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    Features

    What's Going Online

    With the world's Internet population increasing steadily, paint and coatings companies are strengthening their Internet visibility but have yet to fully embrace selling their products over the web.

    Tom Williams08.09.05

    With the world's Internet population increasing steadily, paint and coatings companies are strengthening their Internet visibility but have yet to fully embrace selling their products over the Web.

    The year 2000 was nothing if not interesting in the dotcom arena. In spite of the fact that many Internet companies with once bright futures were finding themselves sinking fast on Wall Street, the number of U.S. residents with online access rose to more than 153 million by November, marking a 30% increase over the previous year, according Nielsen/Netratings. Combine this with similar and even greater increases in Internet use around the world, and it is not hard to hypothesize that opportunities exist for companies in all industries to utilize the Internet to maximize profit.

    With this in mind, the importance of web marketing and e-commerce initiatives in today's business environment has eluded neither industry leaders like Benjamin Moore nor niche companies. In fact, most major manufacturers of paint and coatings have a developed web presence of some sort, and many are defining Internet strategies as inextricable from their overall business plans

    "E-commerce plays a vital role in extending how we service existing customers and reach out to new customers," said Dan Passinault, marketing manager for PPG's Pittsburgh Paints brand. "In today's environment, it's impossible to talk about e-business as separate from your core business strategy."


    Redesign Strategies
    As those companies with pre-existing e-business strategies look to evolve with trends of Internet usage and other companies look to establish themselves on the web, the question becomes what methods will prove successful, and what concepts will fall by the wayside as archaic attempts of a not-too-distant online infancy? In search of answers, a number of early entrants to the web that have had sites online since the mid-1990s have recently invested in redesigns. Benjamin Moore, for example, has enlisted the services of Landor, a preeminent brand identity firm, in an effort to revamp its Internet portal to make it more user-friendly.

    "We are looking forward to launching a redesigned site that will be very up-to-date and a little bit more visitor friendly in terms of navigation and the information architecture," said Eileen McComb, the company's director of corporate communications. With plans for the re-launch to occur by the middle of this year, Ms. McComb asserted that the redesign was spurred primarily by the availability of new technologies that did not exist when the site was first introduced.

    A similar sentiment was expressed by PPG, which has updated virtually all of its web sites in the past six months. "That's one of the challenges you face in this media, it has to stay new and fresh," said Chris Caruso, director of e-commerce strategies for PPG. "A company's web site has to continue to bring new elements to the fray. As you do that, you get rewarded with a lot of repeat traffic."


    What's Being Offered
    Obviously, repeat traffic is the goal of any web site, no matter what is being offered. While a number of industries have found success by offering products directly for sale online, this has not been the case for most of the paint and coatings industry. As a result, rather than viewing their Internet portals as direct revenue generators, the majority of paint and coatings manufacturers are currently content with using their sites as information resources and brand-builders.

    "Use of the Internet has added another channel of communication with our customers, suppliers and end-users," said Russell King, vice president of e-business development at ICI. "We view it as an important element of the marketing mix and a useful tool in creating a more effective supply chain."

    "Our presence on the Internet has given us a broader reach in terms of supporting and strengthening the brand image and recognition," added Ms. McComb of Benjamin Moore. "Except for a small cyber-store where we sell branded non-paint Benjamin Moore merchandise, our site is information-based and non-transactional. Its mission was to be a great resource for all our end-user bases."

    St. Louis, MO-based specialty coatings manufacturer Tnemec follows a similar strategy, citing the consultative services offered by their sales organization as major factor preventing it from offering products online. "Because of the nature of this consultative process, selling our products over the Internet has never been a viable option," said Robert A. Juran, vice president of marketing. "However, our web site is an extremely important tool for us to keep customers and coatings professionals up-to-date on what we offer, changes in products or in the company, new developments and more."

