Staying anchored in a shifting channel
Hand tool users have more buying options than ever
By Ken Brack -- Industrial Distribution, 11/1/1999
Channel surfing no longer refers mostly to that incessant clicking of the television. Contractors and other professional hand tool users have added another meaning: shifting their tool buying among industrial and construction supply houses, home improvement stores and online "e-tailers.""It used to be that an electrician bought at an electrical supply house. Now we're finding small industrial plants are going to a Home Depot and electricians are going to STAFDA houses," says Alan Sipe, vice president of sales and marketing at Klein Tools, Inc.
"The end users seem to be much more mobile than in the past," he says. "Even an Ace Hardware store is getting more professionals."
That doesn't mean many hand tool distributors aren't holding their own against the big boxes. While some contractors have changed their buying habits for some power tools, other tools typically used for plant maintenance shutdowns and utilities most often get sold through distributorships, for example. And hand tool distributors like A&M Industrial Supply of Rahway, N.J., continue to find innovative ways to reduce customers' tooling and transaction costs in ways they believe the retailers cannot.
A&M Industrial, for example, offers end users a paperless tools inventory ordering and tracking system through its subsidiary, Industrial Vending Solutions. Customers such as Con Edison in New York City receive what director of sales and marketing Kevin Rosenthal calls a "souped-up vending machine," which has an ATM-like capability to record transactions via a worker's encrypted card. A&M Industrial charges a monthly fee to maintain the vending station while also generating materials usage reports and issuing summary invoices.
"We think it's really the materials management solution for the new millennium," says Rosenthal. "It handles safety to hand tools and machine shop supplies."
Sipe, for one, says that while the big boxes are dominating sales to professionals in some markets like Southern California, many areas remain up for grabs.
"In parts of the country that are not blanketed with Lowe's and Home Depots, the shakeout is still going on," he says. "With a value-added service that industrial distributors provide, I don't see those guys ever losing the technical sale."
Finding and buying hand tools on the Internet is also taking off, and many suppliers and distributors are concerned it will upset the traditional channel, says John Foote, technical director of the Hand Tools Institute, a manufacturers' trade group.
Besides the addition of Web sites by Home Depot, Ace and others, a virtual tool mall created by "e-tailer" ToolSource.com, Inc. offers an increasing number of hand and power tools -- more than 30,000 items. After launching the mall in 1998, ToolSource in late September introduced its Web site under a new name, 1StopTools.com.
CEO David Ezequelle says the goal is for 1StopTools.com to offer more than a quarter million tools by the year's end. The firm also planned to conduct online tool auctions this fall.
"We recognize a short window of opportunity to build a name in the hand and power tool markets on the Web," says Ezequelle. "The market for these products is still very young on the Web, but like every other product category to date, eventually the market catches up ... Needless to say, we're feverishly working to add more and more supplier partners."
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