Building Materials e-Commerce Strategies that Improve In-Store Results

In this episode, Zach talks to Gus Houghtaling, Director of Sales at Renin, whose eCommerce strategy is largely tied to learning what new products perform well that they can then bring to actual brick and mortar stores

Zach Williams:

eCommerce is typically seen as a way to grow sales and get closer to the customer. But there's actually a key benefit to selling online that most people don't think about and it actually applies to in-store sales as well. On today's show, we bring on a manufacturer whose eCommerce strategy is largely tied to learning what new products perform well that they can then bring to actual brick and mortar stores. It's a really interesting strategy that I'm excited to share with you. Let's get into the show.

Voiceover:

Welcome to the Smarter Building Materials Marketing podcast, helping you find better ways to grow leads, sales, and outperform your competition. Now here are your hosts, Zach Williams and Beth Pop-Nikolov.

Zach Williams:

Hello everybody. Welcome to Smarter Building Materials Marketing, where we believe your online presence should be your best salesperson. I am Zach Williams and we have an awesome show lined up for you today. We're going to be talking about how you can be using eCommerce as a test market. A lot of people want a bigger share of the online sales pie, but thinking about eCommerce from the standpoint of how you can create a proving ground for your dealers, as well as your partners, to figure out what's going to work well is a really uncommon strategy, which is why I'm excited to have Gus Houghtaling on the show with us today. He's the director of sales at Renin. Welcome to the show, Gus.

Gus Houghtaling:

Hi, it's great to be on.

Zach Williams:

So Gus, I think this is a fascinating topic. And before we dive in and talk about Renin's eCommerce strategy and how you're leveraging that from the sales and product proving ground. For our listeners, maybe you could just start with sharing a little bit, how you got into the industry and then what your role looks like at Renin.

Gus Houghtaling:

Well, I've been in building materials industry for over 25 years, started many years ago going to school as a part time employee at Home Depot as a way to make some extra money and got absorbed into it. It was back in the heyday of early mid '90s when Home Depot started opening a couple of stores a week, and was really blowing up and worked my way up through various positions into their corporate office. I spent a lot of years in their operations, merchandising, little over five years ago, left to the supplier side.

Zach Williams:

Do you like that? Did you like making the switch?

Gus Houghtaling:

I do, I like to talk to some of my old peers. It's a different level of stress.

Zach Williams:

Is it a higher level or lower level of stress?

Gus Houghtaling:

It's a little bit lower level, because I know they'll still call and get on me, but Home Depot and in that environment, the doors got to open every day.

Gus Houghtaling:

So there's always something you got to make sure... We had our sundown rule. Had to get things done every day, so the stores were opening the next day and success with what we're doing now, it's more strategic and a little bit longer term. We still have a day to day, but allowed me to... Because most of what I do now can be done remotely and able to move closer to some family and still stay in the industry, because I enjoy it a lot. I love what I do, but it's been really nice to step back and get on this creative side that I call a little bit of growing business in a sector.

Gus Houghtaling:

Went into doors, have been selling here lately, with commodity doors, from interior and exterior with Steve's Doors, prior to joining Renin a little over a year ago working with their team. We do barn doors. Our core commodity is sliding closet doors all the way back to the Stanley Monarch Mirror days with Renin. Now we've added a lot more, of some other decor items, mirror products, back lit mirrors, few small lighting categories, but really at the heart of soul of it we're interior doors and that niche category.

Zach Williams:

That's great. And where do you sell? Because, I was looking at your site. You sell everywhere from Home Depot, Lowe's, Costco?

Gus Houghtaling:

Yep. We sell all the core retail channels, all the core retailers, Home Depot, Lowe's, a little bit with Costco, but we also sell through the dealer, distributor networks, the Orgill's, Ace. We have commercial accounts too, but also we facilitate a lot of parts, whether it's bi-fold hardware kits or other fabrication materials to fabricators. So we also have those manufacturers that buy parts from us that are producing other products as well. So we cover the whole realm all the way to also just some pure eCommerce customers, like Wayfair and others in the market.

Zach Williams:

That's what I really want to talk about is eCommerce because majority of your sales are made up via retail, traditional channels, is that correct?

Gus Houghtaling:

Yeah, and the other commodity is what drives the plants and production. You need to have steady flow of what the contractors buy every day. They need four foot, five foot sliding closet doors, and that's what fills the shelves and the retail channel and production.

Zach Williams:

So are you selling online on your own website? Are you selling through partners like Wayfair, where's your online sales coming from?

