Online sales have been a taboo phrase for many in the HVAC industry, but not for industry veteran Zeiad Hussein, who has launched National Equipment Parts (NEP) in the hopes of becoming the “Amazon of HVAC.”
Hussein started his HVAC career as the national sales manager with Controlled Air Systems, but it was during his time as a manufacturer rep for Stamberger-Sender & Associates that he saw a void in the industry when it came to online sales. With that void, Hussein saw opportunity.
“I am a big online guy and a big Amazon Prime guy,” Hussein said. “I saw the void. If I visited Amazon to look for an ICM board, I never felt there was enough content to allow me as a consumer or end user to make a decision. There were no cross references, specs sheets, or wiring diagrams. Everything on the web was very fragmented, much like the market is.”
Hussein began to investigate the issue more. He approached some of his bigger wholesalers and asked what the plan was for the online marketplace. He dug deeper and asked them if they saw their after-hours web portal entry as a thriving part of their business.
Hussein was disappointed with what he learned.
“Nobody said yes. Nobody had a plan for the online marketplace. It did not make any sense to me,” Hussein said. “It was very shocking that the entire inventory in these distribution centers just kind of died off at 4:30 p.m. All these products can and should be sold on a 24-hour basis.”
A BUSINESS IS BORN
That is what led Hussein to create NEP, an e-commerce platform to sell HVACR equipment, such as motors, thermostats, and humidifiers. He is quick to point out he did not create this to put distributors out of business; instead, he is aiming to partner with them.
“We are a software enabler and a tech company that has industry personnel with technology experts,” Hussein said. “The people on the HVAC industry side make up less than 20 percent of our company. Everyone else is on the tech side, analyzing data and customer behavior, looking at products, and matching that information up with how many times an hour people are searching it on Google. Our company fills a nice void that wholesalers don’t have. And what we don’t have is the lines of credit that extend 100 years and the inventory that wholesalers possess. That makes this a really nice partnership.”
The company currently has about eight distributor partners that act as satellite fulfillment centers. Once an order is placed via the NEP website, a distributor is alerted, and they’re responsible for sending out the product with the boxes and labels provided by NEP.
“We do the tech side, and the distributor ensures there is enough inventory to cover the orders,” Hussein said.
This is similar to Amazon’s fulfillment center model. Hussein said the company also operates a 10,000-square-foot fulfillment center in Pennsylvania.
NEP research shows about 60 percent of the company’s customers are homeowners or consumers while 40 percent is business in the form of contractors and builders. The company is preparing to launch NEP Pro, a separate site dedicated solely to contractors. Hussein is promising a great user experience where contractors can order items from their tablets or smartphones and witness real-time inventory, which ensures the equipment they order will arrive as soon as the next day.
“The relationships we have are solid. We are doing something for the industry, and this is not a fly-by-night e-commerce business,” Hussein said. “We understand the value of data and how expensive it is to capture it. We think we can catapult the market and bring some of the control back into the space instead of relying on various online retailers.”
The distributors that have partnered with NEP vary in size and online experience. One distributor, APR Supply, has been an online seller since 1996.
“We are a business-to-business-only seller,” said Scott Weaver, president and CEO, APR Supply. “Zeiad’s strategy was not at all in conflict with ours. Our goal on the internet is to enhance the relationship we have with our existing customers. I think this is a two-step distribution process with a different ordering mechanism and different communication mechanism.”
Jim Fabricatore, vice president of Dunphey & Associates Supply Co. Inc., also considers his company’s partnership with NEP a continuation of the two-step distribution process.
“My selling to him still keeps the two-step distribution model as opposed to him buying directly from a manufacturer and taking that step out of the process,” Fabricatore said. “It is a wholesale model and not a retail model. We have a lot of faith in him. He is a smart guy, and he knows the industry.”
Unlike APR Supply, Dunphey & Associates Supply Co. had no previous online selling experience before partnering with NEP.
“All wholesalers realize we need an online presence,” Fabricatore said. “You either have to come up with hundreds of thousands of dollars and dedicate some personnel to doing that, or you look for an avenue like NEP, where we could still sell product but not have the responsibility of operating and maintaining the nuts and bolts of a website.”
The company is growing quickly on the back of social media, Google ads, and organic growth. In the first quarter of 2016, NEP saw 33,000 unique customers and $3.2 million in total sales. This is a substantial jump, as the entire year of 2015 saw 5,000 unique visitors and $1.6 million in revenue.
“We are growing because our distributors are supporting it and believe in it. We are doing the right thing. I am not from Wall Street or Silicon Valley. I’m from the industry. I’m a trusted insider, and I know how the market works. I know internet sales is a tough subject to talk about. We can be that driving force to bring wholesalers together and channel out this inventory at a level no other e-commerce business can,” Hussein said.
Publication date: 9/26/2016