Always curious about the technology available within the floor covering industry and the technological improvements taking place in the sector, we got Chad Ogden, president and founder of software developer QFloors, to sit down with us for an update. Below are excerpts of that conversation, which you can listen to in its entirety below.
TF: I have been interviewing you and others in the industry’s software sector for a number of years and one thing I have heard repeatedly is that the retailers in the floor covering business lag behind their counterparts in other industries when it comes to technology. Are floor covering retailers catching up?
Ogden: In terms of the kind of technology used, I think retailers in our business are catching up. About two years ago we released a new product called QPro, which is based on the newest web technologies available in other industries. We frequently attend technology meetings outside of our industry, and many times software companies from other industries look at what we’re doing and say it is well ahead of what they and others are doing. The things we’re doing at QFloors have actually jumped levels of technologies, even outside of our industry.
Just to provide some perspective and to not misrepresent the situation, the majority of our customers are still on the QFloors platform, which has been around for 22 years. However, we now have 50 active customers on our new QPro platform, and that is what I am referring to when I say we have jumped ahead of most technologies out there. QPro is browser-based. It was designed for a browser. There are very few instances of this type of technology for an ERP [Enterprise Resource Planning] software even outside of the floor covering industry. Like I said, it is software specifically designed for use within an internet browser, and there are not many companies using this technology. QuickBooks has tried it and it's taken them quite a while and they still don't have a full offering for their customers. They still have customers that are on their older system, and they are trying to get them onto their newer system. We expect that towards the summer we will be converting another 50 QFloors customers over to this new system. Most of the companies that are currently on this new technology have never been on any type of software before and are new to software all together. But now we are at the beginning of converting QFloors customers onto this new platform.
TF: Would you say that retailers on industry-specific software are generally more profitable than their counterparts that are not on industry-specific software?
Ogden: Yes! I would say that most successful dealers are using some kind of floor covering specific software. I would say that 80% to 90% of retailers doing more than one or one-and-a-half million in sales per year are using some kind of floor covering specific software. The retailers that don't are mostly smallest dealers, and they are using something like QuickBooks. It's rare for me to see a dealer that's doing, say, three to four million per year that is not using some kind of floor covering specific software. I'm not saying it doesn't exist, but it's not the norm.
TF: Industry-specific software also permits retailers to take advantage of Floor Covering Business to Business (FCB2B). I suspect that’s also an advantage.
Ogden: Absolutely. FCB2B permits retailers to streamline business operations in ways that are just not available with generic software options. I don’t know if you are aware of this, but several large software companies from outside of our industry have attempted to come into the industry. QuickBooks-like competitors that are very large and have thousands of customers outside of our industry have attempted to come into the industry. They were here for about two years; they were at Surfaces for a couple of years and then inevitably they were gone. The reason is it was not a good fit for the floor covering industry. This is because the software features required to run a business in this industry are very specialized. And when they figure out that they can't easily add the features floor covering dealers need, they leave. The lesson being that there are some things about floor covering software needs that are unique, and that our dealers need to run an efficient business in this space.
TF: What types of questions do prospects most often ask you?
Ogden: The most common type of question we get is something like: “Why should I do this from a price standpoint?” There is QuickBooks, which is a $500 or a $1,000 purchase, and floor covering specific software is more expensive. They're trying to figure out why there’s a difference in price. We just say, “We would love to take you through a demo and show you the differences, like B2B, job costing, labor management as well as inventory, (which is always a big one that most ERP systems outside of our industry don't do very well), as well as things like square footage or square yardage or dealing with product by the box. All of these are regular features in our software and things that we always highlight. Often, retailers don't know to ask the right questions. They're usually just wondering why they should make the change. So, we take them through the software and explain what the differences are.
TF: I suspect that they are most likely not pleased with what they are using and want more, and just don't know exactly what’s available.
Ogden: That’s true, our job is basically to educate people. Basically, they don't know what they don't know. They do know that what they currently have is not working. Often, they are faced with hiring more people to help run their business, because the technology they currently are using is not helping them as it should. Our job is to educate people about how they can run a better business. It's not just selling software. We don't just sell software, we're here to help people run a better business. And that's really our whole job.
TF: It does seem like you do a great deal of education.
Ogden: That's mostly what we do. It's not just a software purchase, our solution is basically changing the way retailers run their business. Not changing it completely, but making tweaks, modifications, and procedural changes to help retailers streamline the way they run their businesses. QFloors is a business model. It’s a way of doing business in the floor covering space, and sometimes the changes are subtle, but usually most have to change something in the way that they're currently doing business in order to take advantage of all the technologies available with QFloors.
TF: Do retailers who come on board have to shift gears and make certain changes to be more profitable, or have they crossed that bridge before they decided to talk with you?
Ogden: We sometimes help retailers understand that maybe one of the reasons their business isn't growing is because they don't have the capacity to expand. We help them develop the capacity to grow their business and do it without having to hire new people. Basically, doing more business with the same amount of people. This is something retailers often don’t think about. Let's say the technology of some package costs $5,000 for example, and if that technology helps replace a person that you're paying $40,000 per year, then that’s a good investment.
TF: Are you finding that retailers are converting now at a faster rate than they did several years ago?
Ogden: We are selling more units every year, year over year. So, I would say for us, yes.
TF: Why do you expect this is happening?
Ogden: There is definitely a greater awareness on the part of people. It’s often younger people, who are taking over a business or creating a new business, that understand the value of what software can do for the business much better than the older generation.