Firm Footing in Service
One of the state’s fastest growing startups, South Cypress took its flooring business nationwide with e-commerce. A swank new showroom helps target the builder market.
While being an internet-based company allowed South Cypress to offer many products, its new showroom highlights flooring options in three dimensions.
Drew Goneke, founder and chief executive officer of residential and commercial flooring company South Cypress in Birmingham, grew up in the flooring business.
His grandfather, W.B. “Tommy” Humphreys, started working in flooring after returning from War World II. Goneke’s mother and father later took over Humphreys’ Mobile-based flooring company and still run the successful and popular Payless Carpets and Flooring.
Goneke didn’t intend to follow in their footsteps. “I was young, and I wanted to do something different than they had done. Make my own mark rather than just joining the family business,” he says.
But after attending the University of Alabama at Birmingham and playing baseball for the Blazers, at the age of 23 Goneke got the idea of starting an internet-based flooring business. Through the internet, Goneke believed he would be able to offer buyers a greater selection of quality tile, stone, glass, wood, laminate and vinyl floor coverings. “The internet was the attraction for me. The internet provided the opportunity to reach a much wider national market than a local flooring business,” Goneke says.
Goneke’s father thought his idea was a good one, and so his family invested $40,000 seed money into the enterprise, which kicked off in 2006. To begin with, Goneke worked with a partner who had the technical skills to help create the e-commerce retail-flooring site. “South Cypress has a completely different business model than my family’s business,” Goneke says. “The similarity was offering a maniacal focus on customer service.”
In the beginning Goneke brought the best national brands under the umbrella of his website, allowing customers to easily shop multiple brands, get excellent customer service over the phone and via internet and receive simplified delivery. The e-commerce site offered high-end products at good prices. “We wanted to make the entire process of shopping for flooring more pleasing and efficient,” Goneke says.
To improve on the value it offered customers, South Cypress created its own flooring line in 2012. “In essence we went to the flooring manufacturers and cherry picked their best products and began offering better prices under our own brand,” Goneke says. “We are able to feature great products without the added expense of marketing costs the major brands bear.”
That same year, Goneke paid off the investment his family had made in his company. “I was very fortunate they believed in me enough to invest in my idea. And they received a great return on their investment,” he says with pride.
Goneke’s family is understandably proud of his success. South Cypress was the only Birmingham company on the 2010 Inc. 500 list of the country’s fastest growing companies. “And I am now so proud to be the third generation in my family in flooring,” he says. “If it hadn’t been for my grandfather and my parents, I doubt I would be doing what I am doing now.”
He finds great inspiration in the story his grandmother told him about a year after he started his own business. When Humphreys returned to Jackson, Mississippi, in 1945 as a veteran with no job, he heard of an opening at a local flooring company, JB Stokes. The job sounded better to him than becoming a farmer. Humphreys had to compete with two other men for the flooring company job and each was told “All of you will be on the payroll for one week, and the best worker gets the job.”
Goneke’s grandmother told him with tears in her eyes: “And knowing your grandfather, you know who won the job, of course.”
Humphreys, who was known for his determination and work ethic, excelled in the flooring business, quickly moving up in the ranks. After several years he was transferred to Mobile, to run the company’s flooring branch there. He bought that store in 1952 and began to build his own business, Mobile Carpet & Draperies. The company kept going, even after a fire in 1978 and Hurricane Katrina in 2005. “I never thought too much about the history of my family’s business as a young man, but the older I get, I really appreciate all they went through and how they kept going,” Goneke says. “It’s deeply inspiring to me.”
Extreme emphasis on customer service is one hallmark that sets the company apart from a slew of other online flooring options. The online shoppers are sophisticated, with customers in New York, California and Texas recording the biggest hits. Sales staff spends one-on-one time with them on the phone, and valued repeat customers get a personalized video as part of the service.
But the next step in the company’s evolution called for more than video.
As Goneke’s business continued to grow after 2012, he and his managers saw the need for new capital investment in his company’s digital presence and to create a showroom. “While e-commerce is a great way to reach customers, we decided we also needed a showroom to engage our customers even more by providing them a creative space for inspiration,” Goneke says.
Birmingham-based venture capital company Fidelis Capital saw great potential for growth in South Cypress. At the time of its investment in the company in 2014, John Stein, co-founder of Fidelis Capital, was quoted in a press release saying: “South Cypress is an attractive option for both consumers and businesses that are in the market for flooring and tile products. With an impressive leadership team, a top-notch technical foundation, diverse product offering, and a unique customer service methodology, we believe South Cypress is well positioned to acquire a leadership position in the online flooring space and expand its reach in the B2B space. Our team is excited to dive in and support South Cypress during this next phase of growth.”
South Cypress saw a 40 percent increase in sales growth in 2015. While sales for 2016 have already outpaced 2015, Goneke expects the percent increase for 2016 will be more modest. “We have been actively shifting our focus this year, positioning the company for greater future growth,” he says.
Goneke’s team is currently trying to expand the business by more proactively reaching out to building trade professionals including architects, designers and contractors. “We are uniquely set up to be able to provide excellent support and pricing to those who procure flooring for big projects and multiple locations,” he says. “With this type customer, you develop an ongoing relationship through repeat business.”
The showroom at Pepper Place in downtown Birmingham opened this past March. The company currently employs 14 staff members in sales, marketing and operations, and outsources work to seven others. South Cypress also has a separate warehouse and pick-up facility in the area. “With the new showroom, we see a wonderful fusion of the digital and the physical,” Goneke says. “Our mission is unique, and we feel the new showroom gives us an additional avenue for engaging our customers.”
Future plans for South Cypress include the possibility of creating another showroom in a significant regional or national market. “We’re still looking at and discussing where that might be,” he says.
Kathy Hagood and Cary Norton are freelance contributors to Business Alabama. She is based in Homewood and he in Birmingham.