Slowly but Surely

Apr 01, 2001 9:30 PM  By

As so-called old-economy catalogers, Wilmar Industries and Barnett took their beatings in a tech-happy stock market. Now high-tech has cooled and Wilmar and Barnett are united under privately held Newco. Will these b-to-b catalogers transform into “new economy” Internet players? The answer: yes…but carefully.

Currently Wilmar and Barnett receive only about 3% of their sales via the Internet. Just 3% of Wilmar’s customers are registered on Wilmar.com, while only 9% of Barnett’s customers have registered on its four e-commerce sites. By contrast, most consumer catalog customers now log at least 10% of their business through the Net.

Buying a sweater on the Web, however, is far less complicated than buying a connecting bolt to a sink pipe. “Our customer, sitting in a maintenance department, if he’s got a broken garbage disposal, he needs to know whether a part is going to be delivered today or not,” says chief financial officer Bill Sanford. “And if it’s not, he’s going to go elsewhere for that product.”

To address this service challenge, Newco is building Websites that offer the same level of service as a live operator. In other words, a repairman who calls to place an order isn’t going to get just a confirmation that he ordered a particular part. He’ll also get confirmation that the bolt is in stock at the distribution center closest to him, that it will arrive later that afternoon, and that it matches the bolt he bought six weeks ago for the same brand of sink. He’ll even find out that the shower valve he’s also ordering is available at a different distribution center and that he’ll have the option of having both products shipped separately or waiting until the second item comes in so that they’re sent in one box.

Newco has so far spent about $1.5 million building technology that links the Websites directly to the company’s mainframe, which networks all of Newco’s 64 distribution centers. Today only Wilmar.com is linked to the mainframe, which offers customers a real-time window into what’s in stock and how soon they can get it. Barnett’s sites — which will be linked later this year — can capture orders, but they can’t give real-time feedback on stock availability.

Nonetheless, Sanford describes Newco’s Web sales as promising. The company’s online customers tend to order more product more frequently than catalog customers, he says. “Our average order size online is significantly greater — 75% greater in some case.” Because Newco offers volume and other special discounts for Web orders, “we see that growth moving up exponentially.”

For now, Sanford says the company doesn’t plan to aggressively promote its sites: “We’re satisfied to wait a little right now and continue to observe the market. This is an expensive ordering mechanism and we want to make sure it hits the mark.” Also, to avoid channel conflict, Sanford says Newco doesn’t prospect through its Website: “We want to use it as a way to enhance the relationship.”