    All of this is not to say, however, that paint and coatings are not being sold online, but rather that the majority of companies have not yet adopted this strategy or incorporated a true e-commerce model into their operations. One of the first companies to move into this so-called "new economy" was Beltsville, MD-based Duron. At present, the company offers 90% of its products online. "E-business, as defined as the delivery of service and merchandise, is extremely important to Duron," said Gary Saiter, the company's director of marketing and e-commerce. "It has had only a minor impact to date, but it's expected to have significant impact in the near future."

    Other companies offering products online include PPG and Truserv. PPG sells its paint and coatings through its getpaint.com portal, a site specifically designed for pre-existing professional customers who currently buy through company-owned stores. According to the company, the percentage of business that is being done using this method is not sizeable at this point, and although it is expected to grow in 2001, PPG has no plans to expand this service to DIY consumers.

    "We don't see this as an avenue for consumers," said Mr. Passinault. "A number of our customers are accessing the site for information. They are, however, involved on almost a daily basis with our stores and they continue to do a lot of purchasing there, unless there are things they need to buy during off-hours."

    While PPG's e-commerce strategy of offering their products to professionals only may seem to limit its possibilities, statistics bear forth that this may be a more profitable way of doing business at the moment. In support of this is the experience of Chicago, IL-based manufacturer/retailer Truserv, which offers e-commerce services to both professionals and consumers through two distinct web sites.

    "Our business-to-consumer (B2C) web site, TrueValue.com, is a good brand building mechanism that we use," said Neil Hastie, the company's chief information officer. "We have another initiative called NetWarehouse that is really an exchange between manufacturers and our member stores. This allows our customers to procure products from a multitude of different sources, but the majority of our sales are coming from the business-to-business area. It is dwarfing B2C and I absolutely expect this to continue."


    Keeping Customers
    Regardless of whether or not they are selling products, offering information, or both, paint and coatings companies have quickly learned that competition for the attention of Internet users is fierce, and offering unique services is key to maintaining existing customers and attracting new ones.

    As a leader in the online arena, Duron is among the paint and coatings companies offering extensive "extras" through its online portal. "Duron was the first major paint company to have an e-commerce-capable web site, and our site has many special offerings," said Mr. Saiter. "Account holders can order products online through e-X-pressOrder and take advantage of our e-Deals�product specials available only through ordering online."

    Along with online product specials, Duron also offers services specific to its individual customer segments, which include contractors, builders, architects and designers. Among these are Prosemail�a free, private e-mail service that is accessible from any computer with an Internet connection; the Pro's Forum�a moderated discussion board where professionals and consumers can submit industry-related questions that other site visitors or Duron employees can answer; EDGE�the online version of Duron's quarterly newsletter for the professional; and streaming video presentations of the company's products.

    The Flood Company, Hudson, OH, has also included several features on its site to keep visitors coming back, such as a "virtual stainer," an online media room and an interactive help line.

    "We have several features that separate us from our competitors," said Matt Rechin, The Flood Company's national marketing manager. "Our 'virtual deck' section is an interactive virtual reality deck and house that enables customers to test drive colors on their computer before actually purchasing Flood products. The Flood online media room is an exclusive section to our site that allows members of the media to access photos, releases and technical articles about exterior wood care. This also enables them to directly contact us for personal interviews and requests. In addition, the interactive help line allows our technical service representatives to assist customers through our site via e-mail."

    Like Duron and The Flood Company, Benjamin Moore and PPG have also used their Internet presence to publicize rebates and promotions.

    "Anything that we do at the point of purchase, we try to reiterate online so that people know it is available," said Ms. McComb of Benjamin Moore.

    "We have done rebates through our getpaint.com initiatives in the past, and are also using it to publicize a lot of planned promotions that are available offline," added Mr. Passinault of PPG.


    Partnering with Paint and Coatings Sites
    Another avenue a number of paint and coatings companies have taken to steer traffic to both their online portals and offline businesses is through new Internet-based paint and coatings services. Among these are coatingsMart.com and VirtualPainting.net.

