eCabinet Systems, the economy, reality and change

[Ken Susnjara]

Last week I responded to some valid concerns about shortcomings of the current version of the software and indicated that we were considering structural changes in the program. We have made and implemented some basic decisions and I would like to explain them to you.

The basic idea behind eCabinet Systems was to provide high end cabinet design software to the industry for free and pay for the software development and maintenance through the sale of Thermwood CNC routers and the sale of a wide variety of support products through a Member Store. The software was structured so that it would support traditional manufacturing methods but would only function on Thermwood CNC routers. The expected increase in router business was to help fund the ongoing software effort.

The router portion of this program has actually worked fairly well as we have seen increased machine sales to the cabinet industry. With the slowdown in housing and the credit problems, this area has slowed recently but still represents a solid ongoing business moving forward. The store effort has not worked nearly as well.

We expected that if we provided valuable software and support service to cabinetmakers, they would reciprocate, at least a little, by buying products from us that they needed anyway. It seemed that the extra effort was a small price to pay for everything we were providing to them for free. I was disappointed to find this was simply not true. A tiny, tiny fraction of Members actually ever bought anything through the store. In an effort to shore up the web store program we established a mirror store and attempted to sell many of the same products to home woodworkers. This store was integrated with sites such as Amazon.com, Buy.com and Google.

Unfortunately, although we did generate a reasonable level of sales using this approach, each individual sale was very small and the cost to process these orders was higher than the margin on the order. We were using machine sales to support both software development effort and the web stores. Just after the last software release we started working on a program to better integrate the web store with the software, hoping that with a smoother selection and ordering process, Members might finally begin buying and supporting the program. The economic slowdown has caused us to do some soul searching and we are now willing to admit to ourselves that you folks will simply not buy enough through the store to justify our continuing efforts to keep it alive. As of last Friday, we have closed all woodworking web stores including the eCabinet Systems Members store and Woodworkers Wholesale. So now what?

eCabinet Systems has become a major program in the industry and we very much want to keep it going. It is driving a reasonable level of machine sales and perhaps this will be enough to fund the program moving forward. We have discussed other ideas for generating income from the program. We rejected the idea of charging for the software, or for updates, because we thought this would break faith with our Members who were promised free software. One idea we are still exploring is to sell a CNC connection between eCabinet Systems software and our competitor’s machines. The design portion would remain free, as always. The CNC connection to Thermwood’s machines is already included as part of Thermwood’s control, so there is no extra cost for it either. A separate CNC link would be developed and sold at industry prevailing rates to anyone who wanted to use eCabinet Systems to drive other CNC machines. I would like to know what you think of this idea. I know that a lot of folks don’t want to use eCabinet Systems because they don’t want to commit to our machine brand up front. Perhaps they would be willing to use the software under this type of program. In short, anyone who wants to use the software to operate a competitor’s machine will pay for the software link and for yearly maintenance and updates. Those that want to operate using traditional manual machines or Thermwood CNC machines would not pay anything for the software because the CNC link is part of the Thermwood machine price since the nesting and CNC program development is done inside the control. Our thinking is that this may very well expand the size of the program, would make us some money from the software and could ultimately sell more machines.

There are a couple of areas where some Members have been obtaining and using services such as design sharing and carving program rental. These services will be moved to another area of the Thermwood web site. We will continue to sell products through the Thermwood web site. What we are not going to do, however, is attempt to sell products for other companies except for items like tooling which are used by our machine customers.

One of the major reasons we decided to close down the web stores is that they were absorbing a disproportionate part of our technical resources, negatively impacting other priorities with little or no benefit. Unfortunately, much of the work during the last six to nine months has been in streamlining the store operation and our decision to close the stores has essentially made that effort worthless. On the bright side, we are now free of that effort and can concentrate on improving the basic design functions of the software. We will start by focusing on the items that you have been pointing out on this forum. Without the store, the size of the program will be substantially smaller so new versions will be able to be downloaded for free, instead of requiring that we burn and mail a CD. This will save us quite a bit of money. We will still offer a CD version but will likely charge for this service, since there is a very real cost in preparing and mailing these CDs. We plan to bring out updates much more often, each offering only a few new features or improvements, instead of waiting until a lot of new items are complete before releasing them.

