The visibility of the variety of products creates a "wow effect" with customers, motivation for them to go out of their way to visit the Manassas store as they will have a high degree of confidence they will find what they need.
"It matches my vision perfectly," Lyons said, "because it's not a typical front counter scenario. It's a true retail experience where our staff is out in the center with the hose customers and showing them products from an application perspective. It's created quite a buzz, especially with our suppliers."
Tipco employs about 12 at the Manassas site, but that number could double by the end of the year, he added.
The distributor invested $750,000 in inventory alone to start. Tipco leases the facility, but it was a brand new structure where the distributor was able to advise on the build-out so it fit the distributor's needs. "We were looking for a location with very high ceilings, so we could go north with the pallet racking," Lyons said. "It's built not just for today, but tomorrow. It's built for growth."
Gearing up the 'Digital Branch'
In addition, the size of the distribution hub and range of products it carries fit well as Tipco looks to ramp up its e-commerce business. Lyons said his firm worked in conjunction with Alaska Rubber Group in setting up the platform, as both had contracted with Unilog Content Solutions Pvt. Ltd., which set up similar platforms for industry heavyweights W.W. Grainger Co. and Ferguson Enterprises.
To be able to support such a business model, besides the "A" inventory items—those that typically will turn over six times in a year—Tipco decided to stock more of the "B" and "C" products in Manassas.
"We wanted to keep the second- and third-tier items extra heavy, even if it meant they didn't turn six times, because we wanted to create a speed to market that customers are not accustomed to," Lyons said. "We wanted to vastly improve the number of orders we were shipping complete."
Tipco almost is done with its beta testing for the digital business before it goes live, and thus far it has seen great improvement in its fill ratio because of the new site, with fewer back orders.
"I view e-commerce as another value-added service," he said. "Independent distribution, such as Tipco, needs to create a value proposition for our customers. Obviously it's harder to create more value than you can at the front counter fixing broken hoses, but in its own right, the adoption and investment in technology is a value-added service as well."
The distributor didn't create the Digital Branch necessarily to sell outside of its traditional geographic region, but rather to have the ability to craft customer-centric catalogs for customers, almost like a "favorites" type of scenario similar to what one would find on Amazon, according to Lyons.
With a good deal of its manufacturer suppliers having an outward-facing presence with end users and customers, he said the distribution channel needs to have a mechanism for vendors to parlay those orders to distributors.
"I don't believe for the most part that our vendors want to hold receivables and sell direct, but it is incumbent on us to offer that service seamlessly for them," Lyons said. "If someone calls one of our vendors, this gives them the ability to refer the customer right to a landing page to order that product on our site."
He said the goal is to get 25 percent of its existing customers to adopt doing business on the Tipco e-commerce platform.