SAN MATEO (04/21/2000) - With hopes that consumers will be just as eager to buy hammers and hedge trimmers on the Web as books and CDs, both startup and traditional retailers are taking the home-improvement business online.
According to hardware e-business retailers -- including Amazon.com Inc., in Seattle; Buildscape, in Jacksonville, Florida; CornerHardware.com, in San Francisco; and OurHouse.com, in Evanston, Illinois -- by leveraging Internet technology they can offer a much broader and deeper product selection, better product details, quicker access to expert help, and improved product delivery than the hardware superstores.
"We know we need to be much more than a catalog online," says Gary Briggs, chief marketing officer at OurHouse.com.
These e-business retailers are betting that, for planned purchases, many consumers and contractors would rather let their fingers do the walking than face the packed parking lots and crowded corridors of the big hardware stores.
A customer typically makes three trips to the store just to get what's required for a single project, says Greg Ott, vice president of marketing at HomeWarehouse.comSome online retailers are trying to use Internet technology to go after lucrative niches, such as small to mid-sized businesses and contractors. Others that are offshoots of brick-and-mortar companies or have retail partners plan to use their online presence to complement existing hardware stores.
Competition is expected to heat up this summer as industry behemoth Home Depot, the Atlanta-based retailer that racked up $38.4 billion in sales last year, rolls out its foray into online sales. And Lowe's, a high-grossing hardware retailer based in North Wilkesboro, North Carolina, is expected to start accepting online purchases from its currently informational Web site later this year. These big chain stores have had an advantage because their massive buying power affords them bigger discounts from manufacturers and distributors than smaller companies can command.
"They are tough competitors," says Bret Thurman, Paynpak.com's chief operating officer. "The only way we can survive is to offer superior customer service, and move fast."
By 2004, the online market for tools and gardening supplies will reach $7.2 billion, according to Forrester Research, in Cambridge, Massachusetts, compared to the estimated $944 million that will be reached by year-end. The online market for housewares, including home-improvement products other than tools, will reach $5.7 billion by 2004.
Yet adapting the physical world of hardware to the virtual world of the Internet can be problematic, experts say. Big chains such as Home Depot, in more than 960 stores, will have to figure out a way to complement their physical stores rather than cannibalize them. They will also have to figure out how to set uniform pricing for online goods, because home-improvement prices can vary considerably from store to store.
Furthermore, logistics can be a nightmare. Many home-improvement products and building supplies are often bulky or hazardous, or are sold only on a regional basis. Such factors make cheap and fast home delivery on a national scale difficult.
"Probably the differentiator [determining] who wins and who loses will be in logistics," says Hardware.com CEO Mike Pickett.
Attracting home-improvement customers online also can be a challenge.
Eyeballing the description of a product online is not always as satisfying as checking it out in the store, industry observers say.
When John Parks, a handyman based in Mundelein, Illinois, wanted a special set of router bits, he hopped into his red van and drove out of his way to get the goods.
"I go into a store. I see what I want, and I buy it," he said, adding that he "[likes] the immediate satisfaction" of taking possession of the purchase.
"When you want to know whether or not the tile in the kitchen floor is going to fit with the rest of the house or [if you want to] have someone show you how to lay it out, you'll want to see it, or maybe even touch it," James McQuivey, a senior analyst at Forrester Research, says.
However, online hardware retailers counter that with savvy application of technology they can offer customers a better experience online than they can offline.
"It's a matter of delivering the best possible customer experience," says Eric Broussard, general manager of Amazon.com's Tools and Hardware store.
OurHouse.com surveyed its hardware customers and found that 71 percent of them were dissatisfied with their "current in-store experiences," says OurHouse.com founder and CEO Philip Airey. They can't find the product and it takes too long to buttonhole the right person to get help, he says.
To convert those dissatisfied brick-and-mortar customers into satisfied online customers, OurHouse.com offers a broad array of products purchased from manufacturers and distributors that have buying agreements with Ace Hardware and a few additional vendors. Each product has a detailed description.
Additionally, the site offers "Mr. Fix-It," a service that connects users to a live person who dispenses the kind of practical advice normally given over the hardware counter via Web message boards and chat sessions.
For customers who need more contact, OurHouse.com plans to leverage its partnership with Ace Hardware. Already it has integrated its Web order-entry system with Ace's ERP (enterprise resource planning) and legacy inventory system.
By the end of the month, Briggs says, the company expects to announce that local Ace stores will accept deliveries and handle returns for purchases made online. Also, the dot-com company expects to carve out agreements to give customers the option of getting products they buy online assembled by local retailers. OurHouse.com is developing electronic kiosks for Ace stores so that shoppers can access the start-up's Web site.
"It's not about the products we sell; it's about what the customers want," Airey said. "Customers are looking for a new way to fulfill their home-improvement needs."
Home improvement hits the Web
Companies making waves in the online home-improvement market include the following.
Company -- Web site
* Amazon.com -- www.amazon.com
* Buildscape -- www.buildscape.com
* CornerHardware.com -- shop.cornerhardware.com* Hardware.com -- www.hardware.com* HomeWarehouse.com -- www.homewarehouse.com* OurHouse.com -- www.ourhouse.com* Paynpak -- www.paynpak.com* Sears, Roebuck & Co. -- www.sears.com* TrueValue.com -- www.truevalue.com.