The E-Commerce Questions

“Would you buy products online?”

“How would e-commerce change the nature of this industry?”

“How does e-commerce fit in the traditional distribution channels?”

Lawn & Landscape explored this issue with two roundtable discussions centered on e-commerce. These meetings where held in Orlando, Fla., and Chicago, Ill., and they were sponsored by XS Turf (www.xsturf.com), a company preparing its own e-commerce solution for the industry.

Here is a summary of those two discussions:

“If e-commerce is going to happen, it will have to include everyone in terms of contractors and dealers,” noted Terry Culver, director of operations, ILT Vignocchi, Wauconda, Ill. “A lot of the suppliers and contractors are little businesses, and I doubt they’re on the Internet. But everyone just seems focused on grabbing the bigger accounts. That little dealer may have better pricing, however, and that dealer may be more centrally located.”

When contractors consider buying online, the primary products of interest to them now seem to be those basic equipment supplies that they know they’ll use over the course of a year, such as belts, filters, spark plugs, wheels and so on. “We’re already bulk purchasing of a lot of equipment items we inventory and go through over the course of the year, so we could buy them online right now,” noted Bill Henkelman, regional manager, The Brickman Group, Glendale Heights, Ill. “The real key would be if we could buy critical parts online in season because those are the parts that distributors can’t get for us because everyone needs the same parts on the same day.”

“Where the Internet can really help us is in situations where we needed products yesterday because we don’t inventory them, such as engine components and spindle bearings,” noted Bruce Bachand, vice president, Carol King Landscape Maintenance, Orlando, Fla. “Now, we have these things shipped to us next-day air, and we end up paying more in freight.”

“That would be the ideal,” agreed Gene Grant, CEO, Grant & Power Landscaping, West Chicago, Ill. “I’d love to have the mechanic diagnose the situation, click on the Internet and have the part in his hands the next day.”

“That brings up the question of how comfortable our mechanics are using the Internet and making purchases on line,” added Henkelman, noting that the relatively small number of companies already selling online frustrates him as explores e-commerce options.

Grant said in-office training of his employees might acclimate more of them to e-commerce. “I would want someone to train everyone in our office so we could use their site right away,” he related. “In addition, I think a good site will have to continue that education of users online so the process is easy because I don’t want a mechanic spending 45 minutes online to buy one carburetor.”

Jeff Tovar, president, Tovar Landscape Contractors, Elgin, Ill., echoed this point, adding that instruction from any e-commerce supplier would be a must for his company to purchase online.

“Someone is going to have to come into my office and show me how to get on this site and make the purchase,” he related. “We’re not going to go out and get the training because we don’t have either the time or the inclination.”

Identifying one employee within an organization to handle all online purchasing may be one way to overcome this problem.

“I envision a situation where we have a fleet manager with a PC so he’s wired and can access whatever site we make available to him for purchasing parts,” added Joe Janssen, president, Stiles Landscape Services, Pompano Beach, Fla. “But one of the challenges will be making sure whoever runs the shop has the capacity and latitude to go out and purchase.”

Responsibility also lies with those operating these sites, who will have to continue to advance their selling and delivery services. “We tried to buy a few trucks online, but the trucks weren’t at the location we were buying from,” noted Tovar. “The problem was that the inventory information wasn’t being updated in the site quickly enough so the site was selling product the supplier didn’t actually have.”

“I’m really hoping e-commerce will include better inventory systems for suppliers so we can see if someone doesn’t have a part we need and we can go elsewhere to buy it,” added Bachand, adding that his shop foreman has a budget of $10,000 a month he can spend on purchases without any approval.

“Our biggest issue is identifying the right part number the first time and getting that part in our hands,” related Adam Jones, division manager, Massey’s Green Up, Maitland, Fla. “I would like to see a system where we’re able to see parts numbers, serial numbers for parts as well as a visual identification for the parts, because I hate ordering a part, waiting to get it and then finding out we ordered the wrong part.”

Long-term, contractors hope the Internet will help them achieve cost savings in return for bundled purchasing - where they consolidate their equipment and product buying with a select group of suppliers.

“Right now, I’m interested in buying online, having the products direct shipped to me and saving any money I can by eliminating the dealer from that process,” related Bachand. “By consolidating our purchasing with fewer suppliers, I think we should be able to get dealer pricing because we purchase as much as many small dealers.”

Contractors also foresee using Internet purchasing power to standardize their products and supplies across multiple branches. “We think purchasing online will give us better control over what we spend vs. our budgets, and it will help a lot of our smaller branches come up with purchasing systems,” explained Jamie Boynton, vice president of operations, One Source Landscape & Golf Services, Tampa, Fla.

