175. Simplifying Material Purchasing With Janna Colucci

Welcome to another episode of Professional Builder's Secrets. In this episode I interview Gianna Kaluchi from Bundl. Jana and her team are focused on making the journey of designing a home more efficient and transparent. They use real time technology to streamline material selections and pricing for clients. By integrating live data sources from platforms such as Home Depot, they're changing the way builders and homeowners collaborate, balancing customization with simplicity and improving the entire client experience. Keep listening to discover how you can save time and money with material selections while also improving the experience for your clients. This episode of Professional Builder Secrets is brought to you by Apparatus Contractor Services. Apparatus provides full scope end to end QuickBooks, Precision Construction accounting and CFO services for residential builders. If you feel like you can't completely trust your weekly and monthly financial reports or you feel like you're flying blind, Apparatus Route will rebuild and operate your QuickBooks accounting system and give you precision construction accounting capability you can trust. Learn more@apparatusteam.com or on the APB Rewards Partner Directory.

One other trend that's interesting that we've seen across a variety of builders and I think as a kind of tailwind of COVID is homeowners purchasing some of the materials directly. That's also counter kind of the fixed price contract and I don't know if I'd recommend this approach, but we see homeowners often purchasing appliances and kind of getting into that side of things and so there's a piece of that in our homeowner portal as well that really gives the homeowner more ability to be involved in this purchasing process.

Welcome to Professional Builder Secrets, the podcast for building company owners wanting to grow safely and securely. I'm your host Will Blunt and today I'm joined by Janna Colucci. Jana, welcome to the show.

Thanks. Great to be here.

Really excited to have you on today. To kick things off, do you want to start with a bit of a background on what you do and what your company does as well?

Definitely. So I'm the CEO and co founder of Bundl, which is a digital procurement platform that makes it easier to buy, sell and manage building materials. I'm sure we'll get into that a little bit more, but a little bit about my background. I actually started my career in the green building space and then spent some time in healthy buildings. Really more on the commercial side of building. Spent a good amount of time in New York working on tenant improvement projects, commercial build outs really trying to bring innovation, health, sustainability to the built environment through that process. Very much saw how Antiquated and fragmented. A lot of the processes are that we use in, in construction, kind of long story short. Ended up spending a couple years in business school working for a modular construction company. Some more boots on the ground experience through that. Really seeing the opportunity to rethink how materials purchasing and generally procurement happens on job sites with designers in the home building space and have now been building bundle for about three and a half years, really addressing that bigger picture piece of the puzzle.

Interesting. So you, your background in sustainability and working in green building, has that played into how bundles run?

Definitely. I think really at the core of everything that we're doing is trying to have a downstream impact on how buildings are built. And I think there's a lot of things, you know, sustainability and environmental impact being a big piece of that, the health and sort of wellness of real estate and what that looks like for people who are spending oftentimes more than 90% of their time inside, as well as the housing shortages and supply issues and all those great things. So I would say lots of different factors that tie into sort of our greater mission with bundle, which is that we can create a better, more cost effective, faster process that unlocks a lot of those things, reduces barriers when you're trying to find greener products to use in projects or you know, just helps us build faster and really address some of the housing shortage issues that we see really well across the US, across the world today. So lots of things that we do there more specifically we often get into looking at, you know, what does that from a construction waste perspective. If we have better transparency into what we're ordering and what that what comes downstream and eventually gets delivered and not returned and things like that. So some fun metrics that we've pulled together on how much embodied carbon and all sorts of things like that that we're saving. But really at our core is how do we rethink how this somewhat old school industry process happens or plays out to really build better buildings at the end of the day?

Yeah, you guys have had some crazy data actually on materials and everything, like definitely. So talk to me about that material selection process for residential builders and how that's evolved over time and where you're seeing it today.

