Let’s face it, being a product manager for a hardware store does not seem like it would really be a cutting edge job. Hardware stores have been around for a long time and we all know what they do: sell a lot of different things that we can use around the house. None of this really seems to be all that well suited for an e-commerce approach – don’t you have to touch what you are buying? The Ace Hardware product managers don’t think so. They’ve made a decision to update their product development definition and try to go digital.
Ace Hardware Has Big Plans
Hardware product managers have always struggled to fit into the world of e-commerce. With their products such as sheds and grills that are bulky, expensive to deliver and sometimes complicated to assemble, the product managers have failed to achieve significant online penetration. However, things are now changing. Thanks to the era of Amazon that has reshaped consumer expectations about same-day and low-price deliveries, the product managers at retailer-owned cooperative Ace Hardware Corp. are shifting its bricks-and-mortar focus to make a big bet on e-commerce in the name of survival.
Ace Hardware was founded nearly a century ago. The product managers at Ace supply and support more than 5,000 privately owned hardware stores across the globe. The product managers plan to spend billions in the coming years to expand Ace’s e-commerce capabilities, including a recently launched buy-online-deliver-from-store service. There will be challenges for the product managers. The way that Ace is organized, each local Ace store owner possesses a small-business autonomy from the retailer-owned cooperative’s corporate branch, and more than half of them have yet to embrace the company’s online-delivery vision. However, the product managers believe the local focus of the company gives it an edge over bigger competitors such as Home Depot Inc. and Walmart Inc. It’s important to note that these competitors are also are spending billions to shorten the time it takes to reach any home with a delivery, no matter the size.
The Ace product managers have to find a way to maintain their market share in a changing industry against larger companies like Home Depot and Lowe’s, as well as dealing with the increasing threat of disruption by Amazon. In order for Ace to be successful, the product managers are going to have to wage a battle on three fronts. The first will be service. Having local stores with local ownerships who live in, work in, and know that community better than anyone at corporate ever will is viewed as being huge strategic advantage for Ace. The second is convenience, and what the product managers are trying to do is exploit the geographic proximity advantage that they have. Versus all of their competitors – Home Depot, Lowe’s, Amazon – Ace has a lot more stores. They have 5,200 stores around the world in more than 67 countries, and more than 75% of U.S. households are within 15 minutes of an Ace store. All of this would look good on a product manager resume. Right now Ace has about $2 billion of inventory sitting right in the neighborhoods waiting to be purchased. The third front is quality. Ace has a fanatical devotion to locally relevant, high-quality products that are different than what customers can get at some of the other competitors.
Ace’s Future Plans
The Ace product managers have had to change their focus. They are now betting the farm on what they believe to be a timeless principle – that serving hearts and human connection will always have the potential to stir a soul. So how can they go about applying that principle? The Ace product managers recently launched nationally BODFS, which stands for Buy Online, Deliver From Store. The product managers are leveraging their local stores, their inventory, their vehicles and their people to do the delivery to their neighbors. The product managers believe that customer care about who’s actually delivering an item to their door. The thinking is that the person delivering the product knows what the product does, how to use it, how to start it, how to season it in. That matters to customers. The product managers understand that sometimes it may be far less relevant, but the greater the degree of complexity of the purchase, the more important the degree of knowledge.
There is a lot of completion in the hardware business. Currently Lowe’s and Home Depot do offer their own delivery, installation and haul-away services, as well as some pre-assembled grills and things of that nature. The challenge for the Ace product managers will be to make Ace’s delivery offerings different than the competitions. The product managers believe that they have more stores than the two major competitors combined. So the proximity to the homes and businesses is a significant advantage for Ace. Note that the delivery is actually done by the employees who work in those stores. What this means is that it isn’t outsourced to a cobbled-together, third-party strategy. It’s actually done by the employees who work in the store. The product managers are going to have to find ways to get some of the store owners who have yet to opt into doing this delivery service to participate. The product manager’s understand that it’s operationally really difficult to execute and deal with that last mile. Initially, the product managers were able to get about 2,200 stores to fully execute the buy-online-deliver-from-store service from Acehardware.com. Currently, almost every Ace-branded store is doing some form of delivery on their own, and as they operationalize that, they’re waiting until it’s excellent before they integrate with online because the volume is starting to surge.
Going online is never an easy thing to do. There are expenses that have to be accounted for. In the case of Ace Hardware, the operational expense is taken care of by the local Ace store. Currently the operations, more than the expense itself, is the issue with the local stores. The local store operation is heavily dependent on people. Those stores are very reluctant to ever pull people off a floor because they want them serving customers. The Ace product managers realize that a challenge for the hardware and home sector is that some items are large and bulky and some have a do-it-yourself assembly aspect that might discourage some people from wanting to order online. This is a gaping hole in the digital platform of e-commerce. Interestingly, this is also exactly where most of Ace’s growth digitally is coming from – big, bulky, obnoxious product is the vast majority of the stuff the product managers are doing online. A good example of this is grills. A customer can order a grill on some discount website and having it shipped to their home. When they do this, it’s going to cost a fortune in many cases, but then they’ve got to deal with it. How do they put it together? Ace will deliver and assemble those grills to their local customers for free on any grill over US$399.
What All Of This Means For You
When we think about e-commerce, what do we think about? Probabley ordering things like computers, TVs, shoes, etc. What we probably don’t think about ordering are things like hammers, nails, grills, or siding. However, the product managers at Ace Hardware are trying to change the way that we think. They want to use their product manager job description to push Ace Hardware into the e-commerce marketplace. In order to be successful, they are going to have to come up with a way to attract customers and deal with some major competitors.
In order to stay competitive with the likes of The Home Depot, Lowes, and Amazon, the Ace Hardware product managers feel as though they have to move into e-commerce offerings. Ace Hardware consists of over 5,000 locally owned stores. The Ace product managers feel that this may give them an advantage over their competition. The product managers believe that they can win this battle by focusing on service, convenience, and quality. The Ace product managers have launched a new Buy Online, Deliver From Store (BODFS) program to deliver products to customers. The Ace product managers believe that having knowledgeable store employees delivering products to customers will be an advantage over their competition who outsources product deliveries. Each Ace Hardware store has to pay to go online. What the product managers have discovered is that their large, bulky items seem to sell the best online.
The Ace Hardware product managers have got it right. In order to for the store to survive in the 21st Century, they are going to have to go online. When you sell hardware for a living this can be a challenging thing to do. For Ace, things get even trickier when you consider that each of their stores is independently owned and operated. However, the Ace product managers have come up with a plan and as more and more of the store owners see the plan being successful, they will probably join in. Perhaps the next time you need some nails or paint, instead of driving to the store you’ll go online and then wait for it to be delivered from Ace Hardware?
Question For You: What do you think that the Ace Hardware product managers could do to motivate more store owners to go online?
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What We’ll Be Talking About Next Time
So here’s a classic problem that product managers are faced with all the time: you are responsible for an established product. Time has passed. Your product is no longer “hot” or “new” and in fact there are a lot of other hot / new products out there. What are you going to do to get customers interested in your older product? It’s time to make changes to your product development definition. What can a product manager do to breathe life back into an existing product?