For the past five years, the most high profile technology companies in the remodeling industry have been Internet referral services. Starting with ImproveNet, then joined by remodel.com, Service Magic, Home Service Store, Contractor.com, and Handyman.com, there has been a major push toward using the Web to generate contractor leads.
Unfortunately, those Web-based businesses haven't had the same success that Realtor.com and Homebuilder.com have had in the real estate and home building markets, respectively. Realtor.com and Homebuilder.com have been able to sell home builders and real estate agents on the idea of listing homes for sale on the Internet. As a result, prospective buyers first use the Internet to determine where, and in what, they want to live. They then call real estate agents. Studies show that the Internet is having a big impact on the market. One indicates 46% of buyers use the Internet first; another indicates 55% do.
But the Internet revolution never spread over to remodeling. In fact, at this date, several contractor referral services have gone bankrupt. One reason: Many contractors and subcontractors are not at the technological level to make proper use of this type of service.
Tech already a major force
The failure of Internet referral services to play the major role in remodeling once anticipated for them doesn't mean that technology has no role in this industry. Far from it. Technology's been on the forefront since at least the mid-'80s, when 20/20 entered the market with a CAD program for kitchens.
At that time, The Home Depot was just starting to recognize the kitchen segment as a strategic market. To get a jump on their competition, the retailer purchased 20/20 programs for each of its stores. Other large companies, such as Lowe's and Menards, followed suit. Today, 20/20 has over 40,000 customers in the United States using their system and The Home Depot has over 25% of the kitchen remodeling business.
Another success story is QuickBooks Pro, the major job cost/accounting program for remodelers. In the past 10 to 15 years, more than 300,000 contractors of all types have bought QuickBooks Pro.
And yet another success: In 1992, a company called 3D Home came out with a $39 CAD program. In the first two years, more than 200,000 were sold, many to contractors. The company quickly saw the opportunity and launched Chief Architect for remodeling companies.
The power of technology
Of course there are a lot of failures, too. If you look carefully at the failures, it was almost always an inability to streamline the process, save time and/or money, or offer some specific advantage to the parties involved that caused the failure.
Consider the areas in remodeling where technology's been a success. Today, for instance, estimating -- with technology -- is five to 10 times faster than with pencil, and it's far easier to change products, update cost information, and develop the contract down to the finest detail.
Another example is CAD, which is fast, easy to use, and shows customers what the final product will look like.
In the near future, technology will dominate the marketplace. This is because the price savings on most aspects of technology are substantial, creating a monetary edge for those who embrace it. We can expect to see technology unfold, or develop further, in all areas of the industry.
Today's customers, particularly baby boomers, are demanding the use of technology in all aspects of remodeling. Manufacturers, retailers, home centers, lumberyards, and distributors are all going to be forced to use technology in transactions. The final element in this change is that contractors, handyman installers, and subcontractors must also use technology for the system to work.