Republic: Daring to be different

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Republic
Rotem (right) and Efi Eylor of Republic present Pure SPC Max at an NFA meeting.

By Steven Feldman Commerce, Calif.—Republic Floor has come a long way in six and a half years. What started in 2015 with a $2.5 million investment has grown into a company that will push $150 million this year. And that’s just the beginning, according to Rotem Eylor, CEO.

Republic launched as a laminate supplier, but the company hit another gear about four years ago when it got into the SPC/rigid category. We had three displays of 14 colors each,” Eylor said. “Our sales that year were probably between $30 and $40 million.”

Today, Republic sells a little more than 300 SKUs, half of which is SPC at 60% of sales, with laminate about 25%-30% of sales and wood accounting for the remainder. Business last year increased 50%, he said.

Not many companies can grow this much this fast. But Republic is different—and relentless in its approach to gaining market share. “We gain more dealers every year, and the dealers we have increase their business with us,” Eylor said. “We work in parallel ways. One is getting new accounts, such as the NFA. Then you have existing accounts—in every dealer we’re in, I want to get 80%, 90% of the business.”

So, what makes Republic different than other manufacturers? Following are 15 factors.

Unlike many, Republic is in a strong inventory position

“Inventory is a lot of money,” Eylor said. “Part of our business model is to have duplication of material in every warehouse we operate. Everywhere I’m opening, I have the same 300 colors in stock. I’m even keeping a minimum 20,000 square feet of the worst color I have. You’re talking almost $100 million of inventory. We keep three months of inventory. Most companies work on two weeks of inventory. That means if a port shuts down, like in 2015, others are running out of inventory in two weeks while I have three months. On top of that, I have duplication of material in all warehouses. So, I have three more months of inventory that I’m pulling. We do that now. The retailer doesn’t know. For him, it’s a transparent process. But I have about six months of inventory sitting in the U.S. without any problem. On top of that, we have the commitment with ocean liners. Also, I’m bringing the containers directly from the port. Furthermore, I own my own container chassis. On top of that, those are my drivers. This is our biggest differentiator: It’s not only the tens of millions of dollars to build this kind of logistics system; people don’t know how. Even if I give you the money, you don’t know how to build it. We have the know-how where to put the money.”

Republic bills itself as a logistics company that happens to sell floors

RepublicEylor’s background is in logistics. “Logistics is No. 1; product is No. 2. What good is it if you only have product? Why would you put your future in the hands of somebody else? I trust myself. I know how to do it. So, the logistics arm is helping us grow.”

Republic does everything direct. “We’ve even done deals with the ocean line companies, not with freight forwarders. We don’t use third-party companies to bring containers from the port. Every company, even Costco, uses a third party to bring containers from the port. The reason is because the ports are federal, and you need to have special licenses and special trucks with special green emissions and special insurance; it’s very complicated. That’s why companies use a third party. Every location we have, we use our own trucks or trailers. We have more than 60 trucks. We bought our own chassis because the port doesn’t have chassis. I don’t want to be dependent on a third-party that has their own agenda to bring containers to another importer. This is why we are good on inventory.”

Republic controls its own destiny

Aside from controlling logistics, Republic controls its manufacturing. It designs its own papers, but even before it imports its own raw materials from the Middle East to China. “So, we’re controlling the raw materials. We’re designing our own papers, we’re manufacturing, we’re exporting ourselves. So, anywhere from manufacturing, importing, bringing containers from the port and having owned distribution centers, we do everything direct. We’re changing the paradigm.”

Perfection before expansion

“I want to make sure that whenever we are doing something, we are mastering it and we become No. 1,” Eylor said. “We don’t move on until we do that. We started with laminate; we became the kings of laminate in California. We had the largest number of SKUs, the best patterns. We have triple moisture protection. Then we moved on to SPC. We made sure we’re the master of SPC. When we got to that point, we started to do wood.”

Republic locked into container commitments

RepublicContainers are owned by the ocean liners, but Republic owns its chasses. “Two years ago, we made the direct commitment with the ocean line companies for ‘X’ amount of containers. Whether we use them or not, we’re paying for them. We didn’t lock the price, but we locked the commitment for space on the ship. Today, the reason companies in every industry don’t get containers is because there’s a bidding war. If a container comes to the port, and this company is paying $9,000 and yours is paying $8,000, they’re going to take the $9,000 even if your container is going to sit on the dock for one or two months. I saw cases where containers were sitting on the dock for three and four months. This is why dealers must understand they cannot rely on small, no-name companies because [those companies] need to make it cheap, so they need to pay cheap prices for freight. I see the influx of business we’ve gotten in the last few months from those accounts. Suddenly, they don’t have material.”

Dedicated display installation crews

Republic has an entire operation in each location dedicated exclusively to display installations. “In each location, we have two or three installation crews in an assembly department. It’s a whole separate department—their own vans, their own trucks. They go and they install. And we also have a display installation coordinator in the office.”

Republic is a very well capitalized company

Republic is self-financed and not leveraged in any way, Eylor said. “We started with $2.5 million and basically grew the business. We don’t take profits, we just reinvest—in our people, in anything that we do. We take our products and perfect them. For instance, we take a line that was just a micro-bevel or square edge; now, we make it painted. Now it’s selling well. And we never increase the price. We just want the customer to have better value. That’s the difference between us and other companies. We’re using our money to give a better value to our customers in every possible way.