Yeah, definitely. I can even start in thinking of how it's evolved for us as a business. We really started first as this procurement tool, bid process. How are we ordering products, how are we tracking them? And there's been so much demand amongst our customers for really rethinking how material selections, options, selections, upgrades, all happen with customers. And really a couple of different reasons for that. First is that we are seeing this evolution toward technology. A lot of the home buyers of today are used to shopping on Amazon and E Commerce and kind of have the world as their oyster in terms of research they're doing, but also trying to compete with builders. Many of our customers on price are thinking that they could do a better job on that. And so what's typically a process that involves a trip to a design center, maybe a couple hours spent with a designer or your builder picking from a preset standard set of options, or going out to different showrooms and making selections there, and then tracking all of that in a spreadsheet and eventually ordering has kind of become this blown up process that homeowners want to be more involved in and want more time to do. And that can be really challenging for builders who are, you know, trying to keep to a process, maybe have limited salespeople who are not selling and instead being pulled into this back and forth on the selections process. So definitely have seen a lot of evolution there, especially with the Internet being a dangerous tool that homeowners have.

Yeah, I just think about the way my wife goes about purchasing anything. She'll find exactly what she wants, and then she'll go and find either the equivalent on Amazon because she's a prime member, or find it on Amazon at a cheaper rate. Right. So builders are dealing with that kind of process for buying things. So how can builders work with customers during that design and material selection process to manage that better?

Yeah, the biggest thing that we've seen, maybe as a critique of the builder experience, is homeowners not feeling like they have enough time to explore options and maybe even what you're saying, you know, your wife wants to go then search on Amazon, kind of see what other options are out there, what's. What's available. I was just talking to a builder this morning and just really getting into this, like, how long it can take to even pick a countertop. And it's like, all right, how are you? How are you working with all the customers that you have and really streamlining that process. And so with that, I think giving tools to the homeowner to be able to even come to a design meeting, having thought through some of those options is huge. And so having that ability to shop around, whether it's from your preset kind of set of materials or, you know, coming with design board of sorts, that you can actually walk into that design meeting and from the builder side, actually guide that homeowner through and have a more productive meeting. The other thing that we've seen that's worked really, really well, we have a customer that we work with who has taken the approach and we've seen this done in quite a, quite a few ways of basically saying, all right, here is our standard option that isn't necessarily specific down to a model number. You know, let's say you want a French door refrigerator. That doesn't mean that you've locked into this manufacturer, this model number give the builder that flexibility to kind of make it happen. But that really streamlines the process as far as getting data and pricing and all that information. And I would say a lot of this you can do in bundle, even if you want to get down to the model number and sort of level manufacturer. But having those levels and tiers that you set with flexibility within that can go a long way in really speeding up the process while also giving the homeowner a lot of power in terms of decision making and choosing really what they want in their home.

Yeah, I mean, I guess on the surface it feels like you are opening a can of worms to a certain extent with the sales process, which can, in our experience, the more the builder can control that process and move it in the right direction, it's going to be better for their margins, going to be better for the way they can close those high, high margin contracts as well. So how do they balance that choice for the customer but also controlling the process still?

Yeah, definitely. I think coming back to that time, another example of a builder who described this as the experience he's trying to give his homeowners. They were spending, I think their salesperson, they had one salesperson, and they were spending about a week going through the selections process with their customers, which obviously that's time that they're not selling more homes or, you know, more starting more housing starts and so really limiting how fast their business can grow. And with that, he was like, how do I give a homeowner the experience of waking up Sunday morning, being in their pajamas, coming downstairs, grabbing their coffee, and being able to be in a pretty immersive experience and make these selections on their own time and chat with their spouse or their family and really lean into kind of the emotional side of what a home is? And so really utilizing tools that can give this experience is huge. We obviously at Bundle think that we've set up a system that can do some of this, but even before that, we've seen some really good tools that builders of ours are using. BuilderTrend has a selections tool that is a fairly manual process on the builder side. But once you have some of those things set up, you can send those options out to your customers, really let them play around and see what that looks like. You can set allowances and sort of get into even some of the budgeting little bit different. I know we could talk fixed price, cost, plus kind of what a contract looks like. But even with that, lots of different configurations that you can have. House Pro is another one. That somewhat manual process in that you aren't also necessarily ordering through that system, but it gives you the ability or tool to put those selections or your design center essentially into a digital version and send that out to your customer. I do think that still opens up. There's still the can of worms that, you know, is that really delivering to your customer the full suite of, you know, anything they want they could have? That's really where we come in. Because I think we've optimized a system that we take on not only that selections process, but also the purchasing for you. And we really facilitate that process. And so you can actually give the homeowner the world as their oyster to pick what they want. And you don't have to deal with the back end figuring out suppliers that sell that, tracking if the data is still good. If things are discontinued, you can basically pass that into our system. Everything happens in the same portal. That makes that whole process easier. So basically still giving that homeowner anything they want in terms of variety, but not causing you additional headaches on a job site or with your team.