Gus Houghtaling:

Through our partners, so I'd say, the bulk of it is through the homedepot.com, lowes.com, US, Canada, but we also have customers that we have with like Wayfair. We push more of our higher end decor products. Maybe they have a little more of our lighting and mirrors and we try to have strategies for each, so that we're also not creating too many collisions, because we also have strategies... When you look at the retail strategy, the big piece that you hear dealing with big boxes is have a interconnected strategy. They want you to connect from the store in the aisle, to eCommerce, to special order custom, to their pro side of the business. So they want you to have strategies that bring that all together.

Zach Williams:

That align with that, that's right.

Gus Houghtaling:

Right.

Source: renin.com

Zach Williams:

So talk to our listeners a little about what does your strategy look like for testing products? Because, I think that is really unique. Most people think like, "Okay, there's demand happening online. There's demand happening in store. I just want to sell as much of my product as possible." As part of your strategy is, how do we understand where the industry is going from a design standpoint, style standpoint, to create new products that align with people's, frankly like the design tastes that they have. Right? Is that correct?

Gus Houghtaling:

Yeah. I'd say that's a big piece. I mean, our marketing team does lots of market research and customer focus groups and we still mine all that data to be part of it. But my biggest takeaway is that eCommerce can be your best testing ground. That's our testing market to try new styles, new colors, finishes, that you especially want to try to get that higher price point into a store and knowing it's not going to be right for every store, but you'll start to get data that says, "Wow, in this part of the country, there is a big draw for this. We think if you get a price point here, besides your commodity, you now have a higher margin to add your mix in the store."

Gus Houghtaling:

Because the biggest thing is, I learned a lot of it from my Home Depot side, dealing with suppliers is, as much data as you can provide retailers and others, that's what's going to get you in there. They are data driven, they're risk averse to load, piles of inventory into their DCs, then they got to fight with you to buy it back, if it's not successful, you're throwing the markdown dollars at it. Look, not everything is going to succeed just based off, "Oh, we had a great thing online and we've looked at it and it's great." But you're going to have data points to drive decisions, "We put this online the last four months, here's what we're seeing. Really think we should grab some market gains here before others get it."

Zach Williams:

That's a different scenario versus, "Oh, I feel like something is going to sell, versus look how this is already sold?"

Gus Houghtaling:

It's huge. I would always get with suppliers if they came in and said, "Our team looked at this, we feel this is going to be your next best thing." And I always told them, "I don't buy off feelings." That's something, if I feel like I like that pair of shoes, then I might feel that way. But I said, "When you deal in building materials, I said, there's very few people in the industry that are [inaudible 00:08:06]." I said, "None of us are touchy feely guys. That's why you're in building materials industry." And it's data-driven, because at some point you are going to take the risk. So you know that anytime you add that product in, I mean, you're not always going to succeed. My deal is, I learned early on and a lot of it was coming up through the Home Depot ranks was, you were taught, because all the way down to store managers and below, you ran that store.

Gus Houghtaling:

So they always brought up people and trained you and their goal was you had the business acumen to take the risk, going for the reward. That if you had good sound business judgment behind that decision of why you brought that in, what you're doing, if it didn't succeed, then it didn't succeed. You're going to pivot, change direction. As long as you could stand behind your decision, learn from it, move on. It's when you just brought in things and said, "Well, I was in a store and they said they sell a lot of green doors in this market." And the guy at the desk says, "Oh, I sold a bunch of green doors. Could you bring it in here?" Well, you find out, yes, he had one contractor that built four homes and he liked green doors and then you're sitting on green doors in the shelf for the next year.

Zach Williams:

That's a great example. So can you give us an example of an actual product that you were like, "Hey, I want to see if this sells well online to push it in store?" Can you walk us through an actual door that you've seen this process work with for one of your products?

Gus Houghtaling:

Well, I think the biggest thing that we're able to monitor and look at that I've been, in my time right now, has been looking at more of the style, color trends. So we've introduced some new bypass doors that give the barn door look, without being a full barn door kit. So we have some doors that use our bypass hardware and can retrofit in a standard opening, giving the appearance of it without having to spend a $1,000 on a couple of barn doors where you're spending $200, $300 and get the same appearance and look. I've been trying to push the retailers, "We should try this in some stores. We should look at some of these higher end." There's been a lot of hesitation of, "Well, customers come in and they want that $50 starting price point door." So even if I bring it in a stock situation, all right, let's say you can get it to $125 a door, it's a big jump when you get that customer that's shopping, looking at $50, $60 doors, to spend double that.

