- The topic of purchasing building materials may seem too dull to start a startup in it. Unless you know that the size of this market in 2023 amounted to $1.4 trillion and is projected to grow to $3.5 trillion by 2032 😉
- Moreover, this market is still poorly digitized. And this means that one can make huge profits by starting to offer their platform for purchasing building materials right now. At first glance, such a platform is just an ordinary marketplace.
- But it’s not that simple! The whole trick is in the additional functionality that will be added to this marketplace. By the way, the same applies to B2B marketplaces and other topics. And here are some options for what can be added to them:
Project Essence
Buildclub is a marketplace for construction materials. Its main offer is not just that you can find the necessary goods on it, but that the ordered items will be delivered by the marketplace’s delivery service on the same day.
The startup even promises that most items can be delivered in less than 2 hours!
You can order just one package or item—then the delivery will be made in a regular car for a price starting at $59. Or you can order a whole bunch of items—then a truck will arrive for a price starting at $180. And if it’s a medium-sized order, there are vans available for a price starting at $99.
The most popular product categories on the marketplace are finishing materials for walls, wooden beams and components, cement, concrete and bricks, plywood, particle board, and other cladding materials, insulation materials, and roof coverings.
The marketplace’s robots constantly scan suppliers’ websites to collect current prices and discounts—they currently update information on 15 million products from 225 stores in 14 cities where they operate every day.
The main audience of Buildclub consists of construction businesses, ranging from small construction teams to large construction companies. However, alongside them, individuals embarking on home renovations also use the marketplace’s services.
Small construction teams not only build and renovate themselves—they also have to go buy construction materials themselves. On average, they go shopping 6 times a week, which consumes 30% of their working time!
Buildclub helps them save this time, while also purchasing construction materials at the best prices available today.
Medium and large companies have separate individuals or even entire departments responsible for purchasing and delivering construction materials. Buildclub claims that by starting to use their marketplace services, almost all of these employees can be reduced.
Like most marketplaces, the startup earns commissions from sellers and from order deliveries.
The marketplace started operating in March 2021. By the summer of 2023, it had tripled its revenue to $3 million per year. By that time, a total of 10 thousand customers had used the marketplace’s services, and it operated only in one city—Palo Alto. In the same year, it began to expand to Miami, Boston, and Chicago.
In the current round, Buildclub raised $1.2 million in investments, increasing the total investment in the project to $5.8 million.
Something Interesting
Buildclub has an interesting feature that helps attract construction companies, which may then want to buy construction materials on their marketplace.
The startup offers construction companies the opportunity to sell their surplus construction materials through the same marketplace. All a construction company needs to do is send a list of items for sale with quantities and prices. If someone wants to buy something from this list, the marketplace will send a vehicle, pick up the goods, deliver them to the buyer, and transfer the money to the company.
The general principle is cool. If you want a customer to spend money (buy something on the marketplace), make sure they first earn it (sell something on the marketplace). I’m sure this approach can somehow be applied in other areas as well, so it’s worth taking note of.
A conceptually similar service was created by the British startup Snap-It, which I wrote about in October 2022—but they offered to deliver necessary materials for minor repairs to repairmen from nearby stores within 30 minutes using third-party couriers. The startup also explained the need for such a service because craftsmen are forced to spend a significant portion of their working time shopping in stores.
The startup raised £4.4 million in investments, but judging by the founder’s LinkedIn page, it closed in October 2023.
A possible reason for the startup’s closure is that the audience of repairmen willing to pay for urgent material delivery turned out to be insufficiently large and regular, and the hassle of using third-party couriers was too great.
The construction market seems to be a more regular market with much higher check sizes per order. And they can indeed save significant amounts on purchasing construction materials at good prices and optimizing logistics, including timely delivery of construction materials and optimizing their own warehouses.
The startup Kojo, which I wrote about in the fall of 2022, took the path of creating such a comprehensive solution. Their cloud service includes a warehouse management program, CRM for sending and tracking orders, and a marketplace for suppliers.
Kojo’s goal is to embed its platform into the business processes of construction companies, providing full control over the situation with construction materials from start to finish. Judging by the fact that they have already raised $83.6 million in investments, they are succeeding.
Even if we talk only about marketplaces, there are also such new solutions. For example, Ply, which I wrote about in the summer of 2023, created a marketplace where small companies can purchase materials for construction and renovation.
The feature is that the marketplace aggregates small orders from several companies into one large order, for which discounts from the supplier can be obtained—resulting in each company being able to purchase materials cheaper. This startup raised $5.7 million in investments.
The founder of today’s Buildclub says he is creating not a supplier of construction materials from the 1980s but a Silicon Valley startup aimed at solving the problem of delivering construction materials using modern technologies and quality customer support.
The point is that there are many large and conservative markets that seem too boring to most founders to start their startups in this area. However, these markets are ripe for accepting new digital solutions. And the more conservative the market, the usually bigger it is.
Therefore, there are founders who are not afraid of boring markets and go there with new digital platforms. For example, VendorPM, which I wrote about in August 2022, made a CRM with an integrated marketplace, with which property managers can find and control the work of contractors providing professional services for its maintenance (cleaning, repairs, etc.). This startup raised $26.1 million in investments. And this is just one example off the top of my head.
Where to Go
The general direction to move in, therefore, is towards boring, conservative markets. After all, what is the main task of a startup—to make a lot of money or to engage in interesting activities in a new field? 😉
The main principle of entering conservative markets is not to scare customers away with new tricks right away! At the first stage, you need to offer them platforms that allow them to save time and money on what they have long been doing the old-fashioned way—with papers, in Excel, manually, with calls and emails.
And only after you have transferred their old business processes to the new platform, can you carefully and gradually start offering them some new things.
What big, boring topics do you know? Which existing business processes can be digitized and optimized there? Will this lead to real savings? On what? How can you suggest they start implementing their platform without scaring them off with too much novelty and extra work?
Well, if there are no other ideas on this matter, then creating platforms for purchasing building materials, following the example of the mentioned today Buildclub, Ply, or Kojo—seems like a sufficiently boring topic to turn out to be a quite large market 😉
And indeed! The size of the construction materials market in 2023 amounted to nearly $1.4 trillion, and by 2032, it will grow to $3.52 trillion. A topic of this size probably doesn’t seem so boring after all? 😉
About the Company
Buildclub
Website: buildclub.com
Latest funding round: $1.2M, 22.01.2024
Total funding: $5.8M, rounds: 6