The Lure of Online Suppliers

Published: September 13, 2016 - by Dan Holohan

Categories: The Business of Heating

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The question came up on The Wall at HeatingHelp.com about why some contractors buy some or most of their stuff from online suppliers these days.

This led to a conversation that was both mature and passionate, and went on for a week. Bricks-and-mortar suppliers had both supporters and detractors, and these are the main points that grabbed my attention: 

The online business model - Most contractors thought the service was excellent, as were the prices and the delivery. Some who live near one of the larger online distributors talked about the efficiency of their pick-up counter, and how the people there treated them with respect. They felt the online companies really understood and respected their time. 

Product availability (and favorability) - They all commented on how the online dealers had products that the local guys didn't have or said they couldn't get for many days or weeks. Examples were hydronic products offered by European-based manufactures, larger cast-iron fittings for steam systems, American-made pipe, valves and fittings, and oddball items such as compression-tank hangers. Product availability drove the contractors' decision to try the online dealers once, and when that worked out well, they kept going back to the online distributor. Before long, they developed the new habit of buying their day-to-day items from these new guys. 

Supporting the local guys - But then, many of the contractors have had a bad experience with products that didn't perform as promised. This showed up as a weakness with the online dealers, who smiled, said they were sorry, and then referred the contractors to the manufacturers or their reps for help. And this, of course, started the big wheel of warranty replacement turning for the contractors. They were furious that they had to lay out money to replace the alleged defective product until the manufacturer might decide on the cause of the failure, which sometimes took months. Some contractors spoke passionately about how their local supplier would just take care of them in a situation like this. The supplier, whom they saw as being more powerful than themselves, would take it up with the manufacturer. That was very important. But then some contractors said that the day-to-day products rarely if ever presented warranty problems, so they would continue to buy all of those products online.

            This caused one contractor to caution those buying online that they should not complain when the local guy is no longer in business, and the Internet guys then drive up the price. But this didn't draw many responses, which proves, once again, that lots of people prefer to think short-term. 

Handy Homeowners - A lot of very sharp homeowners visit HeatingHelp.com and post regularly on The Wall. Some of these guys have done so much research into their own systems (particularly older heating systems), and are so handy that their work stands with that of the pros. Some are even better than the pros in their area. These homeowners said that they gave up on their local suppliers because the counter people treated them with disrespect, or totally ignored them as they stood there waiting for help. They also took abuse from the contractors at the counter. These do-it-yourselfers first fled to The Home Depot, Menards, and Lowes, but then, because of what they saw as poor-quality products at those stores, they now buy online. 

Saved time - Again and again, the contractors who bought online talked about the benefit of having the products show up on their doorsteps within a day. We can thank Amazon.com for this expectation. They spoke about the benefit of not having to waste time driving to the local supplier and waiting for service.

            In my father's day, when he worked for a New York City wholesaler, there were two men who were expert at heating working there. Contractors would drop off plans and return to get the materials and the advice they needed. Nowadays, the contractors talk about getting their design help online. Visiting the supply house for technical advice is less important. 

Saved money - One contractor explained that if he didn't call the inside guys at his local supplier to place his order, he would have to pay retail at the counter. This was a big problem for him because, the way his mind works, he has to look at the fittings to figure out what he needs to get the job done. He can't do that if he has to first call in the order to get the best price. He was furious about this.

            It's important to realize that most contactors are kinesthetic and visual. They like to touch things and see the shapes of things. They think with their hands and with their eyes. Another contractor reinforced this by saying he loved the way the online suppliers show all the specs and diagrams for every product. "That's hard to get at my local supplier," he said.

            Consider how visual specs and diagrams are.   

The beloved local guy's favor - The most passionate comments were from contractors who desperately needed a product late at night, on the weekend, or on Christmas. They had the cell numbers of their local guys, who left their families to open their places so the contactors could satisfy their customers. Some contractors mentioned how the local guy will deliver a big tank or heavy boiler to a site, and then help the contractor get that equipment into the building. The local guy is also there to help the contactor troubleshoot problems on the job. That mattered a lot to the contractors who worked alone.

            And some of those helpful incidents happened years ago, but the contractors receiving the favors never forgot, and they continue to pledge their loyalty. 

Sales to unqualified people - Some pros objected to the online suppliers' policy of selling to anyone and everyone. There was a real concern that this could lead to injury or death. But then the question of who can decide a person's qualifications came up. Some mentioned that we have all seen less-than-spectacular work done by licensed people who are supposed to know better. Should there be a test applied before taking someone's business? National certification? Who writes that test, and who judges the test-takers? And what might this do to business?

            Safety is at issue here, but the questions it raises are not easy to answer. 

Times have changed - From an old-timer named Bob:  "When I started in the trade in 1960, wholesale houses wouldn't sell to just any professional. You had to have an account, which wasn't easy to open. My first employer marched me into the supply house and introduced me to the counter staff.  He said, 'This is Bob. He can buy on my account. If you sell to him direct, I will fire him and close my account with you.'  These days my customer calls to say, 'Bob, I went online and I could have bought that pump for half of what you charged me.' Times have changed." 

Pros or Homeowners? - One homeowner said, "There is a world of products that we, as homeowners, will never have access to online or even locally. First of all, you have to know what to ask for. Not to say that a pro never asks for help, but a pro brings in more money to the supplier than a homeowner, who, by comparison, is a one-and-done."

            To which another homeowner commented, "I don't know if that's true. We can probably get just about anything we want or need either on the Internet or from our local suppliers. It's not hard to figure out what to ask for. Most things have some kind of product ID, or you can source a parts/service manual. While the pros individually spend a lot more money with suppliers, the ratio of homeowners to pros is huge, even though many homeowners buy cheap and at big box stores. It would be interesting to know what the percentage of revenue (Pro vs. H.O.) might be for local suppliers vs. Internet suppliers. I'm sure it varies significantly by trade. Anyway, I haven't run into any situation where I can't get what I might need from some source." 

            And there you have it. Some food for thought in these changing times.