Distributors, dealers, and big boxes have been the traditional middlemen in building materials. They enabled manufacturers to efficiently sell and ship larger quantities of products. Products are available where and when they are needed and in the quantities needed thanks to the work of these middlemen.
Where they were once essential, distributors and dealers are now in a tough place as manufacturers regularly question whether they are doing enough for how much they earn. Smart manufacturers work in partnership with their better distributors and dealers, but many manufacturers see them more as a necessary evil that doesn’t earn its keep.
One of the benefits of working with a traditional middleman is that they are unlikely to switch the customer. If the customer orders a product, the goal of distributor, dealer or big box is to get them that product.
Now, there is a growing type of middleman that sees its job as also helping the customer make better choices.
New Types of Middlemen
1. Outsource Design, Product Selection and Sourcing
Katerra’s new Kova line of products allows builders and developers to outsource the design and sourcing of spaces like kitchens and baths. No need to spend time selecting and sourcing faucets, sinks, cabinets, flooring, lighting and the many other products that are required for these two complicated spaces.
Their theme is Go. Build. We’ll Take Care of the Rest
And it’s not just easier – their designers are probably better than many builders, too. They also manufacture most of the products and pass the savings along to the customer.
This type of middleman is a big threat to manufacturers. They are offering faster, cheaper and better and they don’t need you.
2. Online Sourcing Services
More and more startups are creating online sourcing platforms that promise to save the customer money, reduce costs, make smarter decisions and better manage information.
“Can’t find experienced purchasing people? Outsource it to us and build more” is part of their message.
Here are some of these companies:
This is a new type of company, and like all new products most of them won’t make it. But a few will, and they will keep making their systems better and there will be more startups. At some point, we will probably see a large player, like SAP, get into building materials sourcing.
Some of these services will simply get the customer what they want at the best price, but others will also recommend different products to the customer you thought you had sold.
3. Online Product Purchases
The online sales of building materials through Amazon, big boxes, online merchants, distributors, dealers and manufacturer sites continues to grow. These are not just sales to homeowners or consumers; more pro customers are purchasing online.
Pro customers see how online shopping makes their personal life better and they want that same convenience in their business.
When your pro customer goes to purchase your product online, they are likely to be shown your competitor’s product as an alternative.
Another type of online product purchase service is Construction Windows. They are focused on selling windows to builders and contractors who want to make better use of their time by purchasing their windows online.
To a lot of builders and contractors, the ability to quickly get prices and then easily and accurately order the windows for a job is more important than the brand or price. They see how many hours per week they could free up by ordering windows online and how much it would help their business.
We will see more companies like this, especially with complicated products like windows. This new type of middleman isn’t selling your brand; they are selling their ability to make their customers more efficient and successful.
Steps to Take
1. Traditional middlemen aren’t going away. They will lose some of their business to these new middlemen – some more than others. Review your current relationships with middlemen and work more closely with the ones you feel are best positioned to succeed in the future.
2. Ask more of your customers how you could make it easier for them to buy your products, and ask them more often. Hand them a magic wand and ask, “How would you choose and purchase our products in an ideal world?”
3. Keep a close eye on the many new ways your customers can source and purchase building materials. If you wait until you start losing customers, it’s too late.
4. Have a plan for how your company can turn these changes into an advantage.