A couple of questions have come up there. We'll come back to fixed price contracts in a moment because you mentioned them. One thing that came to mind when you're talking about those project management software, how do you integrate with those? Because I guess from a builder's perspective, they might be thinking, you know, it's a bit easier just to have everything in one place. Yeah. So how does Bundle integrate with, you know, the builder trends of the world and other software?

Yeah, definitely. We have lots of builders that use more of a traditional project management tool. We don't think of ourselves as managing anything outside of materials procurement right now. So it's a great, great question that's always top of mind for us. Really what we see is that we're pulling pieces of your typical project management process, so that being your schedule and then what those items are that you're ordering and actually pulling them into. We actually initially were trying to borrow other option selection tools and that they do Exist had been not getting the information that we wanted to through some of the project management tools and ended up actually capturing that as more of the end to end experience of procurement. So have a homeowner portal that where they can come in, invite anyone they want to make those different selections. One other trend that's interesting that we've seen across a variety of builders and I think is a kind of tailwind of COVID is homeowners purchasing some of the materials directly. That's also counter kind of the fixed price contract. And I don't know if I'd recommend this approach, but we see homeowners, homeowners often purchasing appliances and kind of getting into that side of things. And so there's a piece of that in our homeowner portal as well that really gives the homeowner more ability to be involved in this purchasing process as it relates to what they're accessing about, what's being ordered for their project. But even downstream, how they can process warranties and things like that is definitely a piece of the puzzle as well.

Yeah, that's a really challenge. That's a big challenge for builders actually everywhere that we operate because they might be like, oh, I found these windows that I want which are, you know, they think it's, you know, exactly what they want or it's more cost effective or something like that. And then they try. So the builders are trying to juggle all of these different suppliers and providers and they've got to guarantee quality and like installation and all these different things as well, as well as factoring that into, you know, potentially a fixed price contract. It's quite challenging to do and it can lead to a lot of customer issues.

Yeah, definitely. And windows and some of those more kind of custom products can be, can be very tricky for sure. I think with the fixed price contract you may have more specific questions about this, but I was just talking to a builder yesterday and I think really having a good estimating tool, having a good sense of what prices are obviously upfront, to be able to lock in what those selections are to your customer is huge. But still being able to have upgrades, you know, that can layer on top of that fixed price contract potentially. But even more than that, I think the way that we think about it at bundle is can we give you a lot of functionality with allowances? Because the reality is that a homeowner may want, you know, an amazing kitchen and they may want to go really lean in and pay more for that, but you know, they're willing to compromise on their bathrooms and almost giving them a tool that allows them to play around and have ownership over some of that can still help you under that fixed price contract and not cause any issues on your end, but still make them feel like, you know, they really got to optimize or even customize what they're building in a not fully custom home, even.

Yeah. So let's talk about fixed price contracts then, I guess that process of selection. At what stage in the sales process are you handing over the reins to the customer? Say, for example, to use bundle and go through and start selecting some materials and picking the things they want. And what are the customers seeing? Are they seeing all the prices? Are they seeing the model numbers, all that kind of stuff?

