Retail News Update

The co-op model has always been focused on driving customers into dealer members’ stores. But as more consumers migrate their purchases online, the three largest hardware co-ops have taken different approaches to harnessing the power of the Web.

Do it Best Corp. launched its Web site and e-commerce department in 1999. Back then, it was simply a tool to help customers find their local store. But it didn’t take long for the co-op to realize there was a major selling advantage online.

In order to leverage all 4,100 Do it Best locations, the company made ordering online easy. Customers could log on to doitbest.com and have access to about 65,000 SKUs — the full line of merchandise from Do it Best — and the item would ship from one of eight distribution centers around the country. By entering the shipping information, the customer’s local Do it Best store would get the credit from the sale. In order to drive sales in the stores themselves, customers can choose to have the item shipped to the store, waiving shipping costs and get ting customers in the stores.

“We remind customers through out their online experience that they can avoid shipping charges by simply picking up the item at their local store through our ship-to store program. This drives customers into our stores, and many times converts that online shopper into an in-store customer as well,” said Joe Caldwell, e-commerce manager.

But members are fully capable of developing their own Web sites. Gillroy’s Got it Complete Hardware has found running its own site, gillroys.com, has helped drive the store name, while benefiting from the Do it Best e-commerce model. While the Flint, Mich.-based hardware chain hosts its own site, it still links to doitbest.com to complete purchases, eliminating the need to run its own warehouse.

“Even though we don’t handle it, we don’t stock it and we don’t have to inventory it, we get a significant amount of the profit margin from it,” said Kurt Zimmerman, of Gillroy’s e-commerce department. “You would need to have a massive warehouse to stock that many SKUs,” he added.

Zimmerman said that Do it Best provides all of the price updates, photos and product descriptions to them — all they need to do is update the server.

“It’s basically like having another store, but Do it Best makes it very easy,” he said.

Currently, 60% of Do it Best members participate in the e-commerce program to some degree, according to Tim Miller, VP marketing. “The key to our program is that flexibility, to let our members take an active or passive approach to e-commerce,” he said.

Ace Hardware’s e-commerce approach has some similarities to Do it Best. It too drives sales through the company Web site, acehardware.com. It also offers customers the same ship-to-store option to avoid paying shipping fees and gives the sale to the customer’s local Ace member store.

At Ace, the e-commerce system is intentionally kept as simple as possible, according to Mark Lowe, of the co-op’s digital interactive marketing team. According to Lowe, driving customers to one online site, and from there directing them to their local store has proven to be very successful. Lowe points to the growing trend of customers selecting the ship-to-store option.

“Overwhelmingly they choose to ship to store,” he said. From there, Ace has been able to track that 33% of ship-to-store customers make additional purchases once they are in the store.

According to Lowe, that drives to the heart of Ace’s e-commerce strategy: to capture the online sales that are out there while driving customers to the stores when ever possible.

In 2007, the company launched the My Local Ace feature on its Web site. “We took the store locator to the next level,” Lowe said. The feature not only gives customers a look at what local Ace dealers are near them, it provides contact information, store hours, current in-store promotions, a list of departments and a list of services the store provides. “We’re really trying to bring on a local feel,” he said.

True Value’s e-commerce model is currently in the works, said CEO Lyle Heidemann in a recent interview.

“We are seriously looking at an e-commerce site in 2010. This is something we believe we need to do to be competitive,” he told HCN in an interview at the co-op’s fall dealer conference in Salt Lake City.

Heidemann recognized that consumers are out there shopping on the Web, comparing prices, and ultimately “you have to be there,” he said.

At least one dealer member has been there for some time. Fusek’s Hardware, of Indianapolis, has its own Web site, fusekstruevalue.com, which it uses to drive customers into its store. But recently, it has expanded its online presence by launching an exclusively online store, Ron’s Home and Hardware (ronshomeandhardware.com).

For Steve Fusek, running an online business apart from the sister store was a necessity. For him, trying to run the brick and mortar while meeting online demands would have been a logistical nightmare. By separating the two businesses, he can run them exclusively — even warehousing his online stock at a different location — and still meet his customers’ demands.

And while Fusek was left to build his online business on his own, he said he does like the freedom that True Value grants its members to explore new ways of building their businesses.

“They aren’t necessarily helping me do it, but they’re not standing in my way either. Their attitude has always been ‘If you have a better way to do it, more power to you, do your thing,’” he said.

But as True Value looks to create Internet sales, it could easily find itself adopting Fusek’s online model.

“We’re blazing a bunch of new trails,” he said.