same number of jobs, he
explains. The same motivations is getting people looking at
Web-based systems now.
Among distributors, Hansen states, the major concern
continues to be improving efficiency overall. The main goal
is to find new ways to add value for less cost. E-commerce
is seen as a tool that enables distributors to continue to
deliver value, as it enables customers to get information
quickly and easily and provides the means to facilitate
reduced handling, inventory, and transportation, while still
maintaining service levels, he states. With mergers and
consolidation, some firms look to E-commerce as a way to
maintain viability, he notes as well.
Efforts to lower costs are a big reason for distributor
interest in E-commerce systems, agrees Boyce. He points to a
National Sash and Door Jobber Association Study which
estimates that 7 percent of the cost of most millwork
products is tied up directly in the sales process. About
half of that figure, he states, involves the simple
processing of the transaction, and E-business is seen as a
tool to take much of that cost out.
Millwork and window and door distributors are beginning to
have more defined ideas of what they want to do as far as
E-commerce is concerned, reports Owens. One example, he
states, is that a lot of companies are simply looking for a
way to handle transactions in place of their existing EDI
systems. They’re looking at the Web simply as a more
cost-effective way to transfer orders and information, but
they’re not looking to do anything with “a lot of pretty
pictures.”
Beyond that, Owens sees a lot of companies looking at ways
to open up their systems to provide more access to
information It may be about product availability or order
status, but currently, he reports, the Web is primarily
being used to provide this information to remote or branch
operations. In some cases, it’s being provided to outside
salespeople and, in a handful of instances, customers.
Construction Supply Chain
As far as E-business is
concerned, manufacturers and distributors may not have the
only say in how E-business develops. A lot may be determined
by the success of several emerging companies which aim to
serve as connectivity providers and electronic transaction
exchange hubs for the entire construction industry. Several
companies are actively pursuing the market, but the best
known of these, perhaps, are BuildNet (which currently has
relationships with a number of manufacturers, including
Andersen and Jeld-Wen) and Channelinx (which has been more
actively signing up companies at the dealer/distribution
level), but several others are actively pursuing
opportunities in this market. Others include Buildscape,
which is currently working with a number of building
products distributors around the country, and USBuild.com,
which is targeting the production homebuilding market.
Suppliers to Wal-Mart have systems in place, so they know
when shelves are emptying, and it’s time to ship products
to replenish supplies, explains BuildNet’s John Wagner.
The concept of his firm, and a number of competitors, is to
bring supply chain management to the construction industry
and take costs out by enabling firms to go from a “just in
case” to “just in time” mode.
The process begins by convincing builders to shift from a
system where they fax orders for various products to the
point where they generate purchase orders electronically.
These orders, in turn, are received electronically by the
supplier, which could be a one-step or two-step dealer,
which, in turn, could relay the information to the two-step
distributor or manufacturer, all automatically, Wagner
explains.
Handling construction products, including overhead and
carrying costs, etc., adds 4 to 8 percent to the cost at
each level, he states. In discussions with window
manufacturers, he notes, his firm has heard estimates that
they could cut their costs as much as 20 percent if they
could get out of the stock window business into the
just-in-time, made-to-order model.
E-commerce and, more importantly, synchronizing the supply
chain makes this possible, Wagner asserts. He points,
however, that it’s not a question of cutting out the
middleman either. The builder’s preferred supplier,
offering local staging, delivery, and service, continues to
be used under this model.
As a company, BuildNet can supply any level of software
desired to aid in this process, he points out. As a supplier
of construction management software to a significant number
of builders, BuildNet is developing the demand side of the
E-commerce equation, enabling a significant portion of the
market to place orders electronically.
For distributors,
dealers, and manufacturers, it can provide a variety of
services, ranging from complete ERP systems, ordering and
configuration systems, or simply connectivity and
synchronization to enable each firm to understand
communications from others to be understood in its own
system’s native code.
Many software suppliers more closely aligned with the window
and door industry see these supply chain approaches to the
market as having an impact, while others are more skeptical.
DMSi’s Hansen suggests that for window and door
distributors and manufacturers they may serve a role very
similar to that of a VAN (value-added network) provider in
today’s EDI systems. These systems simply allow one
company’s back-end system to communicate with another’s,
he states.
Boyce states that he’s convinced these types of systems
are going to affect how orders flow for windows and doors.
The key element driving it, he suggests, is the builder on
the jobsite. He can save costs by scheduling labor because
he knows exactly when windows or doors are coming, whether
two doors are back-ordered, etc. Wireless technology will
enable him, from the hood of his pick-up, to punch in sizes,
check availability, and place an order.
While the builder of previous generations was slow to adapt
to technology, Boyce points out, cell phones and lap tops
are now common. The market is increasingly dominated by
younger people who grew up using computers and want the
latest gadgets.
Owens offers some reservations, not about the systems, but
about the market in general, and how fast it may adapt to
this technology. A number of distributor customers report
that many builders don’t want to take on the
responsibility of configuring and ordering windows or doors.