I have one other idea that I would like to explore, although I am not quite ready to commit to it. As most of you know, we took over the product line from a failed Canadian furniture company last spring. Working with some of the most renowned contemporary furniture designers in the world, we have resurrected their high-end avant-garde contemporary designs using cell based production methods and we have developed a system for customizing the furniture. Although not totally custom, our line of Camillia wall systems, for example, has over 95 million configurations. We have four other collections of furniture currently in production and have quite a few more that we plan to bring out. These products are being sold under the American Visu name through a network of reps and retail furniture stores, primarily in affluent urban areas.

As we talked about this, we realized that many of our eCabinet Systems Members sell to the same type of sophisticated affluent customer that we target with our furniture. Perhaps we could expand distribution of these products using our Members, simultaneously offering Members a path to additional sales and profit without negatively impacting their core business. They could offer and sell our furniture right along with the custom jobs they are already doing. We have developed a web based Sales Processing System that retail stores use to configure, price, quote, sell and order the furniture. Our Members are clearly computer literate and should have no problem using the selling site. They are also more than capable of receiving the furniture, delivering, assembling and installing it. This could open some really interesting possibilities.

If you would like to explore this idea, you can log into the site as a guest dealer. The site is http://www.americanvisu.com/SalesProcessing/FLogIn.aspx?
Use the log on name “dealer1@americanvisu.com” and the password “amvisu#1”.

As you explore the site, your cost is half of the retail prices shown (shipping is not included but generally runs about 12% of the retail price). Feel free to print out catalogs and brochures if you like. Please don’t change any of the user parameters because this will affect others that visit the site. If you are set up as an Authorized Dealer, you will be free to adjust the site any way you want for your own use. If you have any questions or comments about this idea you can post them here. If you think this might work for you please contact duane.marrett@thermwood.com so we can start a dialog.

If we decide to pursue this further, the program will likely not be available everywhere. We currently have exclusive sales arrangements with certain large retailers who provide us with substantial sales volume. We will not be able to violate these agreements but a very large portion of the country should be open to this type of program.

As you can see, a lot of things are changing and we are trying to change with them. We are trying to remain faithful to the core ideas behind eCabinet Systems while exploring ideas that can help pay for the ongoing costs of maintaining and improving the core software. I am asking for your thoughts and ideas about this so that together we can find directions that are good for all of us.

[Damon Nabors]

Ken,

Good morning and thank you for taking the time to explain to us the direction of the company. On the Furniture, will it be pre-finished or would we need to finish during the assembly process? I was just curious if we would need to factor that into the cost.

Thanks you

Damon Nabors

[Jean G Voyer]

Ken,

Regarding the member's store that you just close, have you ever conduct a survey why the members were not buying and what would have made them buy.
I know in my case because of the exchange going up and down, the distance from your outlet and the availability of the product at a more competitive price right here wouldn't make it convenient.
What about a system integrated into the program that direct our purchases to a local dealer that want to work with ecab for a commission per purchase?
Maybe you thought about all those aspects but found them unpractical.
On an other topic for me the furniture line wouldn't be an option for the moment.
I hope we can find a solution all together.

[DanEpps]

I completely understand the economic factors at work in your decision to close the store. These same issues have had a big impact on everyone--worldwide--and we must remain flexible enough to adapt to the new economic realities to stay in business.

I do have a few questions concerning the future direction of eCabinets (I'm sure I'll have more):

1. With the closing of the store, what effect will this have on eCabinets in regard to doors, drawers and hardware used in designs? Will users have the ability to add 3D doors, drawers and hardware design items?

