As a contributor to The Hardware Journal, I’m happy to share insights from the United States, where I live and work just outside of Boston, Massachusetts. Following my previous article on residential construction in the US, this article focuses on Lumber & Building Materials (LBM) dealers, particularly independent lumberyards, a key player in the industry. In the US, LBM dealers can be broadly categorised into four main types:
Independent Lumber Dealers (Lumberyards): These businesses are typically privately-owned and operate
independently of large chains. They sell a wide range of lumber products, hardware, and other construction materials to contractors, builders, and homeowners. Unlike their larger counterparts, independent lumberyards focus on personalised service and in-depth product knowledge.
Big Box Home Centers: These large retail stores, like Home Depot and Lowe’s, offer a broad selection of home improvement products. They cater primarily to DIY customers with their extensive inventory, including lumber, hardware, paint, plumbing, electrical, appliances, and more. They’re mostly warehouse-type stores with about 100,000+ square feet. Specialty Building Products Dealer: These dealers specialise in specific product categories, such as roofing, siding, or windows. They offer a broader and deeper selection within their specialty areas compared to general lumberyards or home centers. But they do not carry all the various products a lumberyard or home centre would normally carry.
Hardware Stores: As you would expect these stores sell a wide range of products for home improvement, maintenance and repair. Including fasteners; tools; hardware; limited plumbing & electrical supplies; paint & sundries; garden tools; cleaning supplies; etc. They are often smaller, locally owned businesses, though they can also be part of national or regional chains. They are known for their knowledgeable staff who can provide advice and guidance on various home improvement projects.
For this article, I will be focusing on the Independent Lumberyards in the US. There really is no “typical” lumberyard, due to various sizes, layouts, and geography. However, they share several common traits;
Product Range and Customer Base: Independent lumberyards carry a comprehensive range of building materials, including framing lumber, plywood, engineered wood products, roofing, siding, windows, doors, tools, and more. While they do serve some DIY customers, their primary clientele consists of professionals – general contractors, home builders, and remodelers. This professional focus allows lumberyards to provide specialised services and products not typically found at big box stores.
Service and Expertise: One of the key differentiators of independent lumberyards is their commitment to service. Most lumberyards have multiple sales counters to better serve their customers. They’ll have a “Retail/DIY” sales counter and it’s usually towards the front of their store. They’ll also have a separate “Contractor” counter, or offices/cubicles, to better serve their professional customers. Moreover, they employ extremely knowledgeable staff who understand local building codes and can provide expert advice.
Outside Sales Representatives (OSRs) and Inside Sales Coordinators (ISCs): Many lumberyards employ OSRs who work directly with customers, visiting job sites and building strong business relationships. They have the option to work from home for their administrative duties (plan take-offs, quoting, etc) and many of them only go into their lumberyard occasionally. Depending on their drive, skill level, and geography, annual residential OSR’s volume ranges from $3.5M to $20M USD (3.1M to 18M Euros), with the average being $6M-$7M USD (5.4M-6.3M Euros). ISCs support OSRs by handling administrative tasks and ensuring smooth communication between customers and the lumberyard.
OSR duties include:
- Sales & services, established accounts and regularly pursues prospects
- Visit jobsites and/or customers’ offices on a regular basis
- Create a “Business Partnership” with their accounts by recommending products; service & productivity efficiencies; etc. to increase sales with customers
- Provide clear, concise info to generate quotes and orders on a timely basis
- Provide accurate info to Shipping/Delivery Department for deliveries (i.e., date, address, instructions)
- Sell more product groups to accounts (i.e., vertical growth)
- Maximise Gross Margins
- Stay up to date on new products, services, and local building codes
- Attend builder association meetings
- Maintain a positive image at all times as a company representative
ISCs main responsibility is to provide administrative support for OSRs, along with customers who communicate with them directly. ISCs duties include inputting orders and quotes in the computer system; managing the flow of information between OSR’s, customers, and departments; assist OSR’s in managing their order and quote reports; and more. ISCs allow the OSR to spend more time out on the road. They work together as a team. Most larger lumberyards have ISCs separated from the counters. It’s not always a one-to-one ratio of OSR to ISC. It depends on the volume of the OSRs. My experience is that a good ISC should be able to handle approximately $10M-$12M USD in total volume from the OSRs.
The majority of US lumberyards pay their OSRs on a commission plan based on Gross Margin Dollars. They usually get a company vehicle or a vehicle allowance, plus gas card, along with a cell phone, laptop, and printer/scanner. ISCs are usually paid an hourly wage, and many lumberyards offer them an incentive based on total Gross Margin Dollars they handle.
Delivery Service: Most US lumberyards offer free delivery service to their professional customers and charge a delivery fee for homeowners/DIYers. They also have varying delivery vehicles including tractor-trailers with piggyback forklifts; 24’ straight body with piggyback forklifts; 16’ flatbeds for small deliveries & emergencies; curtain side box trucks with or without piggyback forklifts; lumber & roofing boom trucks; gypsum boom trucks; and pickup trucks.
Depending on where the lumberyard is located, their delivery radius usually is about 50 miles (80km). However, some deliveries can be as much as 100 miles (161 km). Regarding lead-times, if it’s in stock, the lumberyard can usually deliver it the next business day.
Credit Department: The majority of US lumberyards have in-store credit (house charge) available for their professional customers. The customer fills out and signs a credit application agreement and the lumberyard will do its due diligence to determine if the customer is credit worthy. While payment terms seem to vary, many have payment terms of Net 30 Days from Statement Date. Meaning, purchases in September are due no later than the last business day in October. If payments are late, they will charge interest. Just about all lumberyards accept online payments and wire transfers to pay house accounts.
Other Services: Additional services include material take-off lists from plans; layout/placement drawings with engineer stamp for roof and/or floor trusses, and also for I-Joist floor systems; kitchen & bath cabinetry design; and more.
Technology: Embracing technology, many lumberyards offer online access 24/7 for their customers. This includes access to the customer’s account, where they can look up invoices/orders/quotes, and pricing. They can also check deliveries and make payments. Numerous lumberyards offer these technological services via their own mobile app for added convenience, enhancing customer service and operational efficiency.
As you can tell, independent lumberyards play a vital role in the US LBM industry, offering specialised products, expert services, and a customer-centric approach that differentiates them from larger retailers.
Although I could go on and on about how US lumberyards operate, serve their customers, and drive their bottom line, I believe this article is already long enough. For those interested in learning more about US lumberyards, or exploring potential business opportunities, I am always available for a conversation.
Mike McDole has 40+ years’ experience in the Lumber & Building Materials Industry in the US and is the principal of Firing-Line LBM Advisors (outside of Boston, MA, USA). He helps dealers with management strategies, sales strategies, salespeople, gross margin improvement, profit improvement, and more. Mike can be reached at Ph. 001.774.372.1367 or Mike@FiringLineLBM.com.
