Builders Merchants are companies that not only purchase supplies to construct and repair homes, but also provide services such as installation and maintenance, and real estate marketing. They have developed special relationships with home builders all over the country and have been successful in building thousands of homes. These Builders Merchants purchase materials from the home-builders, and the home-builders supply them to the Builders Merchants who then sells them to customers. In this article we will discuss how Builders Merchants work, how they compete with traditional retailers, and why some retailers feel that Builders Merchants have been taking advantage of the industry.
Builders Merchants lease or own warehouses where they store inventory, tools and machinery used by the home-builders that they purchase materials from. They may also provide mail services to deliver supplies to customers on a regular basis. Typically, a Builders Merchant owns or manages a facility that has between two to four hundred trades workers. In addition, depending on the size of the facility, some Builders Merchants has the ability to expand into additional warehouses if need be.
In today’s world, the Builders Industry is much more fragmented than it was in previous decades. There are now over five hundred separate Builders franchises. This allows brokers to get to know the various trade unions, management firms and suppliers that influence the construction industry. In addition, the Internet has created a new marketplace for brokers interested in working with the Builders Merchants. The brokers can easily find out what retail prices are offered by various Builders and then contact the tradespeople directly. As a result, many Builders Merchants has entered into online internet based brokerage operations that offer retail prices and direct communications with tradespeople.
In order to succeed, Builders Merchants must be able to provide competitive retail prices, competitive shipping rates and a good customer service record. While the Builders Merchants may need to rely on their own knowledge of the trades and the suppliers they purchase supplies from, they also must maintain excellent relationships with their retailers, including access to new tradesmen, free advice concerning products and services and the ability to provide discounted timber products. Builders must also maintain an efficient and cost effective warehouse and sales and distribution systems. The Builders should be capable of managing and operating their own supply chains.
To cater to the retail DIY market, independent builders merchants often need to purchase the building materials directly from the manufacturers. Builders normally have existing arrangements with suppliers of building materials and will charge reasonable retail prices for finished homes, modular homes and custom build shops. Independent builders will often source their raw materials from trade customers and may use local suppliers when they do not have an existing business relationship with them. However, they will also seek to develop relationships with the suppliers through trade associations and other third party channels.
In order to succeed, independent builders merchants must be able to develop a strong local business rather than relying on national or international trade customers alone. Builders need to be able to attract potential customers to their workshops, showrooms and farms and marts by using marketing strategies that include building brand awareness. They need to create a distinctive look and feel and develop a local identity through marketing. To attract customers, Builders will need to have an effective advertising and marketing strategy. They will need to develop a comprehensive plan which includes marketing programs, promotional activities, public relations and promotions and strategic planning.
There are many benefits for DIY retailers providing retail prices to their local builders. Retail prices will enable the builders to make larger profits from selling unfinished units to consumers at a lower cost than if they sold these units to trade customers directly. For example, a supplier of building supplies may agree to sell these supplies at a 25% discount to the builder’s factory. By doing this, the builder has more profit from the sale of the unit than he would from selling it direct to retail customers. Builders will also benefit from receiving the raw materials from a wholesaler at wholesale prices since these wholesalers will pass the savings they receive on to the builder and his employees.
Building contractors, tradespeople and DIY retailers must work closely with each other in order to ensure maximum marketing benefits and effective distribution of products. They should also coordinate with trade suppliers to make the best use of their combined market power. All of these groups can benefit from a strong networking and sales force within the industry. The development of strong working relationships between local builders’ merchants and DIY retailers will help the industry to expand into new areas and to develop new products that will sell well.