2. What impact will elimination of the store have on costing in eCabinets (cost sheets and buy lists)?

3. Will the costing functionality be “beefed-up” with more production control/job costing capabilities (ERP/MRP, CRM)?

4. Will the Proposal Writer be made more flexible and intuitive?

[Ken Susnjara]

Lots of questions, let’s try to take them in order.

First, the furniture. The American Visu furniture is fully assembled and finished. In fact, it is a very high end product with a high quality pre-cat furniture finish. Assembly consists of locating, leveling and assembling the various pieces. Many of the pieces are quite large and are made up of several large components. All assembly is done in the customer’s home. This is beyond most homeowners but should be easy for our Members.

As for doors and hardware; we will continue to allow the current designs and the hardware that we currently offer with 3D images, you will just not be able to order it. We hope to add a beefed up MDF door package which should give you pretty much anything else you might want.

As for costing, we will focus on a system that allows you to input the items and cost you want associated with each cabinet. We are working on some cost systems with our furniture program and if they work well we will add them to the software also. In fact, we have discovered a lot of real needs with our production program and hope to add quite a few features based on that experience.

I am not sure how quickly we will focus on the proposal writer. We have had a lot more requests for an improved drawing editor which will likely have a high priority. As we begin working on these areas, we will respond to those areas where we have had the most requests from Members.

[Damon Nabors]

Once again, thank you Ken.

[DanEpps]

Yes, thanks for the quick reply and information.

I do agree that the LDE is far more deserving of immediate attention than is the Proposal Writer--that was just one of the questions that popped into my mind this morning. I was trying to recall questions that get asked in the forum a lot and overlooked the obvious (LDE) in favor of the obscure (Proposal Writer).

[Peter Walsh]

Ken,
Many thanks for the update and info.
All of us are grateful for the help you have given that has helped us all succeed. Many (or most?) of us could not afford to buy a cabinet software package and deeply value the resource. You have correctly identified a large segment of the cabinet-makers market and we will all hang with you as you refine your effort. We all hope to grow to a point where we will need one of your CNC's.
Thanks again,

[Michael S Murray]

Mr. Susnjara,
Thank You for your time, very interesting. The economy is affecting all of us and I am hopeful that it will turn around. We are also investing money and time into improvements in our processes, from the front office to installation. As far as the member store not working out for thermwood, I am sorry to hear that, but not surprised. Versatile has had a long term relationship with vendors who visit our shop, keep us informed on new processes and hardware that are relevant to us and provide it to us at pretty steep discounts. Some sales reps are not allowed to take our time and others have become part of our business and we feel loyalty to them.A select few of them are actually very important to our business. A example would the salice and grass reps, another different type of example would be a couple of the guys who work for Thermwood, they know they are welcome to use my name and send potential clients to my shop for demonstrations.I like to think that I have swayed more than one shop to Thermwood. This loyalty to some of my suppliers is part of why I could not buy much hardware through the member store. As far as the software, I do not use e-cabs because it is free, and I would be more than willing to pay my part to see it continue. I have used most of the other software packages over the years, and with one exception, I dont think there is any better. I do beleive for e-cabs and thermwood to appeal to the commercial shops(router sales) there will have to be some improvements in the line drawing editor and the drawer box editor to start. As a shop that does a mix of commercial and residential, I find most of the problems are encountered in the commercial work, things such as radius walls, radius reception desks/die walls(think microvelum here)..... Shop drawings produced in e-cabs are not acceptable to architects without spending huge amounts of time fine tuning them, basically impossible to the point that I outsource my shop drawings to others for anything over 20k total job cost. I do understand your loyalty to the one man shops and even the part time guys who seem to be a large part of the e-cabs users, but, if your eliminating the member store and looking for router sales I beleive you should be looking towards bringing more commercial shops into the mix.
Of course this is just my opinion and its the same cost as e-cabs.........
Thank you for your time.

