Not Always a “Commodity”

Friday, March 18, 2016

Over 20 years ago, I was introduced to Weyerhaeuser’s TimberStrand product--a true "Engineered Lumber." Even though the sell price was going to be almost three times that of conventional lumber, I felt there was a place for it. I got it started on Boca Grande, where price was not such an issue. In fact, within a year it was "the hot new product" out there. Soon, I had it started in a development "Off Island"…A builder had placed a large order for all the framing on a two-story house. But just before shipment, our salesperson was told that "This builder shopped it, and got a substantially better price," and that we lost the order. In a bit of anger (not like me for sure), I demanded a meeting with the builder. When we met face-to-face, I'd cooled down a bit. I asked him though, "Who had introduced the product to him?" and "Who had given him some free goods to try on a small job?" and finally, "Who had done a thorough take-off making the project totally Engineered?” Without hesitation, he said, "Well, Kimal…" My quick response was this: “We did all the legwork to bring it to the market, the competition did nothing, and when given a chance to bid it, they just treated it with no respect, put a few mark-up points on it to ‘steal’ the order from Kimal.” I opined that if that was all "loyalty" meant, then the competition deserved the order. I left him then…still pretty upset. Within an hour he called and said, "Kimal still has the order…Just give me a little break if you can...”

Today, TimberStrand is still a very viable product with us. And no, we don't give it away or treat it like a commodity. Now, I fully understand that studs, 3 or 4 ply sheathing plywood, and dimension lumber at large are all pretty much "Commodities," but too many times we take that next great product, get a little market share, and soon others come in after we've done the legwork and “whore up the market”... And we allow it!! So the answer to this issue, in my mind, is pretty simple, and it has worked for many years. (A) Do a thorough job of vetting the product to make sure you want to commit to it. (B) Train your Sales staff on "How to sell it" with contributing features and benefits. (C) Do some promotional work, like a "Lunch and Learn," and ten percent off the first order, and maybe some free goods…you get the picture. (D) Of equal importance to all of the above, once you start selling (from day one to the present) keep a sufficient inventory... (E) I'll throw in one more element, what I call "Creative Ideas"...With TimberStrand 2X4 framing, I tell builders, "If you can't justify using it for all your faming, then use in "tall walls" where straightness is important. Also, use for very visual walls, say in a Great Room...I coined this "Zone Framing" concept. And I also remind them that the cut-off pieces are great for framing soffits for cabinets, etc. because it's so darn straight...and the drywall guys love it.

Although what I’ve said here is mainly a TimberStrand story, it’s nevertheless a great example of this whole (potential) Commodity issue. In fact, what actually constitutes a Commodity? A couple of years ago, with business improving, a lot of "newbies" came out of the woodwork pedaling windows...I even called some of these windows the new (perceived) Commodity. But regardless, our Window manager has done a great job of training the window staff to emphasize "Service," to represent "Good, Better, Best," so our Window program is broad based…Yes, the “prostitutes” are still out there, but today we enjoy pretty decent margins for all the above reasons. I truly believe we often become our own worst enemy…some eventual "Commodities" never need to be treated as such. Good Selling

P.S. It is all about making a profit...My one-liner behind any of this is, "Folks remember, we still pay our bills with "Margin Dollars"!!

Al E. Bavry, CEO, Kimal Lumber & Hardware 3/18/2016

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