Beating the e-tailers at their own game Article Number : 4800

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Date	9/3/2009 9:41:55 AM
Written By	LGM & Associates Technical Flooring Services
View this article at:	//floorbiz.com/BizResources/NPViewArticle.asp?ArticleID=4800
Abstract	Wood may be the toughest flooring category for independent dealers when it comes to competing with Internet retailers. Consumers shop brick and mortar showrooms, then use that product knowledge and professional sales staff input to...
Article	Wood may be the toughest flooring category for independent dealers when it comes to competing with Internet retailers. Consumers shop brick and mortar showrooms, then use that product knowledge and professional sales staff input to make Web purchases. It’s called “getting shopped,” but there are ways to fight back, strategies to compete and beat e-tailers at their own game. “The e-tailer situation has become very tough of late,” said Robert Moomjy, president of Floorsmart in Livingston, N.J. “With the economy there are a lot of manufacturers out there that will sell to anyone at this stage, and a lot of these e-tailers will sell at almost nonexistent margins. It’s a big challenge.” The most effective thing Moomjy said he does is deal as much with the big suppliers like Shaw and Mohawk rather than distributor-oriented merchandise. “They tend to protect us more,” he said. Larger suppliers in recent months have taken steps to protect their dealers’ margins by implementing policies such as minimum advertised pricing. Anderson was the first to do so last fall and the measure was widely applauded by its dealers. “Anderson’s policy allows us to offer the brand with the confidence that another retailer will not be advertising its products at prices below a reasonable minimum advertised price,” said Darren Braunstein, COO of Worldwide Wholesale in Edison, N.J. Vigilance on the part of suppliers like Anderson, Shaw and Armstrong have helped but the problem still exists with people who get customers to call in for a price then undercut the competition, said Anderson dealer Don Herndon, president of Classic Wood Floors in Melbourne, Fla., the largest single store in the state. Dealers also said that sticking with suppliers like Mirage, which refuses to even sell to Web dealers, and implementing private-label programs are other means by which they can remain competitive. In order to stem the flow of lost business, both Herndon and Moomjy now put a lot of effort into screening customers up front, asking how they heard about a brand or product. “If they’ve seen it on the Internet or come in and want to see this or that product, we decide whether we show it to them or not,” Moomjy said. “But private labeling is the best way to protect yourself.” Paul Reimer, vice president of Reimer Floors in Bloomfield Hills, Mich., put together a private-label package with several of his vendors and the result was immediate. “We’re not getting shopped all over town on it now,” he said. Private labels work because they give customers information without giving too much away, he explained. Private-label programs are also the first line of defense for Nick Freadrecea, owner of The Flooring Gallery in Louisville, Ky., but he has stepped up his information game another notch as well. Freadrecea and his sales staff deal with Internet shoppers by actually surfing flooring Web sites with them—and filling in the blanks on issues like shipping, installation, service and return policies. Often, that information can make the difference in turning the sale, he said. “An e-tailer, for example, will offer free shipping to get a product sold but it’s very expensive to return it,” he said. “So, a lot of times we can educate the customer to those things because they are not aware they are not getting what they think they are getting. Many of them have not even thought ahead as far as what happens when the pallet of flooring arrives.” Freadrecea also spends a lot more time talking about advantages he can offer his customers that e-tailers often can’t. “We talk about warranties and installers because a lot of these buyers are not doing the work themselves,” he added. “And we talk about the big problems like even if they find a good installer, he is not going to come back out to do service work.” Service differentiation is the key advantage for most dealers over Internet outfits, so it’s important to stress the advantage, dealers said. “You can’t get that through the Internet and, to me, that’s well worth 5% to 10% more,” Herndon said. “This business has always been about customer relationships and always will be.” Even though Internet sales are growing, a lot of flooring customers still want to see and feel the product so use that as a key to driving traffic into the store, said Gary Cissell, director of flooring at Nebraska Furniture Mart. Reimer also uses promos and couponing in support of his Web site to drive traffic to his store. “We can provide them the installation as well as the product at a competitive price and be here when they have a problem and, if you get a chance to talk to them, that’s a pretty compelling story,” he said. “The ones you can talk to you can turn things around but it’s the ones that just hit the button you don’t get a shot at.”