Zach Williams:

How'd you prove that out? Did you try to introduce it on a couple of the retailers online?

Gus Houghtaling:

Yes. So we currently have a couple online tests going right now. I'm seeing pretty good success on a couple of the finishes. We also you use some of, through Home Depot and Lowe's, there's different programs to participate with them to get more reviews. So we'll do their Seeds program where you send out some products to some of their customer base, to solicit reviews and feedback and utilizing some of that data to then take into our next meetings of, "We've seen this work." We're doing a couple of tests with some individual doors where we're saying, "All right, you know what? We've started to see this online, give me 10 stores in this market and 10 in this market and we'll put them in and test them in these higher demographic areas." So we've just started down some of that road and hopefully we'll get a few more pushed in there, but that's the key thing, is doing a little bit of testing with that where you can say, "I may not have all the answers, but here's where we're going to go and try."

Gus Houghtaling:

So I'd say, some of the results for us aren't fully in that, we're in that mode of mining how these are selling online, looking at that sales data. A lot of things, of course, have been pushed off in the current situation of things that you might've been planning this first quarter and second quarter, and now, well, let's talk about in the third or fourth quarter. Things aren't to a halt, but nobody's looking to add product to their DCs right now. I've seen, in my previous role, probably a better example. So when I was with Steve's Doors, we really had seen the market shifting, trying to figure out, "All right. So six panel doors they're going to sell no matter what. Contractors put those in all their home builds, the number one velocity. What if we can try a shaker style has been a popular movement, so it can get a five panel to capture some of that farmhouse country living look."

Gus Houghtaling:

So we started an online test with some five panel doors, started to see success and we took that to them, they gave us one market and said, "Go put that in Austin. A little bit higher demographic area. Let's see." Put that in. Before we knew it, it was flying off the shelf and then all of a sudden we're in three markets testing. Then all of a sudden I look and I see, Oh wow. You talk to the merchant. He said, "Hey, just to let you know your competitor, we're going to be launching this in the Midwest, but this is now a category that we're going to go in." It's in certain stores, so there might be three or four stores in the market that you can then put that higher price point in. Now you're really driving some of that volume. You're also still seeing the benefit is, you still capture the online customer too, because the online customer is willing to pay more to get that door delivered to their house and not go into a Home Depot store.

Zach Williams:

I love what you're saying there, because you're basically double-dipping. You're still making money. You're still making money on this product, but you're basically saying, "Oh, well, does it perform enough where we could make an argument to get it in an actual store?" What I want to know Gus, is there a benchmark metric point that you're saying, "We want to hit this amount." Maybe it's sales, maybe it's reviews, maybe it's some other metric to decide whether or not you bring that up to your retail partners to say, "We think you should try." Is there some sort of number that you're aiming for or metric that feels like you've got enough confidence that it's going to sell well in stores, as well?

Gus Houghtaling:

Well, yeah, it's a combination of a few metrics. One of the top things is the customer reviews. So, we'll mine data with Bizarre Voice and others and say, "All right, here's what we're seeing in the true feedback out there." Then we'll look at the sales data kind of by geographic location. So if I know that I have some markets I want to hit, am I selling this in the Northeast or in the Florida markets? Am I'm getting enough units where I think, what does that retailer want to generate? You'll have to talk to them. Different bays, they'll say, "You know what? I want to generate $5,000 of sales out of this bay each week, each month." You try to figure out what they're looking for and then you say, "Well..." You back a number for each of those categories that says, "All right, I need to do that. But for me, my core prices, maybe it's a $60 door, an $80 door."

Gus Houghtaling:

Well, a lot of times you don't want to jump them more than 50% up in price range. So can I get it if I do stock mass production to a price point where it's a sell, that I can bump them up another $50, $60 1into that? At that price point, does that generate me X per bay?

Source

Zach Williams:

So are you going to them saying, in advance of even doing this online, are you going to them saying, "Hey, we want to try to bring a higher price point product or we're trying to bring product with a different style to the table." Are you going to them saying that in advance of actually selling online? Are you doing that in advance of that before you even sell? Or is it like, you're trying to basically hide that you're testing before you bring it to them? Is that part of your MO or no? Are you pretty transparent?

Gus Houghtaling:

I'm usually pretty transparent. Especially if it's something that we've been putting some time and effort and work into, but I'll usually tell them, "Hey, this is something we think you ought to do." A lot of them will push you back now too, and say, "Well, give me some numbers of how it's selling online or in your special orders or other channels." But a lot of the successes we saw were just happy surprises, I call them, from stuff that was online that we put out there to see.

