TOUGH CALL: The Reality of Virtual Competition

By / 2 years ago

Tough Call Virtual Competition

Building products are now available from an online mega-retailer, at pricing close to your cost. You’re losing sales. What would you do?

Of all the products and services available today, you’ve always believed that your career choice in the LBM business would help keep you, your products and your customers grounded in reality. After all, buying and selling building materials is personal and “high-touch.” In other words, helping a customer determine the right product for their project is something that’s done best in person. It’s one thing to go online to buy a book or movie; it’s quite another to know what type of insulation is best suited for a specific application.

That was your belief right up to the point that you did a little research to determine why sales of several of your key, high-margin items were in steep decline, while overall sales were going up. As it happened, a few specific items you’d counted on for revenue and margin are now available from a massive Internet retailer. A few minutes with your laptop confirmed the availability, lower prices and free shipping on most items. And conversations with a few customers confirmed that yes, they were buying a few things online that they used to buy from you.

It’s not going to cripple you, but since the lost sales are on high-margin items, your bottom line is taking a hit. For now, this reality is more of a burr under your saddle than a serious business problem. But what about next year? Or five years from now? It’s tough enough to compete with the big boxes. You’re not sure what to do in the face of this emerging challenge.

What would you do?

Accept it: File this under “things beyond my control.” Focus your energies on finding other high-margin products, and possibly offering other services, to make up the difference.

Switch brands: If the manufacturer believes that the Internet retailer will be able to sell more of their products, more profitably, then it’s time for you to align with a brand that values what you bring to the table.

Go to war: You believe that this could threaten your business, and you’re not going to take it lying down. Time to make lots of noise and disrupt this practice before it gets worse.

Focus on service: There’ll always be customers focused on price, and others who value service. Focus on the latter, and never stop looking for products and services that fit your company’s strengths.

What would you do?

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