Ecommerce

 

E-commerce is booming and plays an increasingly important role in the European construction, installation, and home improvement market. E-commerce offers opportunities to retailers, wholesalers, suppliers, and manufacturers to generate more customers and sales, as consumers are getting more used to the convenience of ordering online.

To have insights into the current status, growth and effect of e-commerce in the construction, installation, and home improvement market, USP Marketing Consultancy conducts several studies per year. These quantitative and qualitative studies all show that e-commerce is here to stay and that there are still many opportunities to be grasped.

How is it already impacting the industry?

The digital maturity of the construction and installation markets is lagging compared to the home improvement market. However, the vast majority of construction and installation companies will invest more in their e-commerce policies. This is mainly due to the continuous demand of customers, a fundamental change in how the industry orders, and the realisation that the sector is indeed lagging.

Drivers of E-commerce in construction and installation

When it comes to E-commerce in construction, organisations increasingly know exactly what they want. In essence, the biggest wish is a solution to the data problem, so that e-commerce can be used without any problems. It is also important to reduce manual data errors. This strong focus on streamlining activities and saving time makes sense in light of the  growth that the construction sector has experienced.

While most industry organisations are in the early or mid-stage on the e-commerce curve, many distributors are in a more mature phase. The urgency for distributors to embrace innovation may lie in the rise of direct sales to consumers. Distributors are more likely to be forced to digitalise due to the threat posed by manufacturers and wholesalers selling directly to consumers.

BIM also drives e-commerce growth

However, even the most mature e-commerce organisations in construction are still lagging behind sectors such as retail. Growth in construction will take place partly due to the need for Building Information Modelling (BIM). BIM has changed in recent years from a nice-to-have solution for on-site productivity to a digital model that is at the heart of organisations’ digitalisation plans: a model that building material companies will increasingly rely on to succeed.

Omnichannel is becoming the new norm 

The traditional way of separate trade channels is increasingly disappearing in European countries, not only on the B2C market but also on the B2B market. In the past, manufacturers only supplied their products to professional traders or wholesalers (general and specialised). These channels sold the products to professionals. Today, the decision-making process is much more complicated than it was decades ago and (online) buying options are numerous. This development has led to a switch from the traditional three-layer model to the current dynamic model.

Changing search and purchase behaviour of professionals 

The growth of e-commerce strengthens the online search and purchasing behaviour of professionals. This is not surprising, as e-commerce offers many benefits for professionals. The speed of ordering, delivery, and cost savings are very important advantages, for example, as construction projects need to be delivered faster and faster.

How has e-commerce impacted online search and purchasing behaviour?

  • Architects regularly use online resources to stay up to date with trends and new solutions. They also search the internet a lot for technical product properties. They widely use the internet in general, and specifically the websites of of manufacturers and platforms for architects as sources of information.
  • Contractors expect the share-of-wallet of pure online stores to strongly grow in the coming years. At the moment, the pure online stores have a fairly low share (between 1% and 6%) compared to other channels. The UK and the Netherlands are the front runners with the highest expected increase, mainly due to distinctive features, fast delivery services and convenient ordering methods.
Share of contractors buying from pure online stores
UK Germany France Poland Belgium Netherlands Spain
Current share 57% 27% 5% 21% 12% 18% 10%
Expected share in 5 years time 82% 40% 12% 30% 27% 48% 17%

 

  • The vast majority of installers buy their products online, regardless of the channel. However, there is a big difference between the E-installers and the HVAC-installers. This difference is mainly due to the type of products that can be ordered online.

Buying from pure online webshops is slow in most countries. For example, the share-of-wallet installers dedicate to pure online shops is around 4 to 5 per cent. In times of busy schedules and a lot of work for the installation companies, we see that they tend to go back to their traditional product suppliers where the most necessary materials can be found.

Share of installers buying online, regardless of channel
UK Germany France Poland Belgium Netherlands Spain
E-installer 87% 89% 56% 68% 81% 92% 50%
HVAC-installer 51% 59% 22% 27% 43% 76% n/a

 

E-commerce in the home improvement sector

The online share of home improvement purchases in Europe has grown from 8.5% in 2019 to 13.2% in the first half of 2020. Although DIY stores are growing in sales this year, they are losing market share to the online channel. Established players must therefore defend themselves against the risk of e-commerce and utilise the opportunities e-commerce supplies.

Amazon more often the starting point in the online journey

Online stores as a starting point for the purchase of home improvement products is a worrying development for hardware and DIY stores. In most countries, consumers prefer Amazon as a starting point when buying specific home improvement products. This is worrying because in this case, the DIY store may not be a point of contact at all in the customer journey. This will lead to DIY store rapidly losing market share, which can have negative consequences in the long run if DIY spending returns to normal.

What is next?

E-commerce comes with (extremely) high customer expectations

As customer satisfaction is increasingly important in the business operations of retailers, wholesalers, suppliers, and manufacturers, customers are increasingly spoiled. As a result, customer expectations increase and they require:

  • Cheap or free returns
  • No shipping costs
  • A website where information about products can easily be found
  • 24/7 low response online customer service
  • A frictionless buying experience by phone and computer

Omnichannel is key

Due to the Covid-19 pandemic, e-commerce sales have exploded this year. Brick-and-mortar stores are struggling, and brands selling both online and offline have seen their offline sales lag.

In coming years, retailers should narrow the gap between offline and online. Both channels should be used at the same time. In addition, we saw the Direct-to-Consumer (DTC) trend emerge in 2020.

