Place Your Order: The changing world of online and direct buying

Whether buying online or directly from suppliers, electrical contractors’ access to equipment and materials has evolved as buying options expand. While a purchasing transition was already underway, COVID-19 has created more uncertainty about the supply chain. So today, suppliers indicate their efforts are focused on navigating these challenges by being more flexible than ever.

Contractors have some choices when it comes to acquiring the necessary tools and materials for each new project. Purchasing these items online could make buying easier, just as online purchasing for consumer goods does. As part of this trend, suppliers offer apps that enable purchasing, tracking and replicating the orders in the future. By buying online, contractors can easily compare prices, but they would need funds for upfront payments.

Alternatively, more than half of today’s contractors place direct orders with their suppliers, where they get personalized service and can request specialized items, sometimes at the last minute. Suppliers try to accommodate their customers’ needs and meet the growing demand for goods delivered as assemblies and for some level of material handling and inventory management at prefab facilities.

The coronavirus pandemic has accelerated some of these efforts, but some supplies are hard or impossible to access on short notice, which has necessitated more planning and purchasing upfront.

For those buying online, there are fewer options for last-minute purchases, said David Moeller, director of customer markets for Graybar, St. Louis.

“We’re seeing more planning, with contractors looking days [or weeks] ahead,” he said.

People want to keep one or two weeks of material on-site, he noted, and a phone call may be the easiest choice for a last-minute request. If they want to get things done online, with more advanced planning, they use Graybar’s app. There’s no single method of getting the job done.

“We’re seeing a growth of planning, but a number of customers are still reliant on the phone,” he said.

The benefit of online purchasing, however, is the option for repeatable sales. Contractors can collect and refer to their favorites lists and previous orders to make re-ordering easier. Graybar’s app enables contractors to collect standardized parts that can go into estimating software and then directly to purchasing.

“We are seeing more and more purchasing systems with an electronic data interchange (EDI) output,” Moeller said, adding that, while it’s more formal and requires more planning upfront, it becomes very repeatable. But it’s not for everyone.

“Some folks just don’t like to work with that level of preplanning,” Moeller said. In fact, the majority of Graybar’s business still involves traditional purchasing with call-in orders and material lists. However, even those orders now tend to come in by email or part of spreadsheets, rather than a phone call.

He adds that the nature of electrical contracting work can be last-minute, and suppliers understand that. Electrical contractors are subject to scheduling challenges around any delays that occur ahead of their work on the job site. But, on a general basis, “we’re clearly seeing our demand change from last-minute planning to a planned scenario. It’s electronic; it’s repeated,” Moeller said.

The company is also seeing more assemblies being supplied, as opposed to parts, and a consistent uptick in prefab.

“We’ve got a number of manufacturers who sell those to us as assemblies,” he said.

In some cases, the preassembly process requires more collaboration between the electrical and other subcontractors, and suppliers try to accommodate. Today’s jobs often include electrical contractors “working with mechanical, plumbing and HVAC to build an entire room off-site and ship it out broken down on flatbed trucks,” he said.

With more prefab work taking place, contractors see a value in storing more inventory on-site, which has been exacerbated by pandemic-based failures in the supply chain. Graybar has seen stock holding increasing in recent months, with contractors holding material for a job or holding and kitting it in advance.

In fact, when the COVID-19 pandemic began, Graybar immediately bumped its own inventory up significantly.

“We are seeing some constriction in a couple of commodities, but we are working with manufacturers to ensure consistent supplies,” Moeller said.

Early on in the pandemic, Graybar joined forces with NECA and 3M, St. Paul, Minn., to build a dedicated PPE program to quickly get this safety equipment onto job sites for contractors.

Ordering direct

Colonial Electric Supply, King of Prussia, Pa., finds online purchasing isn’t currently cutting into its direct orders.

Sean Healy, Colonial’s supply chain VP, said the company expected online purchases would be a bigger when they were first made available, but there are reasons contractors still opt for direct orders.

“Electrical contractors speak their own electric language that our guys are very good at translating,” Healy said.

For a contractor on a busy job site, timeliness is always an issue.

“The fastest way is to write [an order] on a 2-by-4, take a picture, and text it to us,” Healy said.

