Uber has become a buzzword in our society. It makes sense why. The company completely reinvented the taxi cab system and is now worth more than $20 billion.
It was only a matter of time before someone attempted to Uberize (is that a word?) the HVACR industry.
Two industry veterans in Sarasota, Florida, are attempting to do just that. Their business model has homeowners buying HVAC products online from their website, www.pricefixer.com. Controversy arises because consumers have the option to purchase direct online and install the equipment themselves if they so choose. Though a consumer is highly encouraged to seek “professional installation” for an approximate charge of $1,300, it’s not required. Anyone with a credit card can push the final button and expect free delivery to one’s doorstep.
Another business, National Equipment Parts, is selling components to homeowners in the hopes of becoming the “Amazon of HVAC.” Throw in the roughly 100 contractors from around the country who are selling online to customers and this is teetering dangerously close to a trend.
What is wrong with that you might ask? Online purchasing is where our economy is going, and HVAC has to change with the times. And, while this is most likely factual, let us investigate all the ramifications before we merge too quickly onto the information superhighway.
• Heating and cooling equipment becomes a commodity. This will hurt every contractor because inevitably they will need to charge less if furnaces are viewed more like refrigerators. The person winning the business will almost certainly be the cheapest and not necessarily the one who produces the best service.
• Contractors become labor-only installers. Not being able to mark up the equipment will definitely cut into profits.
• Contractors will be installing boxes instead of addressing houses as systems. This will inevitably lead to unhappy customers, and who do contractors think they will be pointing the finger at? What are the odds homeowners are performing load calculations? How about checking if they have leaky ductwork? Not likely.
• This makes it much easier for HVAC technicians to “moonlight” the work after hours. If they can get their hands on the product easier, it will be that much simpler to undercut their employers and do the job on the side.
Maybe I have this all wrong, and I am not a visionary. Perhaps I have become the “get off my lawn” old man. It would be ignorant to think a market disruptor could not do just that to the HVAC industry. I know PriceFixer or websites like it are offering contractors a way to dip their toes into the online world. I don’t blame them.
However, one contractor I spoke with, David Squires, HVAC contractor and owner of Online-Access, a website design company, is not going to join them on the journey. He suggested that homeowners should not be trying to install their own HVAC equipment and believes the answer may come from state legislators.
Most states are frustrated with the lost sales tax they forfeit with interstate internet sales and are powerless to do anything about it since it’s a federal issue. Putting a simple law into effect regarding sales of HVAC equipment direct to consumers within their states is something that would not be a hard sale to legislators. The law would simply be that, “All consumer-direct, equipment-only sales must be reported to local municipalities with code enforcement authority over the address it was sold to.”
According to Squires, states shouldn’t have a problem getting on board with this for the following reasons:
• There are a lot of places where HVAC equipment — once installed — is required to be inspected by law. This would just facilitate enforcement of existing law.
• There is a real potential for safety issues and potential mechanical code violations when a knowledgeable licensed contractor does not install the HVAC equipment.
• Permit fees are revenue generators that can be controlled at the local level and policed relatively easily — providing the information as to whom and where the equipment was shipped to is supplied by the seller.
• What legislator would balk against passing a bill that makes it mandatory that all direct consumer sales of HVAC equipment within the state be reported to the municipalities responsible for mechanical code enforcement of the purchaser’s address with the names and addresses of the consumers buying the equipment? Punitive fines could be leveled against sellers for non-compliance. The local municipality receiving the information would then be able to make sure permits are pulled and safety is checked. It’s both a safety and revenue win for the state. Any state passing this type of law would not only protect consumers by making sure equipment installed by homeowners is inspected, it would discourage some do-it-yourself homeowner installations knowing they would be inspected and require additional permit fees.
However, Squires believes the true beauty of this law is that with all the local code-enforcing municipalities, it would make direct sales of HVAC equipment to consumers a complete bureaucratic nightmare. Compliance would be extremely burdensome for anyone wanting to legally sell equipment online into the states requiring such reporting.
“Although I’m not one to typically encourage additional regulation, I make an exception in this case because it would have no real effect on local contractors serving their local markets, but it would severely hamper contractors wanting to dump equipment in other contractor’s marketplaces,” Squires said. “Policing our own instead of going after manufacturers with torches and pitchforks would put a huge hurt on the real villains who treat HVAC equipment as commodities and sell it anywhere they can ship it without a care if it is being installed safely.”
This process would definitely take a lot of legwork as it would need to be passed in each individual state. That being said, it is most definitely an interesting idea.
Publication date: 3/13/2017