While some LBM dealers are just starting to consider how online retailers like Amazon may affect their bottom line, a small-town Arkansas dealer has already climbed that hill.
In Mountain View, Ark., Gentry Hipp of Hipp’s Modern Builders has been in the online retail business since 2012. We asked him for advice for retailers looking to get into the online game as well as compete with behemoths like Amazon. Hipp shared five tips for online retail success.
1 Don’t View Amazon As a Threat
Amazon hasn’t cut into Hipp’s special order business. He said he never hears someone come into his store looking for something and just say they’ll get it on Amazon. Logistically, lumber and hardware items aren’t going to be stocked on Amazon, he said. Weight, size, length, none of it makes sense for them to stock.
“Don’t view them as a threat,” Hipp said. “They’re a company that is willing to take risks, so they’re opening grocery stores and not paying a lot of overhead like other grocers, but they’re not opening lumberyards. Their business model is just too different to be seen as a threat to us.”
2 Beat Them With Service
Even if you have a customer who is going to Amazon. com for a product you don’t have in stock or can’t beat their price on, there is no way Amazon can compete with a real- life LBM dealer’s service.
“They don’t have any customer service,” Hipp said. “People still long for customer service. Our customers know they can come into the store and talk about their water leak, their shingles blown off, their deck repairs and we can walk them through it and get them what they need.”
Through his supplier, Do it Best Corp., Hipp said that he can get pretty much any product shipped to his store in two days, sometimes even next day.
3 Let Your Customers Know
Special orders and expedited delivery are great tools to have at your ready when a customer claims they can get a product on Amazon. But how many of your customers know you can compete with online turnaround times? You have to go out of your way to let them know.
“We mention it and have banners hanging up in your store, some of which are provided by Do it Best. It’s a matter of training our employees to not just tell customers that we don’t have it. Instead, we tell them how much it is and when it can be here.”
With the number of buying groups and distributors available, Hipp said, any independent dealer has access to products. You just have to know where to order it.
4 Don’t Be Afraid to Take a Low Margin
It may seem counterintuitive to most retailers, but Hipp says he doesn’t mind discounting a product if he knows it is for a good customer who is buying more from him. If it’s a product that costs a little more to get to the store than the customer would spend on Amazon, Hipp said there are times when he will eat the margin.
“You don’t want your local competition to figure it out before you do. Personally, I’d decide to take a cut on that item to keep that customer in my store. I do what I have to do, aside from giving it away,” he said.
5 Don’t Partner With Amazon
In the online retail game for five years, Hipp has learned a thing or two through trial and error. One big lesson he has for others looking to start selling online, is to avoid partnering with Amazon.
As an Amazon partner, you can sell products on their site as an affiliate. Hipp found out the hard way that when it came to the bottom line, it wasn’t a very equitable partnership.
“We used to partner with them but we don’t anymore. They’re the ones wanting to make money if you want to sell through them,” he said. “But I have people. I’m paying to warehouse or co-op a product. Amazon wants to be selling it at your cost.”
To read more about beating Amazon, read Real Issues. Real Answers: The Amazon Factor.