Where Do Home Builders Buy Materials? Uncovering Opportunities in the Supply Chain

While often overlooked by those on the outside, acquiring supplies is easily one of the most tedious parts of the home-building process. Pressed for time and asked to stay within a strict budget, home builders must compare a variety of vendors to get products on time without compromising on cost or quality.

So, when builders need to source materials, what’s their favorite way to do it? According to the 2023 Building Products Customer Guide, the most popular answer is to head to the store and shop in person — whether that’s at a hardware store, a mass retailer or a chain like Home Depot or Lowe’s.

As a building materials manufacturer, knowing where and how home builders shop can allow you to tap into the supply chain and better target your marketing efforts to make sure that you’re getting in front of them in the right place, at exactly the moment when they’re ready to buy. Here’s what you should know.

Sourcing materials locally is important to many builders and their clients, especially when working on higher-end projects where the homeowner would like to support small businesses as part of the process.

By far, the biggest downside of local building supply stores is that they can have limited stock and variety and they tend to have higher prices since these stores can’t buy at the same volume that big-box retailers do.

As a manufacturing company, building relationships with regional chains and locally-owned supply stores in large areas can be a valuable part of your business model.

While these retailers may not be able to buy en masse like some of your other clients, they tend to have loyal customers who may otherwise not be exposed to your products at all. Plus, if you work with stores that have caring staff, they will even take the time to educate customers on your unique products.

Not sure if local building supply stores are the right fit for your business model? Consider the following:

• Local supply stores generally purchase in lower volumes, leading to higher markups for the end consumer

• Representatives of a local supply store will be able to build a very personal relationship with your company

• Greater customer loyalty and human interaction can allow a local supply store to push your products more and educate home builders on them

• With limited reach, you’ll need to build relationships with many local stores or regional chains

Home Depot and Lowe’s are likely the first two names that come to mind when you think of major sources for home builders to buy materials. These chains are located all over the country and they offer immense variety along with the ability to check availability online to prevent frustration and wasted time.

While about 60% of home builders choose to shop in-store when buying from these big chains, about 20% enjoy the convenience of buying online for delivery while 13% buy online and pick up in-store.

Cost-wise, these chains tend to be slightly more affordable than local supply stores, but still significantly more expensive than wholesale distributors. The biggest perk of shopping at these chains is that they keep long hours, have multiple locations and a wide variety of supplies are immediately available, allowing them to stick to schedule.

As a manufacturer, getting your products stocked at a major chain can be a long process that involves a lot of paperwork. At Home Depot, the process starts with an online form, which you can expect a response from within 60 days. It’s far less personal than any relationship you could build with a local supplier, but the payoff could be huge.

Consider the following:

• There is a great deal of paperwork involved and generally a long lead time before you can get into a big-box store

• National retailers deal with thousands of manufacturers, so building a strong relationship with them is unlikely

• Once you have your foot in the door, your product could go out to hundreds of stores across the country

• You will need to be able to meet a relatively high volume of orders to stay in these stores, and contracts may need to be re-negotiated often

Data from the Census Bureau showed that sales for building materials, garden equipment and other supplies typically sold by stores like Home Depot largely moved online as a result of COVID. In Q2 of 2020, sales of these items doubled year-over-year to $8.2 billion.

While things have settled down slightly with in-store shopping back in full swing, 70% of construction companies believe those who don’t adopt digital will go out of business and 62% believe the sector as a whole is behind the times on digital technology — and that includes e-commerce.

Home Depot and Lowe’s claim a large part of the online sales due to brand recognition and the ease to buy online for doorstep delivery, shipping to the store or curbside pickup. However, other online marketplaces are popping up that are worth looking into as a building materials manufacturer.

Aside from building relationships with some of the fastest-growing online marketplaces, you should also look to optimize your own online presence so that you can reach the increasing number of builders who are turning to the internet to look for supplies.