Zach Williams:

So you're looking at data no matter what?

Gus Houghtaling:

Right. So we're looking at it. So when we were at Steve's and others, you look back six years ago when barn boards were starting to take off. We were selling barn doors online and all of a sudden we're getting so many orders, we're just... Truckload a week is going out. And so we were going to them and saying, "We have to get this in the stores now."

Gus Houghtaling:

First of all, we can't keep up with the demand of shipping these online. There's so much demand pent up here, we need to put this in your stores. Worked with them on strategies of, these are your top selling finishes. This is your top door. We'll get retail packaging ramped up and ready. Let's put it in there. Then you're lucky in the building materials industry, when you hit some of those trends, we were lucky that we had already been online. We'd been testing barn doors before it really took off and we're seeing kind of a more leveled out performance now. But you've got to be prepared for stuff like that. When all of a sudden the numbers show you, let's jump on this now because in building materials, those things don't come along too often.

Zach Williams:

You've got to move quickly.

Gus Houghtaling:

You want to innovate new stuff, but when you talk, say, doors, well, there's only so much innovation you can do at a price point the average consumer can buy. There's always really neat, cool things that we're working on and developing, and there are going to be niche customers that'll spend fair amount of money on some really cool stuff, but you've got to be able to do mass production if you're going to play with the big boys.

Zach Williams:

Yep. Makes total sense. Well, Gus, this has been fascinating and super insightful. If I'm a manufacturer listening to this, what's the one piece of advice you would give me, if I'm looking to employ a similar strategy or tactic, what would you tell me?

Gus Houghtaling:

I'd say have a strategy in mind when you're going to go into this. With ours, it can get complex if you don't put a strategy around what you're trying to accomplish, because when you start to say, you want to launch a new door, you want to do some eCommerce testing and push things, you can get yourself in a lot of trouble with different customers you have, if you've been dedicating all your time and energy, and you think this is the winner, and I'm going to put this into Lowe's and all of a sudden you're seeing it really take off on some other eCommerce channel. You're not feeling it's going to go there or you've launched a product that you're like... You want to have some strategy up front so that you're not tailoring something that's going to then end up getting you where, "Wow, that really should have been a retail channel in the stores item."

Gus Houghtaling:

You're not always going to get it right each time, but there's different strategies you need to have, whether you're thinking I'm going to hit multifamily and hospitality through the HD Supply's of this world, or I have distributors, they're going to be able to just take off of these items. And then, you know what? I have some retailers that have to have a rock bottom, opening price point through this. So I'd say, have a strategy behind everything, because you're going to get pushed from each of your customers. They're each, of course, your top customer, and when you go meet with them, I've been in all the meetings and the Home Depot guys will call you a Lowe's lover and Lowe's guys will be like, "Oh, what are you doing over there?" So my commitment is always to each of them that, "You're going to have your own strategy. We're going to push you. We're going to leverage our company learnings across all those channels."

Gus Houghtaling:

But I'd say, just be up front with them and have strategies for each customer, because you will get caught up if you're trying to play both sides. Be honest with them and don't get caught up in just trying to please everybody, you have to have a strategy that pleases each customer. If you step away, each customer has needs and customers and things they're strategizing for. So it's easy to put that behind each one of them.

Zach Williams:

That's great.

Gus Houghtaling:

I don't know. I could go on and on, there's lots of stuff. Just show value to your buyer and customers. That's what they're looking for. They're looking for you as industry experts to help lead them down the right path.

Zach Williams:

Smart. Well, Gus, man, thank you so much for coming on the show. If someone wants to connect with you, what's the best way for them to do that?

Gus Houghtaling:

I'd say the best way on LinkedIn, I'm out there, under Gus Houghtaling, there's only one out there.

Zach Williams:

There's only one? The one and only.

Gus Houghtaling:

The only one out there on the LinkedIn with that long of a name.

Zach Williams:

That's great. I'll make sure we link to that in the show notes as well. That's great. Again, thank you for coming on the show and if you want more great content like this, go to venveo.com/podcast. Until next time, I'm Zach Williams. Thanks everybody.

Voiceover:

You've been listening to Smarter Building Materials Marketing with Zach Williams and Beth Pop-Nikolov. To get the resources mentioned in this podcast, visit venveo.com/podcast. Thank you for listening.