Ace Hardware Corp. and OurHouse.com have announced plans to pump more than $100 million (US$) into a new joint e-commerce venture.
The two companies will launch a new Web site in November that will provide expert advice on how-to make home improvements and offer a selection of more than 22,000 products such as upscale decorative lighting and bathroom fixtures.
In an interview with the E-Commerce Times, OurHouse.com CEO Philip Airey talked about the new alliance that will give OurHouse.com access to Ace’s 1,000 vendors and its 17 distribution centers in North America.
“This exclusive relationship with Ace Hardware allows OurHouse.com to supply a broad selection to consumers and provide convenient in-store returns and services for items purchased online,” he explained.
Only The Beginning
Over the next 13 months, the number two hardware co-op in the U.S. will kick in $70 million while Evanston, Illinois-based Home.com will contribute $40 million. The advertising campaign will begin in December, but Airey said it is just the beginning.
“We plan to spend from $500 million to $900 million on joint marketing over the next five years,” he said.
For a 25 percent stake of OurHouse.com, Ace has invested $5.4 million. However, Airey revealed that OurHouse.com will secure an additional $20 million from two undisclosed venture capital firms within a week.
What’s In It For Ace?
Airey said that Ace Hardware’s 5,100 independent dealers stand to gain much from the partnership. “Local Ace retailers will benefit from increased foot traffic in their stores, new customer acquisitions, expanded product selection and service offerings.”
More than 2,000 dealers are projected to sign on to participate in the program by the time of the launch. Along with an individual Web site, dealers that meet certain criteria will receive an in-store kiosk by April 2000. Dealers will earn commissions from product sales generated from both kiosks and Web sites.
“They can also earn fees for delivering and assembling items that are ordered online,” Airey noted.
Industry observers feel that Ace’s partnership with Ourhouse.com is a timely move, considering the considerable competition that is coming from such warehouse rivals as The Home Depot and Lowe’s. They also believe that the partnership reflects a growing trend among brick-and-mortar companies to align themselves with a strong pure play e-tailer.
In a similar move earlier this year, independent office supply stores got an online boost when E-Commerce Industries, Inc. and United Stationers, Inc. formed an alliance, offering to build individual Web sites for independent mom-and-pop stationary stores.
About The Companies
Founded 75 years ago in Oak Brook, Illinois, Ace Hardware is a dealer-owned cooperative comprised of more than 5,100 independent Ace retailers in 62 countries. Ace’s 1998 wholesale sales reached $3 billion and retail sales topped $13 billion.
Founded in May of this year, OurHouse.com currently employs about 150 workers.