Online catalogs may come up short when it comes to customization of products. If someone needs a ½-inch drill bit, they can find that pretty quickly, he said, but 80 feet of a specialized cable is where the personalized service from the distributor pays off.

The trend toward conducting work in a prefab shop has affected Colonial as much as Graybar.

“For us, this has been a very important shift,” Healy said. “We’re offering VMI [vendor managed inventory] for some contractors,” which has helped customers with the ordering process, especially larger orders.

“We also realize contractors are good at being electricians, figuring out circuits, planning out wire runs,” but material handling is not their forte, Healy said.

“That’s where we live and die,” he said.

Colonial is logistically moving mountains of material on a daily basis, he said. The company can help with kitting, labeling and even trash removal.

“We have to break down hundreds of skids daily. To a contractor, one skid in a day can be a nightmare. For us, that’s what we do.”

So for Colonial, the goal is to help contractors keep their shelves stocked, and the company offers management of that inventory in prefab shops.

“They don’t have to worry about reordering. We take care of that automatically, remotely,” Healy said.

The pandemic continues to cause supply-chain disruption, and how soon that problem will be resolved is unknown. Everything from circuit breakers to panelboards are still running behind.

“We’re seeing this with smoke detectors, PVC, so just getting materials to the contractors is difficult,” Healy said. “We’ve never faced a challenge like this before.”

So while he advises contractors to store the inventory they can, sometimes the suppliers have no product available to send.

“If a manufacturer doesn’t have it to send to you, they’re just flat out not to be had,” he said.

That’s where planning ahead benefits all parties. If a distributor can find the product, delays are prevented, and, in some cases, contractors have had to be open to alternative equipment and supplies. Some contractors are loathe to swap out a product they are used to, so everyone is forced to innovate, he said.

Classic Electric and Consulting Corp., Nipomo, Calif., has been buying materials and equipment for nearly a decade, but finds a growing challenge for online purchasing around pricing, said Toby Mitchell, the company’s CEO. He finds suppliers sell products to the electrical contractor at a price that proves not to be competitive with the same product for sale on Amazon. A breaker that cost $220 from a supplier, he said, might be for sale on Amazon for $150.

Illustration of a wooden 2x4 with "35 feet of a specialized cable" written on it

Suppliers indicate that the low-cost product may be a cheaper knockoff. Mitchell said that may or may not be the case at times.

UL offers tips to identify fake products. Look for low-quality workmanship and/or packaging; marks with the letters “UL” side by side, instead of staggered; a lack of control or issue number, or the words “Approved” or “Pending,” instead of “LISTED” or “CLASSIFIED;” grammatical or spelling errors on the packaging; or missing manuals, safety warning sheets, toll-free numbers or manufacturer contact information. For more on this topic, read “Counterfeits Can Kill,” Electrical Contractor, May 2019.

Exacerbating the problem, some customers have indicated that even buying the “cheap knockoff” is worth the risk once they see that option online. Mitchell has heard customers say they’d rather have to buy two of a product at the cheaper price and simply replace them. The frustration is felt from customers to suppliers.

“It’s not the supplier’s fault,” Mitchell said.

All too often, he said, it falls on the contractor to educate the client about the value of a quality product, guaranteed to be authentic, with a warranty.

The problem needs more attention, Mitchell pointed out.

“Nobody’s speaking up,” he said. The question before suppliers, he said, is “What can we do to educate the customer of the value of a product? When they see a product online for half the price, what does that mean?”

He finds it frustrating.

“At the end of the day, we’re the ones dealing with the customer,” he said.

In the meantime, in the choice between online and direct purchasing, the two methods are likely to coexist for some time. Mitchell pointed out that one advantage for ECs buying directly is the ability to use job credit rather than paying up front.

Still, suppliers that haven’t adjusted to providing online purchasing options are falling behind, he said. He recalled a supplier asking that buyers fax their requested materials or tools.

“That’s an old mentality,” he said.

Often contractors work odd hours, and, for that reason, online purchasing offers a strong value, Mitchell added. Suppliers that understand contractors’ time is valuable keep the buying options flexible.

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