Yeah, we see all of this done in a lot of different ways. And so our tool has really leaned into giving the builder the utmost flexibility in what they want to show the customer. I would say typically there's some sense of direction that customer is going in terms of look and feel of a home. Any sort of floor plan, kind of physical design, core and shell envelope of the space has been defined. We're typically not doing that through our system. It's a little bit more of the kind of finish, fix and finish section of the process. With that, however, you can pre configure these different selections and options that you then send out and can make that as granular as, you know, pick looks and feels and sort of compare assemblies or packages of products together down to. All right, let's pick which faucet we want and put those up against each other. Have all that flexibility. But even more to what you were asking, typically we're sharing that without model number. That's kind of the one take that we've had. It's even these days, it's very easy to reverse image search or search names of things. So it's getting harder and harder to completely remove information from the customer. But typically we. We take out that model number and then we give flexibility or optionality for the builder themselves to share with pricing, without pricing, obviously with markup, if they want that and with that, if they want to share allowances and sort of give the homeowner the ability to pick and choose and almost figure out their own budget in a way, but obviously set all of those things on their end. So lots of different options there. We see them used, see both options used, and just different systems or processes happening there. A little bit different. Obviously, if you're working with a designer versus not if it's a fully custom home or not, but with so much variety in how the process is run and really try to create a system that's very simple and easy to use, but also configurable by the builder.

Yeah, I think we discussed this in our pre interview chat. If you've got a customer that's reverse image searching a model number to try and call you out on the price, I think you've running into other issues. Might be a red flag on the customer.

Yeah, definitely. Actually it's interesting. One of the newest features in Bundle is a live feed From Home Depot, Build.com, lowe's, a bunch of other websites. That is not pro pricing. So it gives you a data point for what your customer will be seeing if they are searching the web. Which actually was kind of a value add that we created on the builder front and just sort of understanding of comparing prices, running your bid process, all of that. But it's been super helpful in this selections conversation where builders can use that as a data point as to what the homeowners would be seeing if they were to bid this out themselves, if you will. So that's been an interesting kind of value add of that feature with real time data. So you're constantly seeing what that looks like.

So just to go into a bit more detail around that process, what you're saying is that the contract could already be agreed upon and then the selection process for the finishes, like the faucets and stuff like you mentioned, that could come a later stage and therefore the builder might be able to select, you know, within the budget we've already agreed on. These are the five different options you've got kind of thing.

Yep, exactly. And that can take a little bit of upfront work. But what's great about building homes is that there's often some standardization of floor plans or looks and feels and designs that you can create some templates and sort of pre configure a lot of this that then you can use with a variety of different customers. Even if you know that look and feel from the beginning is change or floor plan is changing slightly, I would say different from, you know, a fully custom full big commercial project that that doesn't quite operate in the same way. You can definitely really manage the process that way, even with that fixed price contract. And one of our builders I was talking to was just describing great system in place. They structure everything with that as. All right, here are the options that we've selected for you that fit into that price range and then anything that's above that, you're just seeing that as the add or upgrade option that then layers on top of of that fixed price contract. So again, giving flexibility, but in a tool that's managing all that in one place, you can kind of do that in a spreadsheet. Right. But it's hard to know what you're actually going to pay at the end of the day. And all of that, when you've configured that and can compare across an entire home where you've decided to upgrade or even deduct certain things, you can really sort of optimize and play around with getting to that, that right price that was in the existing contract.

Do you see builders bringing the customer in even earlier in the journey, like pre kind of when they're quoting up the whole project?

For sure. I would say this definitely. Well, it's a slippery slope. I think smaller builders tend to. When this was one of my things that I faced so much working even in a modular builder where everything was like, all right, we're going to standardize everything. We're building things in a factory. There's a couple things you can pick and choose, but let's make it as streamlined as possible. And I think earlier days or smaller days, you get pulled into customization. And I'd say even with our builders that have a fully customized or a fully standardized process, here is our design library. Here is our catalog pick from this, there's always a mantle or, you know, some sort of light fixture that a customer is trying to pull in. And so with that, having a little bit of flexibility in that I think is maybe necessary evil. We've seen some builders who really stay true to just everything from this catalog. But I think there's, there's definitely exceptions to a lot of the, even the most standardized builders, especially when you are a smaller builder and wanting to win business and deliver as much of a great customer experience as you can. I think that is a trade off that we hear from a lot of our builders, which is that part of our brand and what we're delivering that a production builder isn't, Is this hands on, really personalized approach? And so that begs the question, how do you do that? And it kind of gets back to our earlier question, but how do you do that while still be able to grow and scale your business? And I would say having some tools that really help you streamline the process can kind of give you the best of both. Both worlds.

