Diggerslist: A Benefit to Builders or Just another Craigslist?

By Bruce Erickson

11/03/2009

Got any extra 2x4s stashed in the rafters of your garage? What about that pile of left over cinder blocks? Up until now, getting rid of leftover construction materials wasn't worth the effort. But that is about to change. Recently, a new player showed up in the building materials sector under the name of Diggerslist. Created by co-founders Matt Knox and Johnnie Munger the site seeks to reduce the amount of construction materials going to landfills by creating a venue for builders, contractors and do-it-yourselfers to exchange the materials. So far, registration is free for both buyers and sellers. Like Craigslist, items are divided into several categories. The site also has the ability to post construction services and list projects being bid. This could turn out to be the best part of the website.

Currently, homeowners have been posting projects on Craigslist. Unfortunately, there are very few contractors who monitor Craigslist. Whereas, since Diggerslist was created just for contractors, the projects don't get lost in the noise. Registered users can sign up for alerts to be notified when the item they are looking for is posted. Contractors can also add a widget to their website that shows all the items they have listed on Diggerslist. The challenge for the administrators at Diggerslist is going to be what to do with all the non-construction related items that end up being listed. If left unchecked, they could lose their niche they are working so hard to create. For example, on the Raleigh site, there is currently a motorcycle and go cart listed.

Right now they operate in fifteen of the hottest markets in the US. There are plans to open new markets in the coming weeks. With around 4000 site visitors per day, the project is still in its infancy. But the potential and the need is there for this enterprise to grow. Similar to other social media, registered users can create connections to other users and even In addition, if you want instant access to new items being listed, you can follow them on Twitter.

Is Dollar General Ready for Prime Time, Again?

By Bruce Erickson, C.P.M.

November 3, 2009

Dollar General has announced an IPO due out in the next couple of weeks. The small box retail giant has been private since July of 2006 when an investment group bought the shares out. In order to raise capital to reduce debt, the firm is offering 22.7 million shares of stock to raise revenue. In addition, owners are selling 11.4 million shares of their own. It was interesting that in the prospectus they mentioned that DG had no dividend plans for the future. But they did declare a special dividend a couple months ago for over $263 million. At a sale price right about where they left off in 2007, the question is, is investing in Dollar General a good idea?

Considering that the economy has driven many to the dollar stores, it would seem like an opportune time. But there are two lingering concerns in the case of Dollar General. The transaction will create a half billion dollars in equity to pay down debt. But with $4.4 billion on the books, this doesn't get them out of the woods. With a debt to equity currently at 2.3, they are leveraged twice as much as competitor Family Dollar. The pickup form the new equity will only drop them to 1.6, better but still dependent on adding new stores which requires utilizing additional letters of credit.

Not mentioned in their prospectus is what they intend to do about their lagging information systems. Without an overarching ERP system to drive efficiencies in all operations, Dollar General relies on several management systems for individual operations. Although they have cracked the code on opening new stores quickly and efficiently, the store manager is still limited to a clipboard for many inventory management tasks. For more information on their information systems, download our full case study at http://bit.ly/16vDrg

Finally PMI Breaks the 50% Barrier

"Economic activity in the manufacturing sector expanded in August" for the first time in 18 months according to an ISM report on business. Good news for consumers who have been holding their breath so long their turning blue. PMI, the Purchasing Manager's Index hit 52.9% in August. 50% marks a manufacturing economy at break even. Finally, the economy is actually expanding. New orders are growing 9.6% faster than July and production has improved 4%. However, don't look for an immediate employment turnaround. Typically, employment rises several months after corrections in the PMI. August employment slowed but at a slower rate than July.

Think of manufacturing as a ship making a right turn. We need about five miles to make it happen. More good news includes a shortage of customer inventories and rising exports.

On the non-manufacturing side the market is still contracting at a slower rate indicating course correction in the right direction but still going the wrong way. The NMI (Non-Manufacturing Index) was at 48.4% in August up from 46.4% in July. The brightest spot is new export orders that actually expanded in August with an index of 54%. To read the whole report, go to ism.ws.