“They just want to call the inside sales rep and let him
do the take-offs,” he notes. “Yes, there are
large builders that look at their costs and look at automated
systems, but there are a lot of small and medium-sized
builders who are more focused on what Alan Greenspan is
going to do next.”
Competing Agendas
Bringing connectivity to
all parties involved in the construction supply chain may
promise to take costs out of the system, but it also
presents conflict. Currently, software suppliers note, most
window and door manufacturers are looking at proprietary
quoting and ordering systems.
“Looking at the exchange networks, there’s not much
interest among manufacturers in having their product one of
many,” reports eTechLogix’s Jim Brown. When most talk
about E-commerce, he continues, window and door
manufacturers foresee a “private network” which links
them up with and provides specific capabilities to specific
customers. He suspects that’s what more distributors are
considering too.
The whole impetus for many manufacturers to develop a dealer
front-end system is to enhance the dealer/manufacturer
relationship, Friedman’s Naas states. “The manufacturers
want something proprietary, that enables them to offer an
enhanced level of service.” He also notes that there
simply isn’t that much interest in putting a configuration
and ordering tool directly in the hands of the builder.
Computers Mean Business’s El-Dibani sees manufacturers
primarily interested in proprietary systems too, but
cautions that they need “to put themselves in the dealers’
shoes.” What will software do for the dealer? How will it
make the dealer’s day-to-day business activity more
efficient? He also asks whether such software will allow the
dealer add other products such as siding, roofing, and
installation charges? “The point is that if the software
is designed to address the manufacturer’s needs with
little regard to what dealers really need,” he states, “it
is a wasted investment on part of the manufacturer.
While he foresees different companies maintaining unique
systems which meet their own needs, Wagner warns that
proprietary approaches to E-commerce have their limitations.
The builder, for example, doesn’t want to go to 100
different sites to order all the thousands of different
products needed for the typical home, he states. The real
costs savings, up and down the supply chain, he notes, comes
in automated purchasing.
Boyce shares the concern about proprietary systems. The
builder, and even the distributor, doesn’t want to have to
learn how to use a different ordering system for each
manufacturer. Web-enabled ordering systems can certainly
feature the manufacturers’ look, with its logos and color
schemes, but the user has to know how to use it intuitively.
A proprietary approach doesn’t serve the dealer, 1st
Windows’ Lopez points out also. He asks what it would be
like to use different word processing programs to write
letters to different suppliers.
This issue highlights the fact that E-commerce is likely to
raise a whole host of questions as it progresses. “We’re
driving down a road with no maps,” says Lopez. “It’s
all uncharted territory.”
El-Dibani sees E-commerce potentially disrupting some
traditional distribution channels. One potential
development, he foresees, is “super” dealers emerging on
the Web, allowing builders or contractors to place specs for
a job on a site, and then receive bids from a variety of
manufacturers.
However it develops, E-commerce will come quickly, El-Dibani
notes. In addition to the benefits it offers, he points out
the new ASP or application service provider model that is
moving into the software/computer services industry.
Customers are billed monthly for services, rather than
making a large capital investment in systems. The cost of
taking advantage of new technologies ia coming down
significantly as a result, he states. Friedman’s Naas also sees use of these technologies
accelerating quickly. “We’ll get to the point soon where
we won’t have an ‘E’ anymore. This approach is just
going to be ‘commerce,’” he concludes. “Technology
eventually loses its identity and simply becomes a standard
part of the infrastructure.”
What Happens When Windows Are Ordered Over the Web
On-line since Summer of 2000,
1stwindows.com has proved to be successful selling name brand
windows at wholesale prices, reports Douglas Lopez, president and
founder. Started as a subsidiary of California Distribution Center,
Inc., a Signal Hill, CA, based dealer, the site offers products from
a variety of leading manufacturers.
“It’s not about price,” Lopez states, explaining why people
are buying windows over the Internet, “It’s convenience.” They
want to save money, but more importantly they want to save time, he
says. In general, the online-buyer tends to have a little higher
education level, and they have or want to develop a better knowledge
level about the products they buy, he notes also.
The site’s customer base consists of about two-thirds building
professionals and about one-third homeowners. And though it may
surprise many in the industry to hear consumers are ordering their
own windows, Lopez reports no problems so far. The site provides a
lot of information about measuring and ordering windows, and full
phone support is available as well. Looking at consumers, he
suggests, that as an industry, “We need to give them more credit
than we do.”
From a company standpoint, he says the site as generated a
tremendous amount of new business. While California has been in a
“window recession” in the past year, he states his firm has
enjoyed extremely strong growth. At the same time, this type of
E-business takes a lot of the load off, as so many aspects of the
business are automated. “It really does give you more time for
customer service.”
As for customers of his traditional “bricks-and-mortar”
operation, some use the Web site, others are “never going on-line.”
That’s okay, he states. “We don’t want to lose customers and
we’re going to support them.” He notes that he still goes out on
calls to show people samples and offer other traditional “customer
services.”
As for the reaction of manufacturers, he describes it as “mixed.”
Some are supportive, others are concerned about their relations with
other dealers. “Just about all of them,” he adds, “want to
find out what we’ve learned.”
Click
here to visit WindowandDoor.net |
