You don’t have to look far to see how technology has disrupted once dominant businesses. Some, as a result, crumbled, while others managed to live on.
At its peak in 2004, Blockbuster had more than 9,000 video rental stores in the United States. By the end of 2013, however, thanks largely to poor management decisions and the success of Netflix, all corporate-owned Blockbuster stores had been shuttered.
In 2000, Toys “R” Us entered a 10-year deal that would make it the exclusive toy seller for Amazon. The joint effort was successful until Amazon allowed Toys “R” Us competitors to sell on its e-commerce platform. Toys “R” Us sued Amazon and won in 2006, but it wasn’t for enough money to make up for the years the company lost in which it could have been developing its own e-commerce platform. Now, you can no longer experience the joys of once again being a “Toys ‘R’ Us kid.”
Borders invested more in its physical stores and outsourced its online sales to Amazon, while Barnes & Noble invested in its own online and e-commerce presence and later developed an e-reader, the Nook. By 2011, Borders had closed its doors for good. Today, Barnes & Noble is still a Fortune 1000 company, with 627 retail stores in all 50 states.
All of these brick-and-mortar companies have one thing in common: they were digitally disrupted. Fortunately, the LBM industry hasn’t yet been caught in the crosshairs of a digital disrupter, but that doesn’t mean it won’t happen. According to some industry professionals, it’s only a matter of time. “It’s just not reasonable not to expect someone, whether it’s Amazon or someone else, to build out a global model that lets people procure building materials online effectively,” says John Maiuri, president of the LBM&H Division at ECI Software Solutions, in our cover story “LBM’s Digital Dexterity Rises.”
That’s why some leaders compete with Amazon. “We have customers tell us, … ‘You ship on time,’ and then we analyze our data and we figure out we ship on time half the time. So, we asked our customers [about it and they said], ‘But you’re so much better than anybody else!’ So, we see a real opportunity to apply digital technology to improve the …efficiency of the supply chain so it looks more like Amazon instead of someone who gets it right half the time,” says Fritz Mason, president at Georgia-Pacific Lumber.
In the above situation, Georgia-Pacific Lumber customers are only happy with the company because its competitors are much worse at making on-time deliveries. If left unchecked, this would be an invitation for disruption.
The same holds true for construction supply dealers. For this reason, you should be doing everything in your power to leverage digital technology to drive change. Otherwise, you run the risk of getting run over by it.