Building one click at a time

The construction dot-com forest grows thicker

By -- Industrial Distribution, 11/1/2000

If only running a distributorship could be as easy as playing baseball, where the rules give structure and shape the outcome of the game. Over time, the game's rules have been tweaked, keeping the sport interesting and competitive.

Today, the electronic field to which business is moving, as product procurement and management shifts to the Internet, also makes for an exciting and keenly competitive climate. Unlike baseball though, there are no rules of play set in stone. Business practices and models have changed, certainly, since Industrial Distribution published its first issue in 1910. The Internet is affecting all sectors of the durable goods market. For the fragmented construction industry-with many players on the field but none moving in the same direction-

e-commerce could bring some structure and cohesiveness.

First, a game plan

Distributors' best practices will rely for a long time on product knowledge, application-specific procedures and order follow-through. The Internet, one distributor suggests, is not the be-all and end-all of business practices. The handshake to handshake, packing list review to packing list review will remain. E-commerce will be another venue on which to do business.

"It's just another marketing channel," says Brian Fihn, an e-business development director at Fastenal.

The number of construction-related dot-com sites on the Web are sprouting like multitudes of spring flowers. Some sites that blossomed over the summer include whitecapdirect.com and netclerk.com, Liquidation.com and Buildscape, Inc., nationalcontractors.com and BuilderSupplyNet.com and Construction.com and Dodge e-Leads. Fastenal is on board with one, BuildPoint.com, because that partnership means Fastenal's salespeople in the field can go to a construction site with a BuildPoint.com salesperson and "co-market some line cards," says Fihn.

Sales of construction MRO supplies generate about a third of the Winona, Minn., company's annual revenue. In 1999, that meant $250 million of the house's $609 million in sales were from the construction market. Fihn notes that selling supplies to the construction market, specifically to contractors and subcontractors, is "not your typical sales call." Distributors and other suppliers must be able to turn an order around on a dime. In short, be prepared to do whatever it takes, he says.

Moving that "whatever it takes" to the Internet doesn't change how new business is sought or how existing customers are retained.

"Our entire e-business initiative has been wrapped around our core competencies," Fihn says.

It is not that one construction sector dot-com Web site fits all distributors' needs and models of operation. Rather, at least one site under electronic construction is geared to assist small and large distributorships in growing MRO sales to contractors and others in the industry. How a Web site can help keep a distributorship running in the black is still in the research and development stage.

More room to work

"Among some smaller distributors, there's a concern over some of this e-business," says Thomas C. Leppert, chairman and CEO of Turner Construction Corp. "This has the potential to make them much more competitive and effective in the industry."

"It isn't a fad; it will have real implications," Leppert says, explaining the next step in B2B e-commerce is to "take the promise and make it a reality."

Leppert, speaking from Turner's corporate office in Dallas, oversees the construction company's annual $4 billion-plus projects. With employees now numbering around 3,100, Turner has built some of the country's marquis projects over the last 98 years.

"The opportunities outweigh any downside. The industry is trying to deliver the promise of the new technology," Leppert says of e-commerce, specifically the proposed www.aecventure.com Web site. Turner's participation in AECventure, a global business enterprise created to serve the entire architectural, engineering and construction industry, shows its understanding of the need to bring together the fragmented construction industry. Turner is one of four companies comprising AECventure.

The aim of this venture lies in collaboration. This portal, notes its Web site, "will provide an integrated range of marketplace, collaboration, project management and other specialized tools in an application service provider model that promotes greater efficiency and effectiveness."

If ever an industry was associated with a hands-on approach, it's the construction sector. From the rolls of gridded blueprints on a makeshift plywood desk supported by sawhorses to the plethora of hand and power tools ready for the grabbing, it's easy to spot a job site. It's less easy to understand how a building project will come together via the Internet where those visible cues are missing from the scene.

A fresh perspective

With more construction-related dot-coms making their way to the Internet every month, it can be confusing to keep track of all the sites. Your list can quickly become out of date. There is a reason, though, why the construction sector dot-coms can make distributors more aware of new selling opportunities. In the case of Fastenal's partnership with BuildPoint.com, a collaborative environment helps the distributorship's supply chain management, as opposed to project management, explains Peter Daley, executive vice president, strategic analysis, of BuildPoint.

"Synchronized and on the same page," is how Daley describes the value to distributors and the construction market sector of sites such as BuildPoint.com.

AECventure differs from other construction-related dot-com sites, Leppert explains, because its premise centers on lining up suppliers, distributors, contractors and others towards a detailed understanding of the entire industry chain. The site's content-what it will offer in real time information-is the service it will offer to participants.

There's another reason for the increase in construction-related dot-com sites since the summer: one Web site cannot fulfill all distributors' needs. To be sure, Liquidation.com and Buildscape, Inc. were "designed to meet the needs of buyers and sellers of surplus assets and excess inventories within the $200 billion building products industry sector," its press statement read. Contractor-related dot-com Web sites aim to unify the project definition stage of a construction project, including land acquisition and permits.

As with anything new, there's a fear of the unknown, the untested. That's a genuine fear for at least one distributor in New England. If construction MRO items can be sourced by contractors on the Web, he said, why would contractors trek to a distributorship large or small for building supplies? Some would say the answer to that question is for the same-day delivery services the distributor offers or application knowledge, and so on.

Change is constant

In an industry long known for being hands-on, distributors, suppliers, contractors and others in construction are scaling an e-commerce learning curve. Distributorships' business models continue to evolve. One company's e-commerce trial and errors may become another company's how-to lessons in Internet marketing and procurement, according to one New England contractor.

"I find that technology is advancing at such a fast pace and the amount of information available is overwhelming," said a member of the Massachusetts chapter of the Associated General Contractors of America. "Therefore I feel the most time effective way to harness the benefits of the Internet is to wait for the major companies to determine the most effective way to use the Internet in our industry."