Centralization and Productivity
The first example of how we are changing the roofing materials distribution model is how we work very hard and maintaining business efficiencies by running a very centralized system. We are a technology company specializing in selling roofing materials. The hub, or headquarters of the business are the online systems. The Roof Store is able to be extremely efficient and it's likely that each person The Roof Store employs ends up being exponentially more productive by at least seven times. The centralization and automations create great opportunities within the productivity space.
Gross Profit Margin Targets
The Roof Store has very modest gross profit margin targets. Potential price increases are passed on and it is understood that there is great opportunity cost. The idea is to operate productively and pass on the savings to the roofing contractors and end users (The property owners).
The Roof Store offers and even incentivizes bulk purchases because that is how our customers will benefit the most. We want to help increase your business' gross profit margins.
In fact, most roofing companies, regardless of size and scale, should be buying moving materials in bulk as soon as possible from inception of their business. It could be said that it's never a good time to do anything, especially because it might involve committing more space to store the materials. It also involves investing money in inventory. But when the leadership of the roofing company becomes more confident in their ability to execute a well-planned business idea, then the confidence spills over into making decisions that benefit the company in the long term.
Without a doubt, buying in bulk is the fastest and most organic way to grow your gross profit margins. At the end of the day, The Roof Store wants to become a valued resource to your roofing company's organization.
Misconceptions of buying in bulk.
Some roofing contractors think that they might not have the space necessary to store 3 months of materials. Others might say that they don't want to invest, but choose to buy only what is needed for each roof they install. That is a way of operating, but it's not the most efficient nor is it the highest and best use of your roofing business' capital.
48 boxes of coil nails only occupies a space that measures: 48 inches high, 48 inches wide, and 48 inches deep. The real question becomes, do you care more about saving 35 to 60% When buying enough material to last you 3 months of forecasted sales, or do you prefer the inefficient use of space available in a closet. The objection of not wanting to invest the money is irrelevant because any great operator will gladly trade $1,000 today for $2,000 3 months from now. Business owners that don't align with this frame of thinking are not the most efficient of operators.
The national average price of one and a quarter inch coil nails sold at the usual big box distributor is $55. We recently lowered our bulk price for these nails to $25 per box with a minimum order of 63 boxes (free shipping). If a roofing company plans on installing two roofs per week, they will run through the inventory in approximately 3 months. 3 to 4 months is a responsible amount of inventory to have on hand at all times.
As The Roof Store grows and enters new markets, the plan is to lower the minimum order quantities while maintaining bulk pricing. Making prices more reasonable for everyone is important for the gross profit margins of all the roofing companies choosing to be our customers.