Dara spoke with us some years back on his previous venture. This time, he has switched from B2C to B2B and brings insights on the nuances of that sector.
Sramana Mitra: Let’s start by introducing our audience to yourself as well as to the new company that you’re doing.
Dara Greaney: I started LED Light Expert. This was based on the premise that LED lighting would be transformative of the lighting industry. It has that social benefit of reducing our energy impact. It has been a fun journey so far.
Sramana Mitra: Give us a little bit of metrics. How long back did you start this company? How far along are you?
Dara Greaney: We’re in our 5th year. We did about $11 million in sales last year. We specialize in larger commercial-scale lighting. We do full stadium light installations. We partner with local electricians and contractors to do the installation.
Sramana Mitra: How does that work? If you’re doing large-scale installations, does that mean that the business is a B2B business?
Dara Greaney: We’re largely B2B. We’re 70% B2B. It’s a different business than a lot of e-commerce businesses out there. It’s growing. A lot of B2B has moved online. It’s a nice space to be in.
Sramana Mitra: How do you sell? Do you sell through the installers or do you sell to the end customers?
Dara Greaney: Most of the projects are sold through installers. We have a big network of electricians and contractors who buy directly from us. We have some people who come to us directly. They buy direct and hire someone to install.
Sramana Mitra: How do you do customer acquisition?
Dara Greaney: It’s all online.
Sramana Mitra: Nothing is different, because it’s a B2B business.
Dara Greaney: Nothing has changed. We’re seeing a lot of people beginning their searches online. Even municipalities and government agencies are going online. We want to make sure that we’re there at the beginning of that process. It’s a little bit different than the direct B2C stuff where it’s very fast.
Sramana Mitra: What is your average deal size?
Dara Greaney: About $800 is our average order size.
Sramana Mitra: That’s not too bad. It’s not too large.
Dara Greaney: We sell to a lot of electricians for projects. Some of these owners are not going to replace all lights at once. We see a lot of people doing two to four lights at a time. Everyone buys in different ways.
Sramana Mitra: What is your inventory strategy?
Dara Greaney: That’s a tricky one. LEDs have a huge turnover rate. Everything I’m selling today didn’t exist two years ago. We know that we have to be pretty heavy on inventory. We do have millions of dollars in inventory.
We have a logistics strategy where we keep inventory. Inventory and logistics are big parts in this business. These lights are not small. You’ve to be able to put them on trucks and have a lot of flexibility in the logistics chain.
The biggest thing that I’ve experienced is just the change from B2C to B2B. A lot of the B2B traditional outlets are struggling too. Customers are turning online. Understanding how to service your B2B market is important. You have to be fairly aggressive on your acquisition strategy and acquiring those customers.
These electricians, if they like your product, will stick with you for a long time. We’ve also had to change our financing strategy. We’ve also had to offer net-60 financing terms. That’s something that impacts your cash flow and working capital situation.
This segment is part 1 in the series : Thought Leaders in E-Commerce: LED Light Expert CEO Dara Greaney