Yeah. There is a big portion of our audience and listeners that work at that luxury end of the town right when they're building homes. And so they're typically more custom. But that's not to say, I mean, you've still got a list of options that you go to. Right. For most of your materials, there might be the odd, you know, exception to that, but for the most part you're going to have, you know, a list to go to.

Definitely. And I think, I mean, the thing we haven't quite gotten into is the pricing of these products. Right. If you're able to standardize whether you're buying in bulk or have those supplier relationships, that can go a long way in terms of price and margin. On the builder side, it actually gets into our name. Bundle is kind of goes beyond just being a workflow tool on the procurement side, but we work a little bit like a buying group in terms of bundling together, aggregating together small and medium projects to get you access further up the supply chain. And that's where you can kind of have the best of both worlds in using the tools. Unlike a buying group, we're not locking you into our couple vendors or couple brands that we're working with. So you may not have the craziest amount of savings that you would if you're just locking into one brand, but you can give your homeowners more of this flexibility and still get the benefit of rebates and trackless data and simplicity of kind of supplier relationships and that sort of thing. Which obviously is another piece of the puzzle in just thinking about cost, even beyond kind of the workflow piece of ordering one off products that you haven't sourced before.

So that's the main difference between bundle and a traditional buying group. You've just got more breadth of brands and options. But the, I guess the discount wouldn't be as significant.

Yeah, and it could be as significant, right. Kind of depends on what the product is. We like to think of ourselves as being your kind of outsourced purchasing team if you need that. If you have a purchasing team, we're a tool that helps you to optimize how your managing those supplier relationships and really running that entire process. But with that, we're either pre negotiating with our vendors, you know, saying this is what we're looking at spend wise in the coming months and coming year, really setting up some of that standardized pricing similar to what a buying group would be doing. But you aren't limited by what you select. In our system, we have a chrome extension. You can scrape anything you find on the web into our system and that will get added into our catalog and sourced through our Suppliers. We also now have a bunch of different ways that you can add products into the system that are doing something similar. They're pulling from all different places on the Internet to get you anything that you find and want in the system. So we aren't locking you in at all. Quite the opposite. We're basically saying anything you need to purchase, get it through the system will streamline the process for you and also get you more buying power than you may have had on your own. And that goes beyond even just price. We often see, you know, maybe that's just getting you better return policies because we have more buying power, more direct relationships with manufacturers. You can message often through our system higher up in the supply chain than you would if you're going through more of a big box store. So it's giving you more of that leverage and buying power or just relationship than you would have otherwise, but not locking you into to certain brands.

Yeah, that makes a lot of sense. Where do you see material purchasing going next? What's going to happen in the next 12 to 24 months?

