Hogging Sales: Ben Johnson, left, Philip Brown, and Richard Waters of SupplyHog.com are building an online lumberyard. Photo by Jamey Guy
Hogging Sales: Ben Johnson, left, Philip Brown, and Richard Waters of SupplyHog.com are building an online lumberyard. Photo by Jamey Guy

Home Depot’s online sales increased by 50% last year to $2.7 billion, and that number undoubtedly will rise this year following THD’s acquisition of Blinds.com. A widening range of building products is available for purchase on Amazon.com’s octopus-like website. And in the second quarter of 2014, Lowe’s—which generated $1.07 billion from online transactions last year—was scheduled to re-launch lowesforpros.com, through which contractors can buy products online, access contract pricing, develop requisition lists, and view their purchase histories.

Slowly but surely, e-commerce is elbowing its way onto the building supply and home-improvement stage. But the main actors so far have been a handful of retail behemoths. Pro dealers and distributors, for the most part, remain spectators, watching as more of their customers’ business flies through the Internet and lands onto competitors’ online selling platforms.

“E-commerce is taking over every industry except LBM retailing,” says Jon Goldfarb, who owns Riverland Builders in Charleston, S.C. “Ninety-nine percent of [pro] dealers have no e-commerce presence,” he says, with only slight exaggeration. “The potential for growth is humungous.”

Frustrated by his own experiences trying to create estimates and place orders conveniently, Goldfarb and his friend Bill Rebey—a product engineer with the IT company iSirona—developed an e-commerce site specifically for building products called OrderOnSite.com, which went live in 2011.

The business model, Goldfarb says, has been to partner with independent pro dealers that provide free next-day delivery of orders placed through the site. His company is currently working with a dozen dealers that cover 15 metro markets in five Southeastern states. It gives these dealers territorial exclusivity based on zip code and product. For example, OrderOnSite.com works with two dealers in Charleston, one for lumber and one for drywall

The site offers products in 11 categories, but they aren’t available in all markets yet; only drywall can be bought online in Jacksonville, Fla., and Savannah, Ga.

“We want to give [LBM] dealers a voice because, right now, they are being shut out of the e-commerce system,” says Goldfarb. That certainly was true of Buck Lumber in Charleston, which was the first dealer to sign on with OrderOnSite.com. At the time, Buck Lumber had a middling e-commerce presence that “generated very little sales,” recalls Dale Fort, this dealer’s vice president of purchasing. 

OrderOnSite.com is bringing in business, mostly from DIYers, that Fort says Buck Lumber would not have gotten otherwise. (Buck sells products to OrderOnline.com at a discount, which OrderOnSite marks up for the retail transaction.) Fort attributes this positive turn of events to marketing by OrderOnSite and Buck Lumber, whose trucks show the online dealer’s web address. Fort hopes that homeowners and pros who use OrderOnsite.com eventually gravitate to Buck Lumber’s yard.

Another dealer that’s realizing incremental business through OrdOnSite.com is The Building Center in Pineville, N.C. Its president, Skip Norris, admits that his company hadn’t made e-commerce the priority it needs to be. “OrderOnSite gives us the ability to reach those customers.”

High on the Hog

Just as OrderOnSite.com was getting off the ground, another online retailer was emerging in Chattanooga, Tenn.: SupplyHog.com, which is the brainchild of a local home builder Nathan Derrick. Supply.Hog’s 16 employees include its chief technology officer Philip Brown, who had been a web developer; and COO Richard Waters, who previously helped start two other companies.

Derrick, the company’s CEO, is a bit of a character: His preferred title is “Hogfather.” And the only other job he lists on LinkedIn is when he sold rabbits at a flea market in the mid 1980s.

Working with startup “accelerators” 500 Startups and Dreamit Ventures, Derrick raised $2.5 million in venture capital to launch SupplyHog.com. The website has since expanded to offer 2,500 building products in 20 categories from about 200 vendors that are mainly manufacturers and multi-branch distributors. The company says its coverage is nationwide, with customers in 48 states, but lists on its website four markets where it has established supply chains: Chattanooga and Nashville, Tenn.; Atlanta; and Charlotte, N.C.

When ProSales asked Waters and Johnson for names of current suppliers, they cited local branches of giant distributors ABC Supply, Roofing Supply Group, and Lansing Building Products, none of which has an e-commerce component on its own website. SupplyHog is working on what Waters calls an “on-boarding plan” to bring more smaller vendors—possibly including pro dealers—into its fold as suppliers.

Waters says SupplyHog.com’s customers are mostly small- to medium-size contractors and remodelers. They order products through the site, and pay for them using a credit card, a bank draft or a credit line. Like OrderOnSite.com, SupplyHog.com takes title of the products it purchases from suppliers, and retails them at a markup. 

SupplyHog.com strives for next-day delivery, but it could take a few extra days depending on an order’s complexity and product availability, says Ben Johnson, its customer service manager.

While he won’t disclose SupplyHog’s annual revenue, Waters reveals that since September 2013, its monthly sales have been increasing by between 25% and 50%. He concedes that SupplyHog’s biggest challenge has been “finding the right focus” in an industry “that’s so large and has so many products.” SupplyHog intended initially to confine what it sells to basic commodities for building a house. However, many customers turn to SupplyHog to help them find products not readily available from their regular suppliers.

Raising Capital for Growth

OrderOnSite.com and SupplyHog.com, say their executives, are providing suppliers with inexpensive surfboards to catch the wave of contractors and remodelers looking for an online resource that facilitates the seamless purchase, payment, and delivery of building products. 

But the online retailers have a long row to hoe before either achieves its goal of nationwide coverage. They must beat the odds against startups in general, whose failure rate within their first five years historically has ranged from 50% to 90%, depending on the industry. 

Undaunted, SupplyHog.com plans to expand into California and Texas by 2015, and is soliciting new capital to beef up its marketing. (Right now, Google AdWords and banner ads on its suppliers’ websites are SupplyHog’s primary promotional avenues.) OrderOnSite.com, which to this point is self-funded by its two owners, is also seeking investor capital to expand to other markets and extend its marketing to mass media like billboards. 

Goldfarb says his company wants to add product images and descriptions to its site. (SupplyHog.com already has these.) He also wants to tweak the site to spur more package purchases. And sometime this summer, Goldfarb hopes to introduce OrderOnSitePro, a software solution for dealers that allows their best customers to pay for orders placed on OrderOnSite.com through their accounts with the dealers.

Goldfarb won’t disclose his company’s annual revenue, but he says OrderOnSite expects to increase its dealer-partners’ sales by 10% per year. “We’re a long way from that, but that’s our goal.”