Distribution remains a vital part of the floor covering trade, but distributors are facing increased competition from e-commerce sites and retailers who go direct to manufacturers to buy their flooring products. However, local distribution continues to offer several advantages, including exposure to product training, knowledgeable local representatives and inventory/logistics functions.


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Ray Prozzillo, A&M Supply’s president and CEO, said the role of distribution in the modern flooring marketplace comes down to one word: Flexibility. “We want to have a partnership with our retail customers. Whether that’s special credit terms or metering out the inventory to the job site as needed, we are not just looking for the sale but being a business partner with the retailer.”

He said distributors also help mitigate risk for dealers “by extending their credit line so they can grow without bank financing. And we can work with them to maximize that. They can ease their banking relationships and their debt load while building value.”

Another way wholesalers build value is through product knowledge training. “What will happen sometimes is a customer will hire a new retail salesperson, and they’ll request us to come in and do some product knowledge training. We bring them some of the information they need to be more well-rounded salespeople.”

According to Enos Farnsworth, Denver Hardwood’s general manager, retailers who are accustomed to purchasing direct from flooring manufacturers will often find they still need the expertise that distributors bring when purchasing products such as hardwood. “Retailers are faced with acclimation, delamination, humidity, etc., that can affect the performance of wood. Retail stores are also experiencing a stronger demand for site finished flooring, and distributors stock everything required—finish, stain, sandpaper, etc.—along with on-staff trainers that offer education in sand-and-finish applications.”

He said the key to a successful distributor is an educated sales team, including counter personnel and outside sales staff. Because sales and installation training are so paramount to wood, he doesn’t believe e-commerce sites pose much competition for hardwood flooring distributors. “[Brick-and-mortar] retailers will also have a distinct advantage when it comes to marketing and displaying the features offered. Wood flooring is an investment, so consumers will take the time to understand the features and benefits, and this is best accomplished at a retail store with the help of a professional sales associate.”

Rick Holden, Derr Flooring’s COO, said there are several factors that help his brick-and-mortar distributor compete against e-commerce firms: “Better delivery service, credit terms and a physical presence for information and claims.”

Local distributors, he noted, “act as a delivery service with local inventories. We provide product knowledge. We vet new products and we specify appropriate products for commercial and residential projects.”


Part of the Neighborhood

According to David Powell, marketing director for Erickson’s Flooring & Supply, distributors are “a local advocate for customers and their needs up through the flooring supply chain. We offer locally based facilities, inventory, delivery, management personnel, customer service, credit, sales and other support staff who are from the areas we serve and understand the local needs and culture of our customers, which are very different from region to region and even city to city. Examples include customized training programs and sourcing products appropriate for use in our geography or specialized application requirements.”

He said while online channels “serve a real need, customers will always need local sales and technical support who understand their needs, the local market and the products they need to get the job done right and get paid. Customers need local inventories for last-minute needs, the ability to return items easily, test products, attend training, talk to someone face-to-face, get repairs done, claims processed easily, etc.”

Powell added, “Dist-ributors need to communicate this value and our services effectively to our customers, and then deliver the best value in quality, cost and service every day to earn that business.”

Bob Wagner, president of Fishman Flooring Solutions, said wholesalers help contractors and retailers by understanding the total requirements of a project. “Distributors look at the number of products it takes to install a floor properly. It’s not just the ceramic, carpet, wood, vinyl, laminate or LVT—it’s all the bits and pieces that go into making a proper job. All of those bits and pieces can be very difficult for a retailer or contractor to procure quickly and properly. So having local inventory and expertise to put this together with a variety of products that can be delivered quickly is important.”

He added wholesalers offer their technical expertise in other ways, too. “From a finished flooring standpoint, the distributor is going to look at what are the uses for that space, what are the desires of the end-user, and do they want low maintenance, no maintenance or a lower price of entry but higher maintenance? We know a great deal about different products. Even for products we don’t sell ourselves we know how they integrate to do a proper job. We can help someone interpret a large product line so the right products are ordered and delivered.”

Wagner noted distributors are focused on more than just “local credit, local inventory and logistics” but “a total customer experience. I wouldn’t say it’s any one function that is the most important, but rather all the things that distribution does as a whole and what that means to get the job done properly. As long as we’re talking to customers about whatever problems they’re having and finding solutions to those problems, I think distribution will remain relevant.”


Customer Service

Dennis Cook, Gilford Flooring’s president, said while credit lines are an extremely important part of the distribution business model, so is customer service. “It is important to our company that a customer can pick up the phone and immediately get in contact with a customer service rep who can help them.”

Training is also crucial, he stated. “We spend a lot of our efforts on the education and training of our retail customers with product knowledge, installation training, and training on showroom setup and promotions.”

Cook also believes in the importance of using the Internet as a way to communicate with his customers. “We have a very active e-mail process where once a week we send a communiqué out to retailers promoting an event, product line, sale or whatever else we decide to promote for that particular week. We also have an active Facebook account, and on our website we try to highlight new products with a presentation the retailer can look at and then use as part of his presentation to the consumer.”