Yeah, it's a great question. I think there's always this ebb and flow of do we centralize purchasing completely? Do we not? And then the flip side of that also is we touched on this a little bit earlier, but does the homeowner even get involved in some of the purchasing? I think in a real kind of professionalized builder sense, you're not engaging the home. You know, if they want to buy appliances, that kind of breaks the model in some ways. It's into warranties and all of that. But it's been interesting to see customers sort of span this kind of on one end. Like, do we centralize everything, own everything, even purchasing from what our subs were doing, Treat them less turnkey, more labor only, all the way to, okay, do we own finished packages, but sort of outsource some of that to even our homeowners buying some of that. So it's an interesting process. Common theme through all of that, I think, is just more technology being used to manage the process. Traditionally, this is phone calls, emails, sometimes faxes, spreadsheets, and that's just to make the selections and sort of run the purchasing process downstream. It's then, all right, are we setting up payment terms with all these different vendors? I think the first phase was a lot of these vendors setting up e comm sites, whether that's available to the builder themselves or to to the homeowner. That was kind of the first pass. But in that case, you're often still having to log into 10 or 15 different sites to do any and all of your ordering. And so a lot of technology coming into to help with that process. I think the reality is a lot of the homeowners or home especially first time home buyers of today have grown up with a lot of this technology and are expecting again, like your wife, to go to Amazon and be able to get information and purchase quickly. But I think the other piece that we're seeing come in across everything that we're doing is the use of data. Obviously AI is coming in as a way to utilize data in an even smarter, faster, easier way. But even without that, for a builder being able to look at past purchase history, we've kind of seen a little bit of that when rebates come into play. But other than that, oftentimes starting a net new project, you almost start from scratch in some regards. And so really being able to use data to inform future purchasing, to estimate future jobs that can go anything from more accuracy to saving time in running through all different steps of the process. I expect to see even more and more of that, especially on, on the home, home building side.

Yeah, that makes a lot of sense. And I think it's the one thing I've taken away from all this. It's more the perception of choice for the customer, isn't it? Because the builder is still controlling the process and choosing what they see and all that kind of stuff. But if the customer feels like they're able to actually contribute and make a choice about what's going to be put into their home, it gives them a lot of just that feeling as if they're involved and they're confident with what's happening.

I would totally agree. I think being able to have that choice, understanding how to balance where and how time is spent and who's spending it. And it's the homeowner that wants to spend a ton of time doing all of this, giving them that experience, but minimizing the impact on the builder process. But also, I mean the reality, I was walking through an ADU big in California right now, basically our version of single family homes walking through an ADU and, and the homeowner was showing us around and they're basically like, we didn't want to do anything. Like we had to hire this builder, hired this designer to basically put the selections in front of us. We want a final approval essentially to know what's going in, but we don't need to be in that process or working and you know, busy with other things and so there's definitely also that homeowner experience too, where it's kind of like, all right, do you have a process that can cater to all of those different options and still give people what they want at the end of the day?

Yeah. Yeah, it's a good point. Bojana, thanks so much for coming on the show today. I've really enjoyed having a chat and learning more about what you guys are doing at Bundle. Best place to go for anyone that wants to find out more. Bundle build, is that right?

Yep. Bundle Build. Definitely. Let us know. Feel free to reach out to me as well. Jana, Build for any more information about our selection or option selection tool, any of our purchasing tools would be happy to tell you more about it.

And what geos do you serve just to. For anyone listening out there, it's just the US at the moment. Is that right?

Just the US at the moment? Yep.

Yeah, perfect.

But let us know. We're always, we're always staying apprised of where else where we could go next. But yeah, just across the US right now.

Now, of course. Perfect. Well, yeah, thanks for coming on the show. Is there any final advice you want to give to the builders listening out there?

I think there's a lot of opportunity there. There's a lot of opportunity to lean into really improving the homeowner experience. Like I said, I think people are so used to technology and apps and all sorts of things at this day and time. And there's definitely the customer that, you know, wants the touchy feely experience and to go into many different showrooms and pick and choose a lot of things, but people are busy. We're used to quickly swiping and doing all sorts of things. So definitely lean into where there's some cool, cool options of rendering. You know, I've seen all sorts of renderings and different things in real time that are just happening faster and bringing a really cool customer experience to the process without too much impact to your typical kind of tried and true process. So definitely stay apprised to what's coming down the pipeline on that.

Yeah, great advice. Lean into technology and definitely go check out Bundle for anyone listening. But Jana, thanks for coming on the show today. I really appreciate it.

Awesome. Well, thanks for having me.

No worries. A big thank you to our listeners as well, wherever you are in the world. If you like the show today, please subscribe to Professional Builders Secrets on your platform of choice. And if you're feeling generous, leave us a review. But until next time, have a great day.