Consider the following:

• Online marketplaces stand to gain more and more market share in the years to come

• Getting onto these marketplaces now can allow you to build strong relationships with up-and-coming retailers

• With the potential for national reach, online marketplaces could drive a high volume of sales for your business

• Combined with your own marketing campaigns, these marketplaces can help your company gain recognition fast

It’s more likely for larger builders to buy directly from manufacturers’ distribution centers than smaller builders as there is generally a longer lead time, a minimum order size, and freight costs involved that can only be offset by purchasing in bulk.

As a manufacturer, you can encourage direct purchases by establishing a stronger online presence, listing your inventory online, producing brochures and spec sheets for your products and creating an easy form where builders can request quotes. For some manufacturers, setting up an online ordering system may also be viable.

After a builder purchases directly from you as a manufacturer, your work is not done. It’s important that you foster that relationship with timely shipping, continued email marketing and one-to-one follow-up about their order to make sure they’re satisfied.

It can be a major time investment to build relationships directly with home builders, but you will get it back tenfold if you’re able to encourage routine direct purchases, especially with higher volume builders.

Consider the following:

• Selling directly to home builders allows you to cultivate a strong relationship with your end customers

• You’ll need to focus on higher volume builders, potentially setting minimum order requirements, to prevent overhead costs from adding up

• Contracts and orders will need to be negotiated with each home builder, which can take more time than your team has

• You can make more per order compared to selling through wholesalers and retailers

There are dozens of trade shows and expos in the building materials industry each year, and they serve an important role in connecting manufacturers with home builders and other potential buyers.

Home builders explicitly attend these events to forge relationships with manufacturers and discover new products that they can use to bring down costs or address consumer requests (especially in areas like sustainability and energy conservation).

As a manufacturer, attending multiple events throughout the year can help you drum up business, get face-to-face with potential clientele and provide demonstrations that show how high-quality, tough, unique or innovative your products truly are.

Consider the following:

• Trade shows are great for cultivating relationships with individual suppliers and home builders

• These events are a good way to demonstrate specific aspects that make your products unique

• It does take a lot of time and manpower to attend these events, but the right ones can build credibility and recognition for your company

According to the Building Research Establishment (BRE), consumers have a solid understanding of what a sustainable home is, and some 96% have made changes in order to live a more sustainable lifestyle. More than 65% agreed that it would be important for their future home to have sustainable features too, like triple glazing, solar panels or extra insulation.

With a clear trend toward sustainability, it’s no doubt that home builders are going out of their way to garner appropriate materials when clients express demand for green and sustainable supplies, especially when many consumers are willing to pay extra for them.

Some larger construction companies also have environmental, social and governance (ESG) programs in place that steet them toward green suppliers, while others may be tackling projects where they’re pursuing government incentives to be greener. In all cases, you should lean into this as a manufacturer.

Sustainability promises and eco-friendly certifications can make the building materials you provide more appealing to a wider audience, and allow you to align with the growing consumer desire for earth-friendly products.

Consider the following:

• Green and sustainable suppliers often reach an audience of home builders who are working with high-end clients

• Positioning yourself as a sustainable building materials manufacturer will pay off time and time again, no matter what supplier you’re selling through

• Sustainability efforts can allow you to put a larger mark-up on your products, improving profit margins

For high-end and specialized products, home builders often can’t head to the local supply store and find what they need. Discerning clients may ask that their home builder sources products locally or go out of their way to find repurposed, upcycled or artisan-crafted touches, from reclaimed barn wood for the front door to custom-made tiles for the master bathroom.

Many manufacturers are not positioned to handle special requests or they simply aren’t in the market of custom products, but if you are able to provide bespoke or unique solutions for home builders working on these projects, don’t shy away from this niche market.

In order to become known as a manufacturer for these situations, you’ll need to spend more time and money marketing and branding your company as such. It’s also important to collaborate with the suppliers who are already serving these niche markets, building relationships with them so that they can turn to you if they ever need to source materials for a custom request.

Consider the following:

• Working with specialty suppliers can help you build relationships with a new niche of home builders

• Offering customization options and unique solutions can allow you to enter a new niche as a manufacturer

• The time involved in working on one-off projects is great and you may not have the manpower to handle it

Going to a wholesaler can often net huge savings for a home builder. While wholesale suppliers still act as an intermediary between a manufacturer and home builder, they don’t have all the overhead costs of a big box retailer like Home Depot, and they tend to sell materials in large quantities, sometimes providing bulk discounts.