According to Craig Dupra, IW Hardwood’s owner, training is a focus for his company. “Product knowledge helps lock up sales. We have few claims because we communicate and settle customers down before they get too worked up.”

He said the best way to grow an operation is to “tailor your business model to your strengths. Try not to be all things. Partner with supportive vendors. There will always be customers looking for the lowest price; you have to let some customers find out the hard way.”

Torrey Jaeckle, vice president of Jaeckle Distributors, said flooring distributors help retailers keep on top of what’s hot in the market. “Due to our position of serving several customers in any given area, we have a good feel for the pulse of business in any particular region—what is trending, what is hot, etc. We can point a dealer to lines and products that are doing quite well that they might be missing out on.”

He said distributors also help retailers by providing a wide range of products and brands and being able to react quickly. “We listen to our customers and can gear our product offerings to what they need, filling holes in our product lineup by searching out new vendors. No distributor will ever be a full one-stop shop for any particular dealer, but we can certainly help the retailer consolidate his purchases with fewer vendors. Complexity adds costs. To the extent that retailers can consolidate purchases, they can cut down on complexity and reduce costs.”


Developing E-Commerce

In regard to harnessing the power of the Internet, Jaeckle said wholesalers still have a long way to go. “Where I see e-commerce having a large impact on our industry is in customer expectations. Customers, having now become accustomed to simple and easy to navigate B2C (business to consumer) e-commerce sites are going to begin demanding that same functionality and simplicity in their B2B (business to business) transactions. While many distributors, including us, have e-commerce sites, they are not up to par with the likes of an Amazon or Zappos. We have work to do.”

He added, “Distributors who develop e-commerce sites that are more than just ‘online ordering’ will have an advantage over those who do not.  Eventually customers will demand this type of functionality and it will become standard—but we still have a ways to go. I foresee online account portals as becoming a key method of communication in the future. In essence, retailers will be able to login to their account online to accomplish many of their objectives. Self-service will become important for smaller needs and issues.”

Jaeckle also said wholesalers are not using e-mail to its full capability. “We still only send about 60% of our invoices to customers via email, and we’ve recently begun distributing price lists via email. There is still some hesitancy toward electronic distribution of documents.  It’s something we as an industry need to move to because it’s cheaper, greener and more efficient.  Money invested in paper and postage subtracts from a distributor’s ability to invest in more advanced functionality like an improved e-commerce site.”

Terry Gray, NRF Distributors’ senior vice president of marketing, shared these benefits of working with a distributor: “Service from knowledgeable salespeople, [working with] truck drivers you trust, friendly order-takers and fast turnarounds on backorders.” She also believes the Internet offers more opportunities for the business. “The Internet is very important, and social media is important to our customers.”

According to Kevin Murphy, Trinity Hardwood’s general manager, a distributor’s product and sales knowledge are crucial benefits to retailers. “We carry a wide array of products to help dealers. We offer machine repair if your sanding machine does not work, we inventory parts for machines, we offer job site delivery, we also have several people that speak Spanish so if an installer [or end-user] has a question we can help bridge the communication gap.”

He said e-commerce is “here to stay and will only become a bigger part of the industry,” but believes brick-and-mortar operations offer distinct advantages. “Carry a portfolio of actual installations of products with testimonials of clients regarding their work. Provide ‘good size’ representative samples of the products rather than swatches sent via UPS. Talk about a problem job or product problem that happened on a previous job and how you took care of the customer, and provide contact information from that customer praising how it was handled. Make the purchase/installation personal rather than just another purchase.”
 

A Look at Loyalty Programs

Floor Trends asked this same panel of distributors to comment on whether they find value in loyalty programs. Here is what some had to say:

  • Prozzillo: Currently we don’t offer loyalty programs. We have done them in the past, as part of a big launch. We like to time them to marketing programs, but since we are not currently in the midst of a major launch we don’t have one in place.
  • Cook: We have a loyalty program and it’s an important part of our marketing mix. Customers who are part of our loyalty program I believe benefit greatly, and are attentive to the programs and promotions we put out.

As long as our customers have an ample number of our products and display fixtures in their showroom they can be part of our loyalty program. We have an event every year where we put them up in a nice hotel, and have featured speakers and an awards banquet to recognize them. In this business it’s all about relationships. This event gives the retailers and our company an opportunity to further these relationships.

  • Gray: We have probably 10 or more loyalty programs, including discounts, rebates, freight rebates, advertising programs, points rewards programs and much more.
  • Murphy: Loyalty programs have pros and cons in my opinion. Costs are constantly being squeezed out of the channel and everyone from our customer to the end user is looking to ‘go direct’ or have the best price, so it is tough to build some extra promotional money in the price of the product. We don’t have a loyalty program, but that’s not to say that loyalty programs don’t work if done in the right way