Build.com Inc., an online hardware and home improvement products supplier, has been in active discussion to acquire small appliances and web-only merchant Living Direct Inc., sources tell Internet Retailer, a sister publication of B2BecNews.

Living Direct founder and CEO Rick Lundbom says the two companies are not in talks and called any industry speculation incorrect. Build.com chief marketing officer Danielle Mohn says the company doesn’t comment on industry speculation.

But sources tell Internet Retailer that Build.com, which generated annual web sales of $525.0 million in 2014 and is No. 76 in the Internet Retailer 2015 Top 500 Guide, has been in serious discussion with Living Direct and that an agreement looked close as recently as of a few weeks ago.  “It’s either close to being done or talks fell through,” a source tells Internet Retailer. The Top 500 ranks companies on their annual web sales.

Based in Austin, Texas, Living Direct operates multiple e-commerce and mobile commerce sites such as LivingDirect.com, CompactAppliance.com, HotWaterSource.com, Kegerator.com, PortableAirShop.com, WinecoolerDirect.com, SimplyDehumidifiers.com and IceMakers.com, as well as other websites that target web shoppers looking for various small appliances looking to fill a particular room, niche or compact living space. Though it is not ranked in the current Top 500, Living Direct in recent years has generated annual web sales in the range of $65 million based on previous Top 500 listings.

Industry sources says Build.com was considering an acquisition of Living Direct as a way to add more niche products to Build.com’s portfolio of e-commerce sites, such as FaucetsDirect.com, and compete more effectively against bigger omnichannel hardware and home improvements retailers including The Home Depot Inc. and Lowes Cos. Inc.

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Of particular interest to Build.com was Living Direct’s online inventory of about 7,000 SKUs, some private-label products. “Build.com thinks they can grow that business,” a source who asked not to be identified tells B2BEcommerce World.

Hardware and home improvement was the fastest-growing merchandise category in the 2015 Top 500 Guide with collective web sales that increased 24.2% to $8.51 billion in 2014. But the category also is dominated by The Home Depot Inc.and Lowes which account for 59%, or $5.02 billion, of all sales in the category. In comparison Build.com’s 2014 web sales were $525.0 million.

Build.com’s parent company is British plumbing and heating products retailer and distributor Wolseley Plc with annual sales of around 12.8 billion pounds ($19.56 billion). 

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