For large home builders, wholesalers and builders’ merchants make it easy to get the products they need without going over budget, although there may be more lead time compared to walking into a retail store.

As a manufacturer, working with wholesalers can lead to larger purchase orders and get you in front of an audience of bigger construction companies that are less likely to be found shopping inside a big box retailer. Of course, you don’t stand to profit as much from wholesalers, so there is a trade-off.

Consider the following:

• Wholesalers often deal with bulk buyers, which makes it easier to sell your products in large quantities

• You’ll generally earn less per order compared to retail and direct-to-builder sales

• You will need to be able to fulfill high volumes of orders to effectively work with wholesalers

Some bespoke suppliers will use reclaimed and salvaged materials in their projects, especially when it comes to repurposed wood and stone. While there is generally a major mark-up on those salvaged materials when purchased from a bespoke supplier or artisan willing to fulfill a custom request, there’s a whole other subset of suppliers who will sell the materials for nearly nothing.

Suppliers who specialize in reclaimed and salvaged materials do little to no customization or restoration, but instead pass the savings onto home builders by selling as-is. The materials may have been donated, salvaged from scrap yards or even purchased directly from manufacturers in cases like damaged inventory.

However the materials find their way to reclaimed and salvaged suppliers, they’re becoming increasingly popular amongst home builders because they allow construction companies and consumers to realize their sustainability goals while also saving on costs.

As a manufacturer, you might consider incorporating reclaimed materials into your product offerings by working with builders and other sources to collect materials for re-sell. On the hand, you can also partner with salvaged materials suppliers as an opportunity to sell your old and damaged inventory instead of sending it to scrap yards.

No matter how you work reclaimed and salvaged materials into the equation, it’s a fantastic way to encourage sustainability in the home building industry and help home builders get their hands on highly cost-effective materials for their future projects.

Consider the following:

• Sending out damaged or B-stock inventory to salvaged materials suppliers can be a viable way to reduce losses

• Accumulating salvaged materials for resale in your own catalog will take a great deal of forethought and ongoing sourcing

• Selling salvaged or reclaimed materials alongside your normal products could change the perception of your company if not properly marketed

Regional market differences have a major impact on how and where home builders source their materials. It goes without saying that rural home builders have far fewer options than those in urban areas, but weather considerations can also factor in.

For instance, in areas where the building season is shorter, home builders must work on tighter schedules, which can make the longer lead times associated with online marketplaces and other alternative sources unfeasible. Meanwhile, in urban areas with an abundance of specialty suppliers, chains and local stores, home builders are empowered to shop around for exactly what they want.

As a manufacturer, it’s important that you understand the choices (or lack thereof) available to home builders in different regions, along with the consumer demands and climate implications that they’re catering to when looking for materials. It takes a good deal of time and research to account for all of these details, but tailoring your marketing strategies accordingly will help you drive better results in each market you target.

There is no shortage of options when it comes to where home builders can source their materials. Truly, the biggest deciding factors are convenience, cost and consumer requests.

If a home builder is working on a high-end project, they’re more likely to turn to suppliers focused on sustainability, customization and specialty products. Meanwhile, larger builders are more likely to turn to wholesalers while smaller builders are more keen on walking into retail stores, even if it costs more.

Online marketplaces, industry trade shows and other sources shouldn’t be ignored when you’re considering how to get your materials in front of a wider audience, but it all comes down to the products you offer and who your ideal customer is. Selling directly to builders makes sense for some manufacturers, while others prefer to get into that retail market.

Regardless of how you’re currently selling your materials, one thing is for sure — home builders’ buying habits are changing. With an increased focus on sustainability across the board along with wider adoption of online purchasing, you need to make sure that you’re continuing to cater to home builders’ wants and needs.

Diversifying your marketing efforts and exploring new avenues can help you grow as a manufacturer and stay top-of-mind for your most important customers. If you need help, why not turn to a team of marketing experts who specialize in the industry? Reach out to Venveo today to learn how we can work together to expand your business.