In addition, contractors want e-commerce providers to offer services to help them run their businesses. Helping them become better product purchasers is just one example.

“Aerators are a particular challenge for us, and we have 60 or 70 of them,” related Jones. “They cost $4,000, but you can put $600 a month into one for maintenance, so when are you better off not bringing one back from the dead?

“We don’t always keep great records in terms of how much money we have put into a particular machine, so I would love to find a vendor who could do that for me,” Jones continued. “I can handle providing the technical information to our field personnel, but I would love some help generating more information on my own buying patterns.”

THE DEALER DILEMMA. Clearly, contractors are accustomed to doing business with local dealers they can build working relationships with. “These dealers are in a service business just like us, and we have relationships with them that have been built over time. We can’t just suddenly go in there and beat them up about price, but we’re always looking for better service, related Grant. “I like having relationships with my suppliers so I can call them, tell them what we need and make them responsible for getting us that part, even if it means they have to call other suppliers to find the part.”

In many cases, these relationships add value to a contractor’s business. “There’s no question that plant suppliers are an extension of our company,” related Henkelman. “They know our expectations for a tree, and those are different depending on the varieties. So I don’t know how you can buy plants online without that.”

“I think you could order something like annual color online,” noted Jones.

“I imagine the suppliers will have to come up with a grading system for plants so you pay based on the quality or grade of plant you purchase,” offered Alison Pieters, marketing and communications manager, David J. Frank Landscape Construction, German-town, Wis. “But then I can’t imagine all of those prices being online, so we may have to call or fax in more information anyway.”

“I agree,” said Grant. “I can buy books online because a Stephen King novel is the same no matter who I buy it from. But every plant is different depending on the supplier. So suppliers will either have to be the cheapest and sell on price or else they’ll have to build relationships with contractors who buy from them for the quality.”

“And what happens if we get a plant we don’t like and we want to return it?” wondered Pieters. “How will that be handled?”

Bert Clattenburg, CEO, Rood Landscape, Tequesta, Fla., discussed improvements the Internet could introduce to the plant purchasing process. “Imagine the time we could save if we didn’t have to send someone out into the field, and instead the nurseries could just post digital pictures of plants to Web sites for us to shop from,” he explained.

For the most part, contractors at the roundtables are only buying limited products online, such as specialty features for an installation project, but they’re disappointed in the lack of information available from suppliers’ sites. “Most retailers’ sites just duplicate their catalog, and there isn’t any new information,” complained Grant.

Besides a product listing, there is plenty of additional information contractors would like to see from suppliers’ sites. “We already use vendors’ sites for Material Safety Data Sheets and product information,” noted Henkelman, who added that most suppliers’ Web sites are little more that digital catalogues right now. “Other than that, there’s not a lot of information out there, such as something describing the difference between sodium chloride and potassium chloride.”

Some contractors aren’t inclined to switch from their current suppliers to online vendors without incentive, such as guaranteed delivery, added Henkelman.

“But quicker delivery is a promise, and everyone makes promises they can’t deliver on,” countered Tovar. “I think lower prices would make us switch sooner because price is something we can see.”

“At the same time, we’ve learned that when you leave one vendor for another vendor just for price, you can burn some bridges,” Henkelman added. “So whenever we do that we make sure we start in very small quantities with the new vendor.”

“The other part of the dealer question is the support they provide,” commented Janssen. “Supplying parts is important, but where they can be invaluable is when you have a crucial piece of equipment break down and they’ll provide you a loaner or a rental until your machine is fixed. There are certain pieces of equipment that we only have one of, and you can’t get that sort of support online.”

“I would need to save at least 10 percent in pricing and get a guarantee on delivery to switch,” Grant related.

“I’d look at a change in supplier if some could save me even 5 percent because of how many thousands of dollars I have in expenditures,” related Bachand. “Then I’d look to see how that supplier could help us manager our inventory and what they could do for us if we increase our expenditures with them.”

“Something else that would get me to buy online if is a supplier would let me buy on consignment so I could buy the material but not pay for it until I use it,” commented Henkelman. “And I would want the product on my property without having to pay for it.”

“What’s most important to us is that suppliers have the product there when they say they will,” added Jones. “We don’t have a 200,000-square-foot warehouse to inventory something like fertilizer, so we purchase in advance for a four-week window and take delivery a couple of times a month. If the product isn’t there and we have a bunch of technicians standing around with nothing to apply, that’s not good.”

“I would even be willing to pay a premium to anyone for the ability to have the parts delivered to us within three hours or so,” Grant related. “Then I wouldn’t have to tie up dollars in inventory, and I wouldn’t have the problems with equipment not working.”

“Ultimately, we’ll have to evaluate how much this convenience dealers can provide us is worth,” noted Boynton.