Distribution model
The three step distribution model, from manufacturer to wholesaler to professional customer, remains dominant in this rather conservative market, as it has been for decades. And consequently, the role of the wholesaler remains solid for now as is shown in the results of the Q3 2019 report of USP’s European Mechanical Installation Monitor.
Traditional system
Dominant as it may seem, other channels through which installers can purchase their products, like direct purchasing from manufacturers and pure online channels, are increasing the pressure on this traditional system. A good example is the rise of purchasing at pure online stores, which is evident in the results of interviewing 900 installers from six countries.
Pure online purchase channels
In terms of usage of pure online purchase channels, there are major differences between countries. In France and Poland, installers use the pure online channels the least. In Belgium and Germany, 15% of the installers report to purchase products at pure online stores. In the Netherlands, about a quarter of the installers report to do the same.
The UK is in the lead with 34% of the installers using pure online channels to purchase installation products in 2019. Compared to 2017, the number of UK installers using pure online purchasing channels has grown by 20%, indicating how pure online stores are indeed on the rise in some countries. In France, on the other hand, where only a mere 6% of installers use pure online channels in 2019, no development in usage has been seen over the past two years, so pure online stores are clearly not on the rise everywhere.
Budget
The above percentages paint an image of usage of pure online channels, but do not tell the full story. For that, the amount of money spent through those channels has to be taken into account as well. In the UK, for instance, where about a third of installers use pure online channels, only 5% of the total budget spent by all UK installers is spent through the pure online channels. Similarly, almost a quarter of the Dutch installers report to use pure online shops, but only 3% of the budget is spent there.
Germany and the UK
As was mentioned before, only 15% of the German installers use pure online channels, but 3% of the total budget of all German is spent through those channels, indicating that the position of pure online stores might not seem so strong in terms of usage, but is indeed as solid as in the Netherlands in terms of share of wallet. Looking at growth figures of share of wallet, the budget spent at pure online stores grew with 2% since 2017 in both Germany and the UK.
Conclusion
Taking both usage and share of wallet into account, the above figures show that, although the installation market is a conservative market, purchase behaviour is changing. Traditional channels are increasingly under pressure by pure online players like Amazon or Ebay, or specialised pure online stores, as is seen especially in the cases of the UK and Germany, where growth figures of pure online channels are strongest, both in terms of usage and share of wallet. For more detailed information we refer you to the Q3 2019 report of USP’s European Mechanical Installation Monitor.
