Wednesday, December 11, 2013
The Atlanta Journal-Constitution
ATLANTA - It's next to impossible to sell lumber online. Appliances aren't that easy. But tools? Online sales are growing and growing.
Sales specialists Ryan Sherrill, left, and Jason Howard take calls at the CPO Tool Outlet in Lawrenceville, Ga., the backyard of Atlanta-based Home Depot. The eight-year-old company is reporting growth in online sales.
Bita Honarvar/Atlanta Journal-Constitution/MCT
In the past five years, IBISWorld senior analyst Nikoleta Panteva said, sales of tools online have risen 7.8 percent annually. Atlanta-based Home Depot has 10.5 percent of the market share for online sales of hardware and tools, according to IBISWorld research.
But an eight-year-old company with operations in Lawrenceville, Ga., is seeing some of that growth.
CPO Commerce, with headquarters in Pasadena, Calif., started selling refurbished saws and drills online. Now it is expanding its brands, adding categories from lighting to storage and taking on more space and workers in Georgia.
"Being small and nimble is good," said Rob Tolleson, the company's founder and CEO. "It's fun when you're growing." CPO Commerce plans to hire more order-fulfillment workers this year as it looks to compete.
The company plans to add 12 to 15 workers to the 55 already at its Lawrenceville center, where employees take and fill orders and handle sales and customer service calls. It recently expanded the facility from 70,000 to 100,000 square feet and could add even more space.
CPO Commerce competes with Home Depot and Lowe's, but it also competes, maybe even more, with Amazon and other strictly online sellers.
To do that, Tolleson said, he has to operate in a niche. While two-thirds of the tools he sells now are new, the company continues to offer refurbished tools for less in the 40 brands it carries. CPO Commerce primarily caters to professional contractors and experienced do-it-yourselfers who are seeking specific tools from their favorite brands, he said.
There are nearly 2,000 online competitors, with total revenues of $5.7 billion, according to IBISWorld. Financial analysis firm Sageworks says its data show fewer than 2 percent of hardware stores in its database of 700 privately held hardware stores have annual revenues above $50 million, with more than 60 percent of the stores at $3 million or less.
Tolleson said CPO Commerce's projected revenues for 2012 are $70 million. For the 12 months that ended in June, they were $62 million.
Sam Zippin, an analyst for Sageworks, said sales of tools and other home improvement categories have started to return to pre-recession levels. People are doing more home repairs and improvements, she said, and are buying more tools and more expensive tools.
The average customer spends more than $200 at the online retailer, Tolleson said.
Panteva, with IBISWorld, said the shift will continue.
"We've seen quite a lot of growth in online tool sales," she said. "The general trend is that retailers are moving online."