Low price porcelain tile strategy
The company must be willing to standardize its offerings (limited numbers of SKU), have low costs of raw materials, low labor cost and service (installed in a cluster area), indirect distribution, everything is done without frills.
The company makes its sales in Alibaba.com, made-in-china.com or Guangzhou fair.
To be successful, every day low prices require every day low cost in line with the pricing.
This strategy can be effective and profitable. Also, very hard for competitors.
Products and strategies become more and more similar (in every porcelain tile segment group: wood, concrete, slate, cotto, marble, exterior, XL, commercial projects..) There are many brands that meet consumer needs. And there will be more.
Very close to the low-price strategy, is brand differentiation.
If the brand does not communicate the difference you provide, the consumer will see little reason other than price to purchase it. Who communicates that difference? The distributor? The ad? In the fair?..
Be sure you have a strong distribution strategy.
Wolseley is the world’s leading specialist distributor of plumbing and heating products.
Group revenue: £13,300m (growth of 7.1 per cent), Gross margin 28.0% and a good performance in trading profit, at constant exchange rates, up 11.4 per cent to £857 million.
In total, the group operate 2,739 branches.
Moving forward with e-commerce
This includes investment in e-commerce, new distribution centres and hubs, technology processes and network infrastructure to support investments in operating efficiency.
The Company has a clear programme of work to implement new business models including the growth of e-commerce revenues. A strong culture, focusing on customer service, efficiency and execution.
E-commerce now accounts for £1.7 billion (13 per cent) of the Group’s revenue and continues to grow.
In USA, there are a total of 1,418 branches across all 50 states, served by 12 distribution centers providing next day product availability.
The USA operates in B2B market primarily under the Ferguson brand, and also operates B2C with Build.com and PED (powerequipmentdirect.com)
In May, Ferguson launched the new Ferguson.com website to generate leads, drive professional contractors and potential customers to Ferguson branches, attract new online customers and sell more. These changes lay the foundation of Ferguson’s e-commerce strategy.
During 2015 Wolseley acquired BathEmpire.com (UK company), a B2C online bathroom retailer with £26 million revenue. In 2016 rebranded BathEmpire.com to Soak.com.
Wolseley sees the e-commerce channel as a way to better meet the needs of their customers. And also it´s a lower cost-to-serve channel, leveraging the brand, the branch and logistics network without extra capacity being added.
Source: Wolseley 2015 Annual Report
Saint Gobain strategy
In Distribution, Saint-Gobain is adopting a multi-channel approach to develop e-commerce services, supported by state-of-the-art logistics.
Distribution is a driver of the Group’s strategy, affording it detailed knowledge of its customers’ needs.
Saint-Gobain has developed a network of strong and complementary brands, both generalist and specialist, oriented towards trade customers, private contractors and small, medium and large companies.
MAIN DISTRIBUTION BRANDS
FRANCE: POINT.P Matériaux de Construction, La Plateforme du Bâtiment, Decoceram, Lapeyre, CEDEO, Brossette
GERMANY: Raab Karcher, Keramundo, Fliesen Discount
DENMARK: Brødrene Dahl, Optimera
SPAIN: Distriplac – DP Materiales, La Plataforma de la Construción, Sanigrif, Discesur
NORWAY: Bergersen Flis
NETHERLANDS: Raab Karcher, Tegelgroep Nederland BV
POLAND: Platforma Materialy Budowlane
UNITED KINGDOM: CTD
SWEDEN: Kakel Specialisten, Konradssons
The low cost of investment to launch an online commerce platform has reduced barriers to entry, while asymmetry of information between sellers and customers has fallen due to a number of tools, such as price comparison engines and user recommendations. Companies must now be closer to their end customers to avoid new intermediations. To differentiate, it is no longer just the company’s product that counts, but the services associated with it. With digital technology, a profound rethinking of buildings and habitat is also under way.
In January 2016, Saint-Gobain has formed a partnership with Impulse Labs, a start-up incubator in Paris. The Group is also a partner in Partech Shaker, a digital incubator, and Greentown Labs, specializing in green technology.
Source: Saint Gobain 2015 Annual report
In the rapidly changing digital world, companies must execute their digital strategy at speed and at scale to take leadership positions.
author: Julio Sol