[Neville Bastian]

Hi Ken,
Being in Australia we do not have the ability to purchase through the shop for cabinet items. I think if it was available the experience would be the same as the US.
As a thought on the shop maybe a different approach would be to do what Google does. Have the orders go via Thermwood then onto the retailer that the cabinet shop usually uses. In turn that retailer agrees to give you a small fee, say 25cents. You could argue that they will get the order in a electronic form and be quicker to process. If they don't pay the fee they will miss out on banner advertising that will appear on the ordering of goods page. If I was a Blum hinge supplier I sure would not like another Blum supplier being flashed in front of my customer.
If each Ecabinets just had 100 orders a month that would be a good income stream for you all done via software in the background. The shop is already setup so no real costs. If you had 1000 Ecabinet users using this that would be $25K per month.
With placing the orders via Ecabinets doesn't effect our discount, our relationship with reps and our account system stays the same, why wouldn't we flick over.

With Ecabinets being used on other CNC's I think that is a great idea. Your Thermwoods are fantastic but circumstances will make it hard for people to always buy your machine. This way they get your software at a reduced cost with the post processor but get daily reminders that the Thermwood company is the software arm. It must pay dividends over the years as people always update. Having the Thermwood name in front of them constantly must brain wash them.

The Ecabinets software is free and you don't want to charge for it. I understand why you don't but why not consider a price tier approach.
The Ecabinets software currently does every thing we want to do. The calls for improvements stem from advanced users who want more as they have stretched it to its limits. I have asked for advanced mdf door features and others have equally important areas they need done for their business.
If you created the free edition and the advanced edition. The free edition is the current Ecabinets but the advanced edition which you pay upgrades for has the more advanced features. In my case the MDF doors can do square corners and have a few more door designs. Maybe the proposal side is more advanced and so on. Then as each new version of the software is released the older advance features filter down into the free edition.
This way you are not breaking any promises. The free edition may suit 70% of the users so feel no need for the advanced version. The advanced edition is created from requests of users willing to pay for the programming time. We use it for business and we make a profit from it so don't begrudge this payment.

With the free Ecabinets version I think you should have some banner advertising. This can be built into the free version and advertising doors manufactures with a link to their web site as an example. Each upgrade new banners are included. This may worry some people but it can be handled responsible. Have them appear at the bottom of the page after a certain time of inactivity. They don't reappear until this inactivity happens again but the banner will be different. This banner advertising could generate funds on the free edition which may help pay for the licenses you are paying to other software houses.
If people click through to the suppliers web site this should also generate a fee to you.

I didn't see where you addressed Kerry's issue of the program problems but everything can be fixed with money. With the economy of the world looking pretty poor we need to make sure that you have the funds to continue with Ecabinets development. If you can think of ways for Ecabinet/Thermwood owners to be more efficient with your software that would be appreciated.

Regards

Neville

[Thom Davies]

Hey Guys

The banner idea is a good idea. BUT Im in NZ and what would be the point of having a banner showing an american firm? Yes i know you might say it might be a banner from hafele or blum But we know about them and use them when we need to.

How about a semi naked woman lying on a thermwood as a banner? LOL

Cheers

Thom Davies

[Gary Urlacher]

Like others have said, Thanks for letting us in on your plans for the future.

I am from western Canada and for me, I could not justify purchasing hardware from the US. Both for shipping, wait time, and now more so
the exchange.

I did buy a Thermwood router and that is my reason for using E Cabinets. I never had an interest in purchasing product such as doors and hardware.
I did not even know about that part until the tech set up the machine. I though the program was free only becouse if people liked and used the program
they would purchase a Thermwood machine. I did the oposite. I bought the machine them looked at e cabinets.

It would not bother me at all to pay a fee of some sort for updates or perhaps having levels of program as options.
I would hope that the fees are not as much as some other cabinet software that I own like CV..

I really like the way that ecabinets handles the parts and joints etc but I find it lacking in drawer edits and doors and a few other common things
like the constraint manager, reports and door and drawer front edit etc.

I still use my other software for 3D renders and bidding but then I take that cabinet list and batch cabinets in ecabinets for producing product.

