The Evolution of Green Dealers

“Environmental gift shops”—that’s the term Andy Pace uses to describe many green dealers that opened around a dozen years ago: eco-light companies that featured a squishy save-the-world message and An Inconvenient Truth movie nights. Those stores had lots of spirit, but not much of a business plan, Pace says. “Half of them went under when the recession hit.”

But Pace’s business survived, as did scores of other green-focused LBM operations nationwide. They evolved, primarily by learning to reach out to a wide range of customers in a wide range of ways. Even as they evolved, though, they remained what they’ve always been: on the bleeding edge of LBM with regard to product knowledge and construction processes.

Pace now can claim 20-plus years in the business. His Milwaukee-based Green Design Center emerged from his earlier company, Safe Building Solutions, founded in 1993—“back when green was still a color,” he says.

Selling healthy materials is still Pace’s main criterion, though he realizes customers may have different objectives. “We allow the customer to decide what their idea of green is, and we help them achieve it,” he says. 

Typically, Pace’s customers tend to fall into one of three camps: those who for health reasons (like having a child with asthma or an occupant with multiple chemical sensitivities) need an indoor environment free of materials that off-gas noxious toxins; individuals who want to build with recycled materials; and people interested in energy efficiency. His goal is to help educate each of his customers enough to figure out what that individual’s degree of green is and provide the correct products.

“Ninety percent of our time is spent in education, even after 23 years. That’s why you can’t go to a quasi-green dealer who is just reacting to the market,” Pace says.

Pace, like Iowa-based dealer Joel Hirshberg, spent years sourcing products, during a time when obtaining information on what went into a paint, cabinet finish, or flooring was difficult. Dealers had to become sleuths, amateur chemists, and guinea pigs as they tracked down information, scratched their heads over figuring out what those tongue-twisting multi-syllabic ingredients actually did, and tested legions of products in their own homes.

“We built this business by finding products that were green,” says Hirshberg, owner of Green Building Supply in Fairfield. “We didn’t have the luxury of going online and duplicating what others were doing.”

Over time, green dealers have learned that an Internet presence matters. While most do very little actual selling through the Internet—Hirshberg, who figures 80% of his business comes from Internet sales, is a notable exception—they all realize that a great website is a must, as it sparks interest in their product, provides information on various green products to consumers, and drives customers to their stores.

That’s how Kensington, Md., green dealer Jason Holstine views his Amicus Green Building Center’s website. “It’s a lead generator,” he says. Holstine, who opened his business in 2005 at the peak of the nation’s housing boom, says that only about 10% of his inventory is sold online, primarily the non-toxic finishes and sealers. Educating customers one-on-one is an integral part of the business, he says, adding, “We don’t want to have people making decisions [on green products] online.”

Today, the nation’s asthma epidemic and the increasing numbers of people with multiple chemical sensitivities—a malady that not too long ago had little credibility within the medical establishment and practically none with contractors—is driving the industry toward a greater emphasis on a healthy interior environment.

Says Pace: “People are less concerned about the environment because it doesn’t give them instant feedback. [But] now that people have a bit more disposable income, they are interested in a healthy product.”

Successful green dealers continue to stress product knowledge and study products far more intensely than do most dealers. Many even have developed their own rating systems to help them evaluate products, like GreenDepot’s Filter, which founder Sarah Beatty built using LEED guidelines, with increased stringency added to many of the requirements.

Like Holstine, Beatty started her business 10 years ago, serving retail customers and tradespeople. With 10 locations stretching from her company’s flagship store in Manhattan to the West Coast, she has adapted her business model to focus more on the trades and believes that will be the model for green dealers’ success into the future.

Much of GreenDepot’s success in serving the trades came from its traditional distribution channel, which is something Beatty wanted to align herself with from the beginning. That she was able to do that so readily resulted from her ability to convince her husband, Mark Buller, co-founder of national building material distributor Marjam, of the opportunity to be had in selling green construction materials.

Unlike GreenDepot and Pace’s Green Design Center, which has six other locations throughout the Midwest that are all located in a LOHAS (lifestyles of health and sustainability) demographic, most green dealers operate out of one location.

However, all of them are also selling to builders and contractors, in a nod to Beatty’s prophecy that sales to the trade is the way forward, as well as retail customers, the traditional backbone of the business.

Some, like Maria Onesto Moran’s Oak Park, Ill.-based Green Home Experts, are also supplying materials for commercial contracts and state jobs. Many green dealers get a significant share of their business from special orders and drop-ship arrangements—which typically command higher returns than commodity sales.

Moran, who opened her business in 2008, the year the recession hit, learned to adapt her business model very quickly as the sands shifted under her feet. She modified her products from more traditional building materials to a green goods mix—cleaning supplies and personal care items, even selling mattresses for a while—as she quickly found out that people weren’t putting money into their homes.

In 2012, as the recession wound down, Moran moved into a new, larger space, even though she admits, “We weren’t really feeling the recovery then, but I felt like I had to get bigger or quit.” A year later, she shifted her store’s emphasis back to green building materials. She says those lean years, while tough, “were a good boot camp for our business.”

Green didn’t enter the mainstream marketplace until 2000, around the same time that the U.S. Green Building Council—founded in 1993— started its LEED green building certification program. On the heels of LEED, government incentives started showing up for entrepreneurs to green their business opportunities. As green became a hot commodity, more and more green stores opened.

The dealers still standing as the recession ended were those who were able to adapt to changing market forces, solve customers’ problems, and provide green building products that performed as expected. For traditional building material dealers, there are lessons to be learned: adaptation to changing market conditions, education, depth of product knowledge, problem solving, a solid Internet presence, and a diversified customer base.