Service is king

RepublicRepublic currently owns and operates nine warehouses with another three opening before the end of 2021. “We already opened in Utah and Phoenix this year,” Eylor said. “We’ll be opening in Dallas, Miami and Boise within the next six months. That’s five centers in one year. How many companies are doing that? We had a target to have 20-plus distribution hubs and cover the entire U.S. within seven years of launching the company.”

In areas where Republic doesn’t have a distribution center, it works with many freight forwarders or trucking companies. “Every area has its own specialty company that may provide better service. And we make it easy for the retailer by giving them a price list that is landed. It doesn’t matter if they order 200 square feet or 5,000 square feet. They don’t need to add the drop fee for freight. That’s why we gain market share in places where we don’t have distribution centers. As we grow, we will have more distribution centers closer to the East Coast. That will cut delivery time and provide even better service.”

Quality to the core

“We have a patented core that is significantly more stable than any core on the market,” Eylor said. “Most products use limestone, which is a very soft stone. People use it because it’s available in China. It’s cheap. Normally, they’ll do 50% limestone and 50% plastic. Today, because of tariffs and prices going up, there is a race to the bottom. There are a lot of importers out there today; they’re not manufacturers. And they don’t care what goes into their material. Many times, even though it’s supposed to be 50% stone powders, 50% plastic, I see cores that have maybe 10% or 20% stone powder in it. And the rest is not even plastic. Some use plastic replacements, which is cheaper than plastic. It’s no wonder there are so many claims in the market and so many things going wrong.”

No cutting corners

Republic takes pride in doing things right. “We’re not a price point company,” Eylor said. “We’re a value company. There is a huge difference between the two. We’re not the cheapest on the market, but the value I’m going to give the dealer—I’m going to charge the dealer, for instance, $0.30 more than a low-end company, but that $0.30 really equals maybe $1.20, $1.30 if you were going to import yourself.

“We are educating the dealers. Before we sell anything, I tell my reps, ‘I don’t want you to sell anything. I want you to first educate your customers. What do they buy from us, what do they buy from the market?’ First, let them understand. Maybe it’s not the right time for them to start buying from us. Because if you don’t understand what you’re buying, and you are paying more for that, why would you buy? Once you understand then you buy.”

Everything is stable

Eylor said Republic will not make material if it’s not stable or if he expects to get claims on it. “For instance, I’m getting a lot of calls from my reps who say we must compete with others that are importing a 3.2mm click. There is no stable product that is 3.2mm. The click breaks in a second, the material is [expanding and contracting] in heat and cold. If you have a separation issue in a thin product, it’s a disaster. Everything we do is between 5mm and 8 mm. We can do more than 8mm, but that is a niche market. Over 8mm, I don’t see a lot of demand.”

Focus on quality

Eylor said Republic’s aims ratio is less than 0.00001 while the average industry-wide is 3% to 6%. Why? “It’s not only our manufacturing. We have a design center in China with 25 employees. They’re designing papers. The other 20 are quality control. We use a very limited number of factories. By the way, that’s also part of the business model: Every factory we do business with, we’re at least 50% of manufacturing capacity we control the factory and get 100% priority. At every factory, we have three to four of our own quality control people in all the lines. Every month, from each factory, we have at least five to six containers that are vetted out. So, they’re not even being shipped from the factory to us. If it’s a problem in the dye lot, the click or whatever, they’re being left in the factory and not being shipped. We have so many stops along the way that we’re checking the material. When it’s a transparent process to the retailer, the retailer gets good quality because we have a lot of stops along the way.”

Republic doesn’t charge for samples

“This is the fastest way of growing, but we’re not giving the line to every man and his dog,” Eylor explained. “We’re giving it to dealers who can commit and we believe can give us good business. We’re in specific places. It’s not only the sample cost. It’s the samples and the installation crews and the trucks. The whole system around it costs money. But I see it as marketing money.”

The Müller Graff engineered wood story

“This factory is 150 years old—it’s older than any other factory in the world,” Eylor said. “They’re the most experienced in the world at making wood floors. Next, all planks are 71⁄2feet long, all AB grade, very clean. You don’t have random lengths. When you buy flooring from others, it’s all random length. Why? Because they use all the pieces in the wood. They use the chunks and the leftovers. Everything is made in Europe with the Välinge 5G click, so you can float it, glue it down or staple it. Also, the glues that have been used are low VOC; the EU is more strict.”

Retailers can make margin with this product

Built-in features such as Valinge 5G allow retailers to charge more compared to some imports from Asia. “A retailer can buy both products for the same price, but they can make at least a dollar more per square foot on ours,” Eylor said. “You explain to the customer, ‘This is $6, this is $7.’ When you tell the story, it’s a no brainer for the customer. This is the value we’re selling. That’s why I’m saying we’re a value company. We must have a story behind it. You need to have a value proposition behind it. We’re doing things the right way. We’re building a story, we’re building real value behind our products and behind the system. We’re building the right foundations behind everything we do.”

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June 21/28, 2021

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