LBM Daily Exclusive #1

LBM Daily is the #1 source for wood products industry information and analysis. The following is a newsletter from LBM Daily regarding the value that TraderDirect has for the building materials industry.

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LBM Daily

Exclusive TraderDirect Interview… The following is an exclusive interview with Charles Smith, CEO and Managing Director of TraderDirect, a relatively new e-commerce company in the wood products industry. Trader direct is known for its user-friendly, low-cost sales applications.

Please stay tuned to the Industry Insight section for more similar interviews of other industry-related technology companies in the near future.

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Describe your business?

TraderDirect provides communication software to help salespeople and traders in the forest products industry. We offer a low-cost, effective tool that can help a salesperson become more efficient without changing the way they do their job or how lumber is bought and sold. Built with extensive input from mill salespeople and wholesale traders, TraderDirect addresses the common complaint that there is not enough time in the day to communicate with one's customers. The software allows users to quickly and easily generate personalized product offerings to their customers via fax, e-mail, and the Internet.

TraderDirect is not an exchange, does not process transactions online, and does not alter existing personal relationships between buyers and sellers.

What role do you believe e-commerce has and will have in the forest products industry, both now, and five years from now?

Today the role of e-commerce is very limited. A lot of people in the industry have dabbled with solutions, but generally with lackluster results. We don't see that changing in the near term. The forest products industry has well-established processes for buying and selling its products. Most of the e-commerce solutions that have been presented so far have not improved the way the members of the industry communicate with each other. In many cases the solutions have created new inefficiencies, such as requiring the buyer and seller to negotiate transactions on-line.

Five years from now, it is likely that the largest half dozen or so companies in the industry will have implemented "EDI" like solutions linking back office systems with a handful of their major trading partners. But to a large extent, e-commerce will not have revolutionized or changed the way the majority of the industry functions on a day-to-day basis. We believe that for the industry as a whole, companies will adopt new tools such as TraderDirect that significantly improve the way they communicate with their trading partners, without changing the underlying nature of how the business is conducted.

Why has the forest product industry resisted e-commerce?

We have found that most forest products companies are annoyed and frustrated more than anything else. They are tired of looking at "solutions" that require them to change how they communicate with their business partners without improving the process or reducing the cost to any of the participants. The industry needs solutions that fit into how building materials are currently bought and sold and benefit all the participants.

What do you think are the keys to be a successful solution?

A successful solution has to make you more money than it costs to implement and use. It must fit into the normal routines of the industry, be easy to use, be flexible to the needs of different types of users, and enhances the way people do their jobs.

We believe, and more importantly our customers have confirmed, that TraderDirect does indeed meet these requirements. TraderDirect's regular users will tell you it is a valuable tool that has improved their ability to communicate with their trading partners and has contributed to their bottom line results. This is due to the following four factors:

1. Customers do not need to change their behavior to use TraderDirect. Selling lumber is a relationship business with individually negotiated transactions. Any successful solution must incorporate and enhance the existing relationship without interfering or making the customer behave differently. TraderDirect allows salespeople to easily and quickly customize and personalize how they communicate with their customers.

2. TraderDirect is easy to use. In less than an hour of training, users can be using TraderDirect and seeing direct benefits from their usage. Salespeople and traders are able to quickly master the tool and do not feel threatened or overwhelmed.

3. TraderDirect is fully customized for each company and each user. Product definitions, product offerings, e-mails, faxes and web pages are all customized to match each company's business requirements. TraderDirect can be implemented to work seamlessly with your existing website.

4. TraderDirect generates sales and improves communications. We are very proud of our success rate in this regard - every single regular user of TraderDirect has captured new business, improved margins, or obtained positive customer feedback in one week or less. We can show you specifically how by using TraderDirect, you can improve your gross margins and obtain incremental new business while improving how you communicate with your trading partners.

How does your product help lumber traders/salespeople do their jobs?

TraderDirect is a very effective tool for getting information in front of your customers quickly and efficiently. Depending on their needs and selling style, people and organizations use the tool in different ways. A common scenario is somebody's business follows the 80-20 rule; eighty percent of sales come from 20% of the customers. In this case, people will use TraderDirect to quickly provide information to the 80% of their customers they may not regularly be speaking with. Not only does the customer feel more informed, the salesperson knows instantly who and when their customers have seen their offerings.

Who is a typical customer?

Our current customers include producers, wholesalers, and distributors of lumber, plywood, general building materials, logs, and other commodity items. Given the flexibility of TraderDirect, users can customize how they use the software to their particular needs. For example, producers use TraderDirect to keep current prices and inventory in front of their customers. Wholesalers and distributors use TraderDirect as a service tool to communicate availability, specials, and market conditions to their trading partners.

Given all the hype and false promises of the last two years, why should anyone be interested in your product?

TraderDirect is a proven tool that can improve the efficiency of your sales floor, keep information consistently in front of your customers, allow you to diversify your client base, gain higher margins on products, and do more work in less time. Equally important, TraderDirect will not alienate your sales floor or require you to change the way you buy and sell lumber.


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