Competition from online platforms such as Amazon

Suppliers in the construction and installation sector must act quickly to compete. Competition is increasingly coming from organisations that do not traditionally sell products for these sectors. An example of this is Amazon. Amazon is now learning from each transaction which parts to replicate and offer at a cheaper price. And Amazon is not alone. Major B2C sellers with a wide range include Amazon, Alibaba, JD.com, eBay, and ManoMano.

Handling more customer data to gain an edge on the competition

Data is becoming increasingly important. By selling products through your webshop, a huge amount of data is collected. Based on this data, the offer can be adjusted to what the customer wants

Incorporating voice commerce

Over the past 5 years, there has been a huge increase in voice-activated devices like Amazon Echo and Google Home, leading to a parallel leap in consumers who want to try voice commerce. As more voice-activated devices appear on the market, this trend will only continue to accelerate.

Artificial & Virtual Reality (AR & VR)

In B2C, Augmented Reality (AR) and Virtual Reality (VR) are a growing trend, focusing on delivering an inspiring and immersive customer experience. There are also great possibilities to use AR and VR in B2B, such as offering the right parts or custom designs.

Sustainable commerce

We are already seeing B2C companies taking a step towards reducing their environmental impact. This includes highlighting the impact of certain actions on their customers. Sustainability matters especially to millenials, which is important as these people are the next CEO’s that might be interested in your product.

    How does USP help their customers with this?

    E-commerce is gaining importance, but for many manufacturers, retailers and building professionals there are still questions about e-commerce and the impact on their business. USP Marketing Consultancy helps to:

    1. Identify the current status of e-commerce and the main players in the market or in a certain category
    2. Map out the barriers professionals experience when ordering online.
    3. Exploring the opportunities the trends in E-commerce provide

    Latest news around Ecommerce

    Need for knowledge

    The above are examples of how trends can change demand, perspective and attitudes of any player in the construction value chain. If anything, it shows what an intricate web of trends and developments the construction, installation and home improvement markets are. To successfully navigate that dynamic web and know where opportunities are or will be up for grabs, knowledge is essential.

    Case study

    Customer Satisfaction

    An internationally operating company for fitting technology and electronic locking systems aims to develop a marketing communication strategy for each business unit with the aim of improving marketing communication and thereby producing higher customer satisfaction, share of wallet, and loyalty. They see this as necessary, as their client base is decreasing, and competition is gaining market share.

    Case study

    Customer Journey Mapping

    Onze klant, een multinationale fabrikant van elektra, heeft een sterke positie in de professionele (B2B) markt, maar niet in de consumentenmarkt (B2C).

    Case study

    Brand tracking

    A leading supplier of door hardware and entrance systems, and a major player in access and security solutions is active in Europe with multiple pan-European brands, as well as numerous local brands. These local brands often have a long history and are therefore strong brands in terms of awareness and sales.

    Context is key

    To create an overview of market developments and provide context for client-specific researches, USP Marketing Consultancy has developed several monitors. We continuously research market developments and effects of key trends like labour shortage among architects, contactors, HVAC installers, electrical installers, painters and end-consumers, of which reports are published quarterly, semi-annually or annually.

    European Electrical Installation Monitor

    This research helps you understand the electrical installer, which is vital for a good marketing strategy and essential for internal discussions. The European Electrical Installation monitor provides insights on what activities installers are doing, how they orientate themselves, what training needs they have, how digital they are, and much more. The key trends in this market are monitored each quarter in seven European countries since 2016.

    Contractor Monitor

    The main aims of this research are to give construction product manufacturers a good understanding of European contractors (who they are, what they do, how they behave) and the main trends in the construction market.

    Discover opportunities for your brand

    Do you want to know how trends change your target groups’ demand, attitudes, perspectives and decision-making criteria, and whether your brand and products are answering their needs? Do you want to learn how you can make your customers’ lives easier whilst adding value to your brand? USP Marketing Consultancy specialises in various types of market research that can answer these questions, like customer satisfaction, driver analysis, customer journey, product development research, and many more.

    Customer satisfaction

    Would you like to increase your turnover by improving customer satisfaction in the construction, installation and home improvement sector? USP conducts customer satisfaction research in these markets to help you succeed. Enhanced customer experience and customer satisfaction is a key factor that helps a brand stand out and grow its market share

    Branding

    The more distinct your brand is, the more valuable it will become. Being distinct is not that easy when playing in the field of construction, installation and home improvement, however. Professionals tend to stick with their favourite brands. Our branding studies all come down to one common goal: increasing long-term profitability by introducing, maintaining or growing your brand in a wildly competitive landscape.

    Customer journey

    Een customer journey (klantreis) is de persoonlijke ervaring van een klant met uw bedrijf. Hoe reageren uw klanten op uw producten, diensten of concept? Het evalueren van een klantreis stelt u in staat om de sterke en zwakke punten van uw bedrijf te verbeteren, waardoor het behoud en de omzet van klanten worden verbeterd. USP kan u helpen uw aanbod af te stemmen op de behoeften en wensen van uw klanten.

    Market exploration

    Perhaps you plan to enter a new market with your product or service. In that case, you need to understand exactly what is going on in that market. What are the trends and developments in that market, and who are the most important players?We use a range of methods to identify the market characteristics, such as market size, segmentation, distribution hubs, key media, market developments and sector culture.

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    For more information about our expertise and research on building materials please contact the responsible partner below.
    We look forward to help you.

    Contact our expert:

    Dirk Hoogenboom

    Research

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