Online Sales and the Independent Retailer
Steve Simonson is a pioneer in the digital realm. He was the founder and creator of iFloor in the late 1990s and has since been involved with a number of entrepreneurial, cCommerce, strategic business, sourcing, content developing and tech support operation and websites. Steve has been a regular on Talk Floor for years and recently appeared on the site to share his views on the economy, the housing and remodeling markets and, of course, the flooring market.
The following are excerpts from that conversation, which can be listened to in their entirety on floortrendsmag.com; just click on multimedia, then on podcasts. Here are those excerpts.
TF: Steve, when I said that you were an Internet pioneer, I was not exaggerating. When you founded iFloor in 1998, you had to develop every element needed for an ecommerce site.
Simonson: It was definitely a different time. Just the idea of developing content, unlike the way it is today, we had to create everything ourselves. The technology to serve up the content was something we had to develop ourselves. Today, there are so many technology platforms and content sharing concepts, it’s definitely a great deal easier to launch today.
TF: I suspect that most retailers listening to us are wringing their hands over how to successfully harness many of the social media platforms. Any suggestions?
Simonson: It’s always a headache. We all seem to have our blinders on as to what people will be interested in. And we equate what they would be interested in as to what topics interest us. For experienced professionals, that is a mistake because what interests us is something new and innovative and something that we have never heard of. We take for granted the basics, the things we already know. When retailers say they don’t know how to create content, a major option is to outsource it. There are quite a number of resources that can do that. In fact, one of our sites, The Empower Cooperative at empowery.com, is focused on exactly that, finding resources particularly for ecommerce related applications to help people solve these types of problems such as content generation and Facebook marketing.
If they don’t want to outsource it, think about every product line in your store, every success story you have with a customer, take jobsite pictures often and just start making content generation a part of your daily routine. There is also a website called Hootsuite.com that has a free version. This site was also founded by a flooring guy. This will help you get content out there and boost the content in your local marketing area to engage new prospects and potentially new customers.
TF: How successful are we as an industry selling flooring online?
Simonson: It definitely varies. There are the players at the top of the food chain, the big box players, and simply by their natural brands they are going to drive traffic to their websites. Many of them are investing in driving specific leads to their sites as well. There has also been a great deal of second-tier players, the ones that are specializing in selling flooring online and there are a variety of them that are putting up reasonable numbers, say $10 million to $50 million in sales, and they are doing okay. There are some that exceed that and some that are below that. And then there is just a ton of players that have websites—and that is probably 90% of the market—and they are just wildly ineffective. They just haven’t put enough time and energy into the equation. I’m less concerned about their immediate sales than about whether they are engaging the customer who needs to find them in their local market. One common mistake people make is putting their phone number in a graphic form on their website perhaps because they feel it looks cooler if it’s in a fancy font or graphic, but mobile traffic is the majority of traffic today so the phone number should be in text so it’s clickable and will connect them immediately to the store. Missing these tiny details is missing opportunities.
The lower 80% is really not getting the job done, and they really need to make a commitment to getting in the game and making something happen; otherwise, the world is going to pass them by.
Fundamentally, everyone wants to check it off their to-do list, so they find something that seems to meet their needs. I suggest they decide just how important ecommerce is to their business, what kind of revenue they feel it can generate and then allocate a reasonable amount of resources for it to get the job done. Too often, people spent $500 to build a website and they didn’t get rich, so they conclude the internet is not a viable opportunity.
TF: What do you see long term for online sales of floor coverings?
Simonson: When we started iFloor 20 years ago, we literally didn’t know how to ship products from point to point. Now all of that has become a great deal easier. There is now software that makes shipping similar to a live auction so better rates can be obtained. In five to 10 years, it will even be a great deal easier and more competitive. Without a doubt, consumers will continue to begin their search for flooring online. They are already doing that. They will be more comfortable with the idea of buying flooring online, especially when it’s made easier.
The big box players, companies like Amazon, will be much stronger. Wayfair will be stronger; they’re already doing over $4 billion in sales per year. I do see marketplaces being one of the biggest opportunities in the future for independent retailers. There will be marketplaces where independents can list products and sell to customers and I think will emerge especially for big-ticket home improvement in the next five years.
TF: Is selling floor covering products online and fulfilling the sale through local independent retailers a viable concept?
Simonson: It’s an interesting concept. We started a program called Install Quote back in 2002 or 2003. The premise was that people would go online to one of our several websites, and they were pretty large in terms of their traffic, and customer pull. We were aware that that 98% were not going to buy online—today it’s probably 92%—so our premise was to connect them to a local organization that could help them out with a good price and good service. The idea has merit, but the trouble has always been developing a large pool of independent retailers to execute with excellence in a consistent and ongoing way. That was the trouble. There were some that were great in a particular town, and there were some that were just interested in getting the lead and going around the marketplace. If that happens, it will end up with low-quality providers, which will make the marketplace fail. There are many potential risks. A large player like Amazon can force high marketplace compliance and has a greater chance of success.
TF: Independent retailers are threatened by online floor covering sellers. How would you recommend independents compete?
Simonson: First, I question part of the premise. Just because an online operation gets a particular sale doesn’t mean an independent missed the sale. I truly believe that the online operators increase the pie. The reason why I think online players increase the market size is because they are answering questions that people are not getting answered through traditional channels. There are plenty of people that walk into a store and walk right back out. In fact, I would submit that the closing ratio is below 50% in most stores. Therefore, those people are trying to turn to a new source to find the answer. I would argue that the pie is being increased by the online guys. But for those who feel that they are going head-to-head with online players, they should at least decide if they are going to sell product online and if that is something that is really important to them. If it is, what are they willing to invest? I have had many people contact me saying that they don’t want to spend any money but they want to make a lot of money. As a percentage of revenue, they are willing to spend, but they don’t want to put any money in up front. This is just not a realistic approach. No investment really works like that. If people want to treat online sales as a situation where they get something for nothing, it’s just never going to work.
The answer is first to define for themselves whether selling online is viable and important for them. If it’s not, then just concentrate on having a really good website with really good content and promoting the site on Facebook to the local market, increasing their brand awareness, If they do decide to sell online, they need the platform, they need to get serious about advertising and they need to have the right resources.