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December 16, 2013

Suffield startup adopts online shopping for landscaping industry

Photo | Contributed Dan Degan, (right) co-founder of SHARKMARX, discusses his new online landscaping shopping tool with Mark Masseo, owner of Masseo Landscaping in New York.

Years ago, George Beiter and his business partner Dan Degan watched intently as Amazon revolutionized the traditional storefront, effectively changing the way consumers buy just about everything.

The advent of online shopping has changed many industries and now Beiter and Degan are hoping to do the same for the landscape product industry.

With a couple decades of landscaping and hardscaping industry experience between them, the duo launched a new startup in January called SHARKMARX, a cloud-based purchasing tool for the home improvement contracting industry.

The online marketplace connects buyers and sellers of landscape products by taking advantage of crowd sourcing and using a reverse auction concept to help contractors save on materials.

“I knew that Amazon wanted to get into this industry,” Beiter says, “but one of their obstacles was the freight and transportation. I had some experience working with a company doing online, reverse auctions. It was always in the back of my head. Turns out, that was the missing link for moving this industry into an e-commerce model.”

The products that move through the SHARKMARX platform can be extremely heavy; items such as a pallet of concrete pavers weigh more than a small car. Orders like this can't simply be shipped with UPS or FedEx. In fact, most 18-wheeler box trucks aren't equipped to handle the products bought and sold on SHARKMARX's online platform.

“They can handle actual weight, but not the offloading on a job site without a loading dock/ramp,” Beiter says. “The Amazon model typically cuts out or bypasses the local distributor while our model relies 100 percent on that local distributor's involvement and logistics arm. We draw from the local distributor's inventory and use them for the local logistics.”

Based in Suffield, SHARKMARX currently has more than 100 customers from New Hampshire to North Carolina and has earned $400,000 since January. The company was recently named a “Tech Company to Watch” by the Connecticut Technology Council.

The SHARKMARX system allows buyers (contractors) to post their material and product needs including specific product brands, colors, and sizes. Many products are pre-loaded and selected via drop-down menus. Alternatively, contractors can describe any product they want to purchase, including quantities, acceptable substitutes, and delivery requirements (date, address, trucking needs), auction/bid duration, and the maximum price they are willing to pay.

The service is free for buyers.

Sellers are automatically invited to bid on projects. The first seller bid must accept the buyer's maximum price or bid lower. Subsequent seller bids must beat the previous lead bid with a price reduction of 1 percent or more. The leading bidder at the end of this process is awarded the job.

SHARKMARX profits via two revenue streams — annual subscriptions of $99 and a 3 percent transaction fee — both derived from the seller.

Beiter said the online marketplace has saved buyers as much as 20 percent.

“It's significant when you are talking about saving $2,000 on a $15,000 order as a small business owner and getting the exact same, branded materials,” Beiter said.

Meanwhile, sellers benefit by reaching new customers in new markets, Beiter said.

SHARKMARX recently developed two new system features based on customer feedback — a public message board and a counter offer option. The message board allows buyers and sellers to communicate anonymously, allowing clarification on product questions and possible product substitution. The counter offer option allows sellers to submit a counter offer to buyers including a new price, delivery date, or product substitutions.

Beiter says SHARKMARX now hopes to expand its reach geographically and into other horizontal markets in the home improvement industry such as roofing, siding, and lumber.

As SHARKMARX tries to build brand trust, it plans to expand its business organically. Beiter predicts that as customers realize savings on their hardscape goods, they will want to earn similar savings on all their purchases. SHARKMARX has already begun to expand vertically with other products successfully completing auctions for ice-melt, heating oil and requests for lumber, equipment and fencing.

Over the next year, Beiter said he will try to secure financing so SHARKMARX can add sales reps and products, grow users, and integrate mobile technology into the platform.

John Lahtinen is a freelance writer/editor based in Farmington. Follow him on Twitter @johnlahtinen or connect with him on LinkedIn.

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