    Founded in March, 2000 and launched last September, coatingsMart's goal is to provide integrated solutions that "leverage the Internet to streamline transactions and simplify the exchange of information between buyers and sellers of paints and coatings." Described by the company as "the first neutral e-marketplace for the paint and coatings industry," coatingsMart has already established successful alliances with leading manufacturers, including Ferro, Morton Powder Coatings and Valspar. Features of the site currently include a comprehensive multi-vendor catalog featuring hundreds of powder coatings products. In the coming months, the company plans to expand into new industrial and specialty coatings segments.

    While coatingsMart offers a multi-company e-business portal, it focuses on B2B transactions and promotions. On the other hand, VirtualPainting.net has taken a more inclusive approach to showcasing paint and coatings online by offering a service it contends is beneficial to consumers, professionals, retailers, manufacturers and, of course, its own bottom line.

    "The goal of our site is to establish a new paradigm in the industry," remarked Bob Thayer, one of the site's founding partners. "The current method of choosing colors is from swatches or actual paint. Our goal is to give customers a third option which is much more representative of how the final project will look, where users can take an actual photograph and see what their space is going to look like as a whole when it is finished."

    According to the company, the impetus behind the site, which was founded in August, 2000, was what it perceived as a lack of ways for people to decide what colors best suit their homes. Mr. Thayer and his associates contend that while some sites offer the chance to paint pre-designed rooms online, there was previously no way for consumers to paint their homes.

    "Manufacturers have stock homes on their web sites that are pre-mapped and pre-configured so that you can click on something and the whole room will change color," said Mr. Thayer. "The response that we have gotten from homeowners to contractors to retailers is that this is pretty much useless to them because it is not their space."

    Armed with its innovative software and a solid business plan, VirtualPainting.net approached manufacturers directly and brokered arrangements to obtain color books to be put up online. So far, the response has been as good, if not better than expected. To date, VirtualPainting.net features more than 20 manufacturers and 20,000 colors, according to the company.

    "When consumers come in initially, they have to choose a manufacturer to narrow down the colors," said Mr. Thayer. "After they have selected a manufacturer, they paint their house. If they choose a color they like, they can add it to a list, and then backtrack and go find another manufacturer and get another color. When they are happy with the color decisions they have made, they click a display button that shows all the colors they have added to their list. It provides them with the manufacturer and the color's name and number."

    Once homeowners have chosen the colors and manufacturer they prefer, VirtualPainting.net's vendor locator allows them to connect with contractors and retailers in their area. In addition, the company is also offering architects, designers and contractors year-long software subscriptions that allow them to submit printed photographs of their client's homes in possible color variations.


    The Color Question
    The increasing presence and importance of interactive decorating sites has brought to fore a central issue when selling or displaying paint online�how to accurately represent manufacturer-specified colors across a gamut of technologically diverse computer monitors.

    According to Benjamin Moore, inaccurate color representation is the primary reason the company does not display its palettes online. "Color is the number one issue," remarked Ms. McComb. "At Benjamin Moore we hold ourselves to a very high standard it terms of making sure that the color we provide to someone online would be accurate. The technology is not yet there, so a lot of our efforts have been to explore the ways and means of delivering color in some way that would satisfy the very high bar that we set for ourselves."

    According to Mr. Thayer, this was a problem that was closely investigated by VirtualPainting.net during its start-up phase. "The problem of color variation is a huge concern for us," said Mr. Thayer. "We want our users to have the most accurate representations possible."

    To date, the best solution VirtualPainting.net has found has been to offer user guides to optimize monitor and video card settings. "We have given them optimal monitor settings and video card settings, so that their experiences can be the best. This makes a major difference in color variation," Mr. Thayer added.

