Electrical contractors-both big and small-are hopping onto the Internet channel to make their businesses better. A few are even ordering supplies from their distributors.
"I use the Internet almost daily in business, and I use it in variety of ways," said Jim Nannery, office manager for Kel Electric, an Auburn-Wash. nonunion contractor with five employees. The contractor has a Web site, and the World Wide Web is also used as a resource for obtaining product information. Online billing-either through e-mail or some other setup-is something the company sees for the future.
Unfortunately, Nannery's foresight is uncommon among small companies. A recent survey by the Yankee Group, Boston, Mass., shows that many small (two to 99 employees) and medium (100 to 499 employees) businesses have not strategically embraced the Internet as a business tool. Of the businesses surveyed, an average of only 30% said the Internet was important in achieving business goals. The majority of contracting companies fall into the category of a small business as defined by Yankee; of the 50,000-plus contractors that subscribe to CEE News, more than 85% have fewer than 100 employees. But another study forecasts the number of small businesses using the Internet will double by the year 2002-from 1 million to 2 million.
CLS Inc., a Hartford-Conn.-based electrical distributor with most of its customers situated in the Northeast, is banking on the Internet being the wave of the future for electrical contractors. Its Web Order Entry (at www.cls.com) brought in about $1 million in sales last year. With numbers like that, it's apparent the Web site has come a long way since it inception four years ago when President Bob Campagna read an article in Newsweek about domain names. CLS' Web Order entry is expected to do between $5 and $10 million in over-all sales this year.
Meanwhile, the national distribution giant, Graybar, Clayton, Mo., has recently upgraded its GraybarNet dial-in ordering system to make it Internet compatible. It's still basically the same proprietary system in which customers enter orders, check order status, pricing, and product availability, but now it's Web-enabled so customers can do it via the Internet.
Another distribution giant, W.W. Grainger, Lincolnshire, Ill., has spent more than $20 million to date developing its Internet product channel. Its most recent venture is OrderZone.com, which it calls a one-stop, online business-to-business service for the procurement of a large variety of products and services. Participating companies include Cintas Corp., Corporate Express, Grainger Industrial Supply, Lab Safety Supply, Marshall Industries, and VWR Scientific Products. Currently in test stages, the site's targeted launch date is May 15. Customers will be able to purchase products across all suppliers using one registration, one search engine, and one order form.
Making the online ordering process as simple as possible is certainly key to getting new customers and keeping existing ones. A good e-commerce site will be user friendly for the customer. Electrical contractors want to spend as little time as possible clicking buttons and navigating through a site. And, even those who are fairly comfortable with the Internet may hesitate before ordering supplies online. Nannery recently found an electric motor he couldn't get from his normal wholesale house on Grainger's Web-order site. Although he could have placed the order through the Internet, he picked up the phone and called the local Grainger distributor.
You've got mail The best way for a company to better position itself for electronic commerce is to encourage employees to use the Internet as much as possible. The most prevalent form of Internet communication is e-mail. Some say e-mail communication with coworkers, customers, and suppliers is replacing the fax. The key point is it's an efficient, economical method of communication that gives employees flexibility in executing their jobs.
When working remotely, project managers can use laptop computers to check and send e-mail, keeping them in touch with the office and streamlining other areas of the business. For example, they can issue purchase orders via e-mail, so the accounting system is kept up to date.
"We actually have customers that require it (e-mail)," said Tom Dinkins, vice president, Fisk Electric, a Houston-based IBEW contractor with more than 2000 employees. "If you cannot communicate with them via the Internet and e-mail, they will not do business with you."
"The thing I like about it (e-mail) is it gives me a communication with a hard copy that I can print and put in the customer file," said Nannery. "We haven't had to resort to that to resolve disputes but it beats the heck out of a phone log .at least I've got something in writing that we agreed upon."
Chat rooms and interaction Another way to communicate over the Internet is by entering a chat room or participating in discussion forums like ElectriTalk at www.ceenews.com. ElectriTalk is a discussion forum for the electrical industry. You can choose one of the current conferences and join in, or post your own message to get a discussion going. It is a way to communicate with other industry professionals when you have questions or would like the input from someone with experience in a particular area.
