HICKSVILLE, N.Y.—While selling he latest in carpet, laminate, hardwood, ceramic tile, resilient and even window treatments, many retailers run into the rut of looking the same as the guy down the street. Differentiation is the key, say the industry pundits. But what to offer and how to sell it is a thorny issue, especially during the current market slowdown.

CoverSource, based in Greenville, S.C., moves manufacturers’ distressed inventories and/or running line products in bulk volume. “We offer a valuable service to the manufacturers in that we have gone through due diligence with our customers and therefore know the ones who are looking for a specific product relative to that manufacturer and the ones who are credit worthy,” said Franklin Snipes, president and owner of CoverSource.

The company recently became involved in a joint venture with The Revere Group, a Boston-based agency specializing in the development of strategic partnerships between off-shore suppliers and retail groups like Do-It-Best in Ft. Wayne, Ind. Do-It- est (DIB) is a large co-op with a mixture of member-owned big box, smaller-format building materials and decor stores that compete with The Home Depot, Menards and Lowe’s.

“This joint venture was formed to enable us to approach companies like DIB with our goods and services and establish long-term, mutually beneficial partnerships,” Snipes said. “We deal with many manufacturers and therefore offer many different items. This includes hardwood flooring, ceramic tile, porcelain tile, vinyl tile, granite tile, underlayment, cabinets, doors, windows, vanities, appliances and more.

“We have a pretty good idea of how many of the DIB locations are opportunity buyers now, so we plan to focus on those initially as well as its overseas locations. From time to time we have manufacturing partners come to us with items that cannot be sold in the U.S., so the DIB members overseas will give us a great outlet for those types of items. With approximately 4,300 locations overall, we plan on having our hands full for some time.”

Lou Smith, an industry veteran who helped design the joint venture between CoverSource, The Revere Group and DIB, agreed, noting that whether it’s handling overruns, off color or old goods, CoverSource “is one of the largest specialists in this business segment.

Because of the type of goods involved and the situations encountered, it is able to purchase its merchandise at a deep discount. While 60% to 70% of the goods can be sold in the U.S., the balance, for a variety of reasons, has to be sold offshore. As Do It Best has more than 1,000 members outside the U.S., this will be an ideal opportunity and a good marriage.”

Given the constriction of the building materials market, the heavy inventories of manufacturers and wholesalers and the rapidly approaching fourth quarter, the CoverSource pipeline is expected to be full of products from vendors wishing to divest their inventories in calendar 2007. “What is most exciting about this new concept is the fresh approach to both the manufacturing and retail ends of the market,” Smith said. “The closeout business has been around as long as there have been inventories. What is new here is the vision of establishing strategic and cohesive marketing philosophies tied to critical inventory disposition. In the past, the goods were simply sold to make the manufacturer’s headaches disappear or to raise cash from stagnant products, often at pennies on the retail dollar. Now the manufacturer has some onward control over the product channel, and the sale process is thus more thoughtful and in line with its overall strategic philosophy while having the additional bonus of achieving a little better price for the goods.”

As Snipes noted, the focus for CoverSource is to offer retailers something different, items that not everyone else has, so he can differentiate himself for the end user. “Every customer is looking for a deal, and every retailer is looking for a means of accommodating that customer while at the same time remaining profitable. Our responsibility to DIB and the rest of our customer base is to bring the best products possible to the table at a price that will allow them to be successful in the retail setting. There’s a great Web site, www.woot.com. It is successful because it offers one item for one day. Potential customers visiting that site know it’s an opportunity buy. They are going to see a quality product at a great price, but it won’t be available tomorrow. In a similar vein CoverSource’s Web site (www.coversourceusa.com) is under development and will launch by Dec. 1.

For more information on CoverSource, call 864.235.5241.