    However, according to Mr. Thayer, the solution to this problem will come not as a result of work on the part of paint manufacturers or companies like his own, but rather due to the proliferation of higher quality computers and monitors.

    "We believe we are in a great position because new software that demands high quality video cards and monitors is making its way into the home for completely different applications," he said. "This will open the door for us in the future. It's our stance that within two years the number of web safe colors will more than double. Within five years, monitors and video cards will be really high quality and everything on our site will be a virtual representation of the direct color."


    Breaking International Boundaries
    As illustrated by the fact that the world's online population, which currently hovers around 250 million, is expected to exceed 750 million by the year 2005, it is clear that countries that initially lagged behind in online access and e-commerce are quickly catching up. In addition, a number of paint and coatings companies outside the U.S. have begun to aggressively pursue online opportunities.

    One of the most extensive e-commerce strategies developed by a paint and coatings company outside of the U.S. has been launched by New Zealand-based Resene Paints Limited.

    "In 2000, we developed a downloadable virtual painting program, Resene EzyPaint, that saw traffic to our web site increase by more than 700%," said Karen Warman, the company's marketing manager. "With strong visitor traffic, it is clear that both trade and retail customers are using our web site as a source of information and color inspiration."

    Directed towards professional painters only is www.duluxtradeonline.com.au, the e-business initiative of Australia-based paint and coatings manufacturer Orica. According to the company, this site allows pre-existing customers to accurately and automatically order make-ups and delivery of surface coatings. In addition, customers can view their own account pricing by item and download invoices for account reconciliation.

    Orica contends that the online portion of its business has been so successful that it has begun to market e-business consulting services to other paint companies globally.

    Lyngby, Denmark-based Hempel and Maia, Portugal-based CIN also cite e-commerce as a growing priority within their business strategies. According to Lars Sorensen of Hempel's e-business department, the company is constantly evaluating the different possibilities offered by the Internet, and it anticipates the worldwide web having an even greater impact in the future.

    CIN, which has also begun to focus more attention on its Internet presence, is taking a somewhat cautious approach. "Internet use is fast increasing in Portugal," remarked Rui Bevilacqua of CIN's public relations department. "E-business is very important for us, but we want to create the best conditions for our customers before offering any services."

    With this in mind, the company has recently overhauled its web site. Registered customers can now place orders online, and this service will soon be expanded to include a virtual paint shop for the public. In addition, CIN's site also offers technical data sheets on its wide range of products.


    The Future Online
    The failure of too many hotshot Internet start-ups illustrates that in the new economy, online initiatives never portend certain success. For this reason, the majority of companies in the paint and coatings industry have yet to jump headlong into the e-commerce fray. Instead, they have chosen to side with caution when it comes to e-commerce and web marketing.

    But as Internet use continues to rise, so will the amount of traffic to most manufacturers' web sites. This means that companies will be forced to decide whether they should offer products online or use this resource as another way to build brands by providing customers with information, promotions and unique tools that lead them to the paint store in their neighborhood. It appears that adopting a combination of both strategies will be most successful as companies forge ahead into the heart of the 21st century.

    International E-Commerce Statistics

    Europe:
    � More than 50% of UK adults have Internet access according to Forrester.
    � According to Datamonitor, consumer online spending in the UK
    has reached $190 million and is expected to climb to $790 million by 2001.
    � According to a KPMG Consulting survey, Internet sales revenue in Europe is expected to reach $2 trillion by 2002.

    Latin America:
    � IDC predicts that by 2003, online spending on e-commerce in Latin America will reach $8 billion.

    China:
    � Xinhua, the official news agency of China reports that e-commerce revenue has reached $40 million and will reach $4 billion in coming years.

    U.S.:
    � From 1998-2000, the number of consumers shopping online increased by more than 140%, according to Yankelovich's Monitor 2000 study. In the past 12 months, 45% of all Internet users made at least one online purchase, 30% made 10 purchases or more and 10% made 20 purchases or more.

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