John Simonson, president of Webstream Dynamics, has been developing websites for flooring retailers since 1998. Some of these retailers have been involved in e-commerce, selling products online. We sat down with John recently to explore some e-commerce options available to retailers in this industry. The following are select excerpts from that conversation. The entire interview is available here.
TalkFloor: Give us your take on e-commerce in the floor covering business and its future.
Simonson: E-commerce in flooring is growing, just as it is in all segments, although it’s growing at a slower pace mainly because of the logistics involved with flooring. The cost to ship flooring from one place to another, dealing with breakage is definitely a problem. The players that have been at it for a long time are way ahead of the curve. I do see independent flooring dealers getting involved however, but to a lesser degree compared with the big box stores. Flooring retailers that are selling online really don't want to talk about it, but you can see them online. I'm seeing more pay-per-click advertising than a year ago.
TalkFloor: Can retailers limit online sales to specific areas rather than selling nationwide?
Simonson: Sure. You see continually where people are shopping locally, taking advantage of the opportunity to buy online, pick up in the store and have it installed when they desire.
TalkFloor: When a retailer wants to get in the business and sell nationally, what sorts of things do you tell them?
Simonson: There are several different areas retailers need to focus on and have the mindset similar to opening a new flooring store. They will need someone to field phone calls, respond to emails, send samples, enter and track orders as well as coordinate the shipping. Customers ask an awful lot of questions because they don't know a great deal about flooring. Retailers need to prepare to get inundated by shoppers searching for information, even though the majority of people contacting a retailer never buy from them. It’s also a time-consuming task to gather all the necessary assets, product images, pricing, and product specs from all the manufacturers to develop the catalog. This is not a get-rich-fast proposition.
Launching a website with a new domain name also will have no age or history; Google loves age. So, as it will be necessary to do a great deal of pay-per-click advertising, which means allocating a lot of money for online marketing. Engaging customers, getting them to the cart and through the checkout, and getting them to buy is a challenge. As a result, a sizable investment will be necessary at first to really build momentum, develop a history, build an understanding of the targeted audience and customer trust. All essential things for growing the e-commerce business.
TalkFloor: Give us an idea of the price range for an e-commerce site capable of selling products on a national basis.
Simonson: I can build a site for $10,000-15,000, which would be a cookie cutter type e-commerce website, similar to Shopify sites, which are very difficult to make user-friendly for flooring. This is because when dealing with flooring it is necessary to work in square feet. Retailers sell full cartons, but prices are stated in square feet. Our websites do the calculations of converting square feet to full cartons. Everything we do is custom, totally geared to the flooring industry. These are true e-commerce sites using Authorize.net, PayPal, with LTL shipping quotes.
TalkFloor: Be more specific about pricing. What would be the minimum? What would be the maximum?
Simonson: Well, there is no maximum, but I tell retailers I won't do an e-commerce website for less than $20,000, and that's just the building blocks. Many also want to get into trims, moldings and other accessories, then the accessory SKUs have to be linked to specific products and they all go in the shopping cart. If retailers are offering in-stock items, we can pull that information from their software, RFMS, QFloors Software, etc. We have done it through SAP Business One Software and others.
TalkFloor: Is it necessary for a retailer getting into selling online to have inventory on hand?
Simonson: Today, it really helps to have inventory on hand because of all the delays in production, container issues and constant price increases. Also, in-stock products are probably bought in quantity at a better price. Having inventory on hand also helps close more sales quickly. There are many advantages to having product shipping out to your location where the retailer can handle putting it on the pallets and making sure it is totally wrapped and ready to go. Often, manufacturers don’t do a good job packing products to be shipped to consumers.
TalkFloor: Talk a bit about the additional cost retailers will incur selling online, answering the phone, sending samples, dealing with freight companies.
Simonson: Normally what has happened when a brick-and-mortar retailer elects to start selling online, they dedicate one person from their operation to handle the e-commerce site. Very quickly when pay-per-click advertising is launched, that person gets quickly overwhelmed with calls while trying to do their in-store duties as well. I recommend retailers start with one person, but realize they will have to gear it up and eventually will have to add more.
TalkFloor: You mention marketing and setting up a marketing budget, a retailer starting at ground zero, nobody knows who they are. What are we talking in terms of dollars and cents?
Simonson: I'm just going to use this as the average cost. Discussing pay-per-click advertising, let's say you're paying $3 a click. Every time somebody clicks on your ad, it’s $3. Now, if you only spent $9 a day, you'd only get three clicks and you're done, your ads don't show anymore. That won’t generate any new online business. So, if the retailer decides to commit to say a thousand dollars a day, which is $30,000 a month. That would be a reasonable amount to allocate at the front end.
On top of that, the retailer will need targeted ads that engage the customers, which I recommend focusing on the customer at the latter stages of their buying cycle. I encourage retailers to be more targeted in their ads, engaging customers, and narrowing their search criteria, such as brand names, or specific collections, say Shaw, COREtec, or Mannington, etc.
TalkFloor: You mentioned earlier that you receive a number of calls from retailers that are interested in pursuing online business, but for one reason or another, they never followed through. Do you see a way a small number of retailers could come together to make this thing work? Is that doable?
Simonson: It's definitely doable. Back in 1999 or 2000, I took this concept to several retailers, and it blew them away. They were thrilled and the manufacturers were nervous. Others have tried this but to no avail. One prerequisite is that the players that launch a project like this must have both the money and the resources to do it well. But by sharing the required dollar investment, it makes a great deal of sense. Each would cover a specific geographic area, which really helps with the logistics issues; I think six retailers or so would be a workable number.
TalkFloor: Might this be something you'd be interested in launching?
Simonson: Well, I've been holding on to a domain name for quite a while. I won’t mention it here. I have been building and maintaining websites for over 23 years and am now beginning to ease off somewhat. My focus now is e-commerce; it's fun. There are a lot of new cutting-edge things to do, and it’s very exciting.