The change seemed to happen almost overnight.
Instead of paying retail price in a brick-and-mortar store, pool and spa customers began buying products online.
“Not only can homeowners get stuff cheaper through the Internet, they’re getting it cheaper than us pool guys can get it from our distributors,” says Bryan Chrissan, president of Clear Valley Pool Service in Temecula, Calif.
This has left many brick-and-mortar professionals frustrated and concerned. Not only has the Internet cost them substantial revenue, but there’s the growing problem of homeowners who buy a product — often the wrong one — at a lower cost online, then want a local professional to install it.
“[Customers] are putting these huge pumps on filters that don’t have the correct flow rate. Or they’re using 1½-inch line when they need 2-inch,” says Fran Stefanski, president of the brick-and-mortar shop Regina Pools & Spas in Timonium, Md.
“An e-tailer may sell them what they want, but it’s not what they can use.”
When a service tech arrives at a job site only to find that the wrong equipment has been purchased online, they often blame the Internet retailer. While that response may make sense in some instances, the fact is that online businesses are here to stay, and getting angry won’t solve the problem. Instead, a number of service techs are moving beyond the blame game to seek real solutions.
From competition to cooperation
Between lower prices and greater convenience, Internet retailers may appear to have some clear advantages over brick-and-mortar shops.
“There are some guys online whose prices are so low it’s just absurd,” Stefanski says.
This cost discrepancy has led some in the industry to characterize online pool retailers as little more than fly-by-night hucksters with no overhead and no staff.
But the reality is more complex. “The guy who’s selling out of his garage is going to have a really tough time growing his business, because he’s operating on a narrow [profit] margin,” says Dennis Marunde, president of Pools.com, an online retailer.
Experts say that many distributors experience turnover of up to 40 percent of their Internet dealers from season to season. The majority of Internet sales, insiders agree, come from a few dedicated online companies that have made significant investments in their businesses.
Many of those companies are hoping to move into referral-based partnerships that allow both Internet sellers and local techs to find more customers. But before that can happen, e-tailers say, they and the local service techs must come to a clearer understanding of what exactly each party is selling.
Local shops may feel the heat from lower prices online, but the Internet will only ever be able to provide a limited range of services. With customer expectations gravitating toward both personalized service and 24/7 convenience, the owners of both types of business are beginning to realize that they may have to learn to depend on each other.
“I know the brick-and-mortar guys consider Internet retail as the enemy, but it’s honestly hard for me to understand it,” says David Williams, CEO of the Olympia, Wash.-based Website The Spa Depot (spadepot.com). “Yes, the Internet’s taking a percentage of their product sales, but we can’t go out to a customer’s backyard and balance the water, or install equipment.”
However, as more e-tailers try their hands at the referral process, and more local techs discover new leads thanks to online sales, unique solutions are beginning to emerge across the country.
Some referral services aren’t as much partnerships as they are databases. Poolandspa.com offers a free nationwide local service company search.
“There’s a box on the site that says, ‘Search over 50,000 local pool and spa dealers, installers, stores and service companies throughout the USA,’” explains Dan Harrison, president of the Las Vegas-based Poolandspa.com Inc. “And customers can go on there, if they do find that they’ve bought something online and they’re in over their head, and they can find a local service company.”
Williams, too, has worked toward networking with brick-and-mortar businesses. “We have good relationships with some local service techs,” he says. “We refer business to them, and they do business with us. Sometimes we send them an e-mail, but mostly it’s through personal acquaintance.”
In each of these cases, however, actual networking has been spotty. For many local service techs, the toughest hurdle to overcome is resentment felt from loss of income, since sales of big-ticket items has historically been a profit center.
“When a customer buys an item online, we don’t make any gross profit from that piece of equipment to cover the potential costs of working on it,” Stefanski says.
That may be true, Chrissan says, but there are still ways to turn a profit in those situations.
“Today we charge for other things — the plumbing; all the parts that are going to go with the item; hooking it up; setting up any automation that’s necessary; and most of all, my knowledge of the product,” he says. “There are plenty of ways to make money on a service call for a product bought on the Internet. I charge for my time and my expertise.”
Even as some techs begin to experiment with online partnerships, other obstacles to a nationwide network are becoming more apparent.
“I met one Internet retail guy at a trade show last year,” Chrissan says. “He’s referred three accounts to me, and that’s what got me interested in this.”
Chrissan says that forming a partnership with an e-tailer is as simple as approaching one at an expo or other events. According to industry insiders, thousands of these companies have sprung up, and many are looking to forge alliances with local techs.
But, as Chrissan described, many of those thousands have only a few dozen techs signed up; or are having trouble finding a specific niche within the industry. Chrissan believes there’s a simple reason that no one’s tapped the full potential of the referral concept: “The market’s too broad. You’ve got so many types of parts and jobs, and these companies are selling to customers all over the country.”
That means a tech who partners with an online retailer can only expect to receive three or four referrals per month, Chrissan explains. Thus, if a tech wants to keep the bills paid, he’ll need to supplement that referral income with some sort of other steady work.
If one major difficulty is scarce service calls, however, that may be gradually changing as the economy drives more customers online; plus, changing business expectations mean an increasing number of techs are willing to work on Internet-bought equipment. Within the next several years, some retailers say, a nationwide referral network may become a serious possibility.
That potential depends, of course, on forward-thinking service techs who are interested in moving beyond the traditional business model. For Chrissan, the future looks both exciting and imminent.
“I think we’re going to see a ‘Geek Squad’ of the pool industry,” he says, referring to the nationwide technology repair company. “The Geek Squad are owned and operated by an independent company, and they use a retailer [Best Buy] to help set up referrals. And that’s exactly what I’m looking at doing.”