Internet offering a new portal to purchasing

Home Channel News, Nov 6, 2000

Home improvement and building supply dealers continue to see the Internet primarily as a communication and product search tool. But many are begining to believe the technology offers an attractive new way to purchase products, according to a recently released study.

Louisiana State University's School of Forestry, Wildlife and Fisheries and the World Wide Wood Network, based in Yelm, Wash., looked at Internet use among 250 companies chosen from NHCN's Top 500 Retailer Scoreboard. Among those dealers, lumber and plywood sales, accounted for 55 percent of total annual sales on average, compared with 19 percent for the industry as a whole. One third of the respondents' forest products purchases were ordered directly from manufacturers, while 60 percent were made through distribution intermediaries such as wholesalers (27 percent), brokers (18 percent), and stocking distributors (15 percent).

The survey found that regular mail and faxes continue to be the most common methods for transmitting the more than three million business documents the dealers process annually (see chart). However, email, electronic data interchange and Web sites are becoming more prevalent, and 24 percent of those polled said they currently use the Internet to support forest product purchases. Those findings, the study's authors contend, indicate that the industry is poised to adopt e-commerce strategies and capabilities.

"Among the folks that were involved in the study, there is a lot of money being invested in these technologies," explained Richard Vlosky, an associate professor of forest products marketing at LSU. "Whether you're a small, $10 million dealer or Home Depot, there's an opportunity to effectively rake advantage of some aspect of e-business."

Indeed, 78 percent of respondents said their companies maintained a Web site, and 16 percent said their sites were integrated into their company's business systems. Still, 91 percent of the respondents said they used their sites for promotional or advertising activities, while 31 percent used it for customer service, 11 percent for operational functions and only 7 percent for e-commerce.

Similarly, respondents were more likely to agree that the Internet would increase access to industry information and aid in the search for new products than that it would increase sales or lower operating costs.

When asked about their major concerns when using the Internet for wood products purchases, respondents put loss of personal contact with their suppliers, a lack of suppliers willing to use the technology and cost at the top of the list (see chart).

"People have seen that the technology is pretty safe and they're saying, 'My god this is really going to happen,' now they're turning to the non-technical issues and asking what effect will this have on the relationships that are the cornerstones of the industry?" Vlosky said.