Tipco looks to create ‘experience' with new hose store, distribution hub

MANASSAS, Va.—When Tipco Technologies Inc. was looking to open a new hose center and distribution hub, it was very early in the process when President Rob Lyons didn't like what he was seeing.

Calling itself the "Mid-Atlantic's leading fluid solution supplier," the distributor of hose and other related goods was looking to relocate one of its Eaton Aeroquip Hose Centers from a suburb of Washington, D.C., to Manassas, as growth migration in the region had moved south and west.

Family-owned Tipco operates 11 hose centers and three manufacturing/fabrication sites in the Mid-Atlantic region, all good operations. But as plans were being drawn up for the new location, Lyons viewed them as the "same old, same old."

"This is boring," he told his team.

Lyons had something much different in mind for the new site, more along the experience of a home improvement store. "I enjoy the experience of going to Home Depot, and I almost always find more than I need when I go there."

Lyons gave the team marching orders to readdress plans for the Manassas site, and what Tipco opened April 1 proved to be well beyond original expectations. He described the new location as a Super Hose Center, with a retail portion upfront clocking in at 4,000 square feet—compared to the normal size of 800 to 1,200 square feet—and a distribution hub in back that will be its second largest, smaller only to the center at its corporate headquarters in Owings Mills, Md.

"I said I wanted to step back and build what would be the biggest such retail center that exists in the U.S. and try to create an experience that customers will travel to," Lyons said. "And that's what we did."

The center will offer a selection of hydraulic and industrial fluid conveyance products. And should a product need to be ordered, the distribution center will support what the Tipco president calls its "Digital Branch," or soon-to-be operational e-commerce platform.

"Our Discovery Manassas location is designed to provide the highest speed-to-market from a logistics and operational standpoint," Lyons said.

Fast development

When the coronavirus pandemic first hit, business in March and April 2020 dropped sharply, he said. But after that, the market rebounded in a hurry, and Tipco expects the surge to last for the foreseeable future. With that in mind, Lyons said the distributor wanted to complete the project in one year as opposed to the typical three-year development cycle.

Most of Tipco's business comes from traditional OEM and maintenance and repair operation clients, where products either are shipped to customers or delivered by its fleet of trucks.

But about 25 percent comes from the Eaton Aeroquip Hose Centers it operates throughout Maryland, Virginia, Delaware and Pennsylvania. Customers can go on their smart phones before traveling there to check out product availability at a given location. And with the size of the store and the wide range of SKUs it will keep on hand at Manassas, Lyons said that should be a big advantage for the counter business.

Being set up as an Eaton Aeroquip Hose Center—Tipco is a diamond Eaton distributor—Eaton products are front and center. But Continental, where Tipco is an elite distributor, also is prevalent in the retail shop with its industrial hose products, as is Dixon Valve & Coupling with its line of fittings and connections. Other brands available include Parker-Hannifin and Kuriyama.

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.