Who sets the benchmarks in e-commerce? The ones we watch most closely right now are publicly held Giants Beazer Homes and Del Webb Corp.
These big boys have bucks to spend on developing this rapidly evolving technology. And they’re all spending millions of dollars each year to find efficiencies on the business-to-business side, and to keep their Web sites humming with consumer contacts. When new things happen, they seem to show up on beazer.com or delwebb.com.
For instance, while Ryland and California’s William Lyon Homes have also done successful auctions through iBidCo.com, Beazer made the biggest splash with a recent sellout of a 30-home subdivision in Sacramento, at $15,000 per home over posted prices. That success is likely to boost iBidCo to a premium position among housing dot-coms.
“The auction approach is not going to work everywhere, but for grand openings in a hot market, there is some urgency in that sales format,” says Beazer’s e-commerce guru Peter Simons. “It creates anxiety among online shoppers that they could miss the opportunity.”
Like any grand opening event, an online auction has to be carefully planned and promoted, says Simons. “We did some marketing to get people visiting our site for an ‘online sales event,’ but we didn’t call it an auction. If we didn’t get our projected prices, we would have just gone ahead with a conventional grand opening. Still, we slammed out 30 units with no models. Before year’s end we’ll do three more events.”
David Thikoll, of research giant The Meyers Group, says builders intrigued by Beazer’s success need to understand the limitations that apply. “Buyers need to have some knowledge of the site and neighborhood, as well as the product,” he says. “Auctions are not going to replace model homes and sales agents, but in certain situations—grand openings in hot markets, closeouts in aging projects, or a distressed project where the builder wants to get out—auctions can deliver real value.”
Simons notes that as many as half of the Sacramento buyers came from the high-tech environs of San Francisco Bay, signaling that online auctions may do better in high-tech markets. “The techie markets generate a disproportionate share of hits to our Web site,” he says. “Northern Virginia, Silicon Valley and Atlanta are the strongest.”
The other strength of iBidCo’s offer is that it allows builders to test the pricing and absorption assumptions on the front end of a development. “That’s a huge benefit,” says Simons. “Big builders have a hard time pricing a premium site well.”
On the B-to-B side, Beazer is going national with MH2 Technologies, after testing that firm’s hand-held scheduling devices for superintendents in Las Vegas and Dallas. “In the first three communities in Las Vegas, our cycle times dropped by three to 20 days using MH2 hand-helds,” says Simons.
Competing head-to-head with Beazer’s interactive “my beazer home.com,” Del Webb Corp. recently unveiled a whole new web site. Webb’s e-commerce kingpin Tom Lucas says the site will take Webb into “permissive e-marketing” (asking for an e-mail address to begin a dialogue).
“We purchased an e-mail marketing program called ‘Annuncio,’ says Lucas. “We’ll use it to greatest advantage in the portion of our site called ‘Build My Home On-line.’ In June, we’ll launch our design studio, which will allow visitors to the site to configure a home as a prospect right online. We’ll eventually take them all the way to a digital contract.”
Lucas believes that allowing prospects to configure a home online will increase the likelihood that Webb will be able to convert them when they actually visit a community. (Remember that Webb’s communities now often work with prospects for several years before converting them, because the prospects often live thousands of miles away.)
By July, Lucas plans to have the online capability to sell a home on the site. “We’ll allow them to pick a lot and go to a digital contract to reserve it with a $500 credit card transaction,” he says.
Webb is also about to sign a contract with Options On Line to facilitate its “design studio” that will take prospects through the options and color selections process. “We’ll be their first client to put all of that online, rather than just using their offering after contract,” says Lucas.
“We view this as having terrific ‘stickiness,’’ the ability to get people involved and moving toward contract even before they make a commitment to us. The further we get them into this process, the better our chances become.”
We also look for Del Webb to be knocking on iBidCo’s door about auctions, soon, because nothing that Beazer does escapes scrutiny from Del Webb.