I myself am on the fence about offering the program for other routers. I think that would hurt Thermwood sales but that is just my take.

For people who do production sharing I think it would effect their business.

My vote is to take a pole on how many would pay for faster updates to real life "wish lists" from people producing parts with the program.
I myself would be interested in that.


My 2 cents


Gary Urlacher
Alberta Canada

[Neville Bastian]

Hi Thom,
Yeah good idea about the banner Thom but I have a female kitchen designer who would prefer a male. Are you open to do some modelling?

The banners would have to be country specific to bring in max revenue for Thermwood.

The other area I thought that would bring in some income would be royalty payments on any orders received via Ecabinets for other Ecabinet users.
This might seem at first to be a additional cost Thermwood users should not bear. The reality is Ecabinets could be dumbed down for infrequent and non computer literate users. I have talked a few of my flat pack clients to download Ecabinets and submit the drawings to me direct. The feedback I got was it looked like a complicated program but a powerful one. So I still have to hand input the kitchen designs. Bummer.
If the money made from us doing a cutting service was tailored into making the free version as friendly as IKEA kitchen design which is web based I'm sure we get swamped with work.

I have noticed during recessions ex cabinetmakers or cabinetmakers who have been put off, start becoming more active in the market place. These guys will be using Home depot type suppliers when they could easily buy through us?

Regards
Neville

[Gary Puckett]

Ken,

I am very greatful for the privilage to use your progam to present to my clients, and I have to say that I beleave it is one of the deciding factors in getting the job.

In the matter of the store this is just my observation, I was talking to my supplier ( I been with him for 8 years ) and I told him that on a blum hinge plate from the store was over $2.00 his reply was what thats only maybe 56 cents may be the store was a little pricey then don't forget shipping it all adds up very fast.

I am a one man shop and do everything by hand, and maybe bought at the most 5 thousand dollars a year in hardware so it was not like I got a big disscount. Now I know you have to make a buck, but the point i'm making is that the store was an other sorce of income to justify the cost of the progam and future updates.

I just think that with the amount of members eCabinets has ( and still growing ) your supply department should be able to compete with supplyers like I mentioned above with no problem. Because why would anybody go and have to call there supplyer and go through all the extra time when all they have to do is make the drawing get an accurate cost and click a button to send the order.

There are many suppliers out there that would be happy as #### to get the oppertunity to be involved with such a large operation.

Anyway thank you for your time in this responce and we will all get through this slump and keep moving forward.

Gary

[Kerry Fullington]

Human nature being what it is, Thermwood would have a hard time making the Member Store work. They would have to be noticably lower in prices on a huge selection of products to get customers and they would have to have superb customer service to keep them. There is just too much competition in this area now. If they don't have a certain product line they lose a customer, if an order gets lost or delayed, they lose a customer and if the prices are higher they don't even get a chance at the customer. Add to that the fact that many shops already had good relationships with other companies made the Member Store a very tough row to hoe.

eCabinets as it stands now is an excellent software for small shops like mine. Of course there are improvements and changes that I would like to see but there will be improvements and changes I will want in the software five years from now. It will never be perfect for everyone and every situation. In spite of this the software works very well just as it is. I think that software development should concentrate on the things the machine owners want and need. Make eCabinets the added value item that you get when you buy a Thermwood that you don't get when you buy any other machine. When you buy a Thermwood you don't have to then try to find software that you need to make the machine work. Make eCabinets the ultimate screen to machine solution in the CNC market. Focus the software development on the most important task of promoting Thermwood sales. Once eCabinets becomes the ultimate CNC machining software, then it could be marketed to other machines to work through a post processor. Make eCabinets the most desired software on the market for CNC woodworking.

I would also not be against Thermwood charging for use of the software or for updates moving forward. Do whatever it takes to keep developing the software. If the eCabinets experiment were to fail then all of us will be paying for software anyway as well as trying to climb the learning curve of a new product.

Kerry