Marketing through the Internet Most Web sites today simply serve as marketing tools. They give information about a company's capabilities, services, and products. A contracting company's Web site should showcase talents and communicate it is technologically literate. It provides a way for potential customers to learn more about a company and its quality of work. If a company needs work done in one part of the country, but its corporate headquarters is in another part, someone might search the Net to find qualified candidates.
And even if a contractor's site doesn't bring in leads, it can still work to strengthen a relationship with a customer-or to firm up a contract. By referring potential customers to your Web site after bidding jobs, you give them easy access to showcased work-they don't have to drive to a site or call on referrals. Web sites can also be used as tools for recruiting new employees.
Companies that want a presence on the Web but don't want to go to the trouble of buying a domain name and then developing a site have other options. There are many opportunities to promote a company for free. Electricians Web (see side bar) is an example of a way for electrical contractors to promote their businesses online.
Kel Electric's Web site is part of a larger site at www.NWContractors.com. They pay NWContractors $20 a month for the site. Kel does all of it's own html formatting before providing updates to NW, but they could have NW do it for a $45 an hour fee.
Many software products give you the ability to create Web pages without knowing how to format html. Html, short for hypertext markup language, is the coding from which the World Wide Web is built.
www.resource.com More and more manufacturers are starting to realize that contractors, distributors, and rep agencies want and need interactive sites with online catalogs, specification sheets and more interaction. Lightolier (www.lightolier.com) and Philips Lighting (www.philipslighting.com) are good examples. Their Web sites include attractions like discussion forums, product specifications, and downloadable application guides.
Manufacturer sites with specification sheets and rich product information will also make it easier for contractors to get the information they need to make informed buying decisions when ordering products via Internet electronic-commerce channels.
Internet ordering Web-ordering is proprietary. To order, customers need an account with an account ID number, and a password. They type in the account ID and password, and they are then logged onto their account where they can access all account information.
To order products at CLS.com, a user simply searches for an item, types in the quantity desired, and hits submit. Users can also link to product cut-sheets to make sure they're getting what they want and they can check the availability of items. New customers can have someone at CLS check their orders until they are completely comfortable with the system.
Most orders are "shipped" the next day by distributor trucks from the nearest distributor location. However, customers can pick up the orders. CLS also has a few national customers to whom they ship products by UPS.
According to Jim Roots, director of marketing with Grainger Internet Commerce, "In the indirect materials business, as much a 40% of the cost is not in the material itself, it is in the process of buying it." When using the Internet, there is savings and convenience. Instead of using the telephone and taking a lot of man-hour time on both ends, Web-order entry allows a more efficient exchange of goods. And, it's accessible anytime day or night.
Some distributors use EDI (electronic data interchange) with their bigger vendors. Instead of using the Internet, they use a VAN (value added network) provided by companies like Sterling Commerce, Harbinger, ATT, or MCI. The companies using VAN have "mail boxes" set up to equate fields in Company A's business systems with its customer's and/or vendor's system. So Company A's address field will equal Company B's address field, and Company A's product field will equal Company B's product field. It maps fields in one business system with fields in another business system.
So, when Company A does a purchase order and sends it via EDI to the "mail box," Company B can go to the mailbox, grab the purchase order, and it will automatically upload it directly to their business system.
EDI means there is no re-keying information or faxing. Information is entered into one business system and goes directly into another business system electronically. But EDI is very expensive; VAN costs are significant. Eventually, some say EDI will be available through a Web interface, which will reduce EDI cost significantly.
U.S. business trade on the Internet will grow to $1.3 trillion in 2003 from $43 billion in 1998, according to a Forrester Research Inc. forecast. "The iCommerce explosion will open up a new set of business opportunities in everyday industry," said Stuart D. Woodring, vice president of research at Forrester. "Companies that are not ready to compete online will be pushed aside by competitors who understand how to use the Internet to generate new value and efficiencies for their customers."