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2003 Fantastic 50
Retail-Wholesale: Lumber Liquidators

by Leila Marija Ugincius
Virginia Business
May 2003

They say the third time’s the charm. And it certainly was for Tom Sullivan. The Boston native always had the entrepreneurial bug, yet his first business, a contracting firm, never quite made it off the ground. So Sullivan switched gears and next tried syndicating a television show on travel. That went OK, save for one minor detail: “I couldn’t make any money,” he says.

It was only during his third attempt that everything finally clicked into place for Sullivan. He had started yet another business — this time a construction company. One thing the company did was build decks. But Sullivan didn’t have the space to store his building materials, so he hired another firm that specialized in distributing building materials. “We hired them to store material for us and we’d take it out as we needed it,” he says.

That planted the seed for yet another venture in Sullivan’s mind. He began to buy materials — such as excess wood that other companies or retailers didn’t need — and resell them: Sullivan wasn’t selective. He bought any and all types of wood that he could find. “We ... bought it during the week and sold it on weekends,” he says. Sullivan soon realized the lumber retail business was where the money was — he made $20,000 in his first week — and dropped the construction company in lieu of selling wood as the Lumber Liquidators company.

Buying and reselling lumber eventually led to Sullivan discovering a niche market for his wood — hardwood flooring. Sullivan quickly switched to providing hardwood floors directly to the contractor or homeowner. Between 1998 and 2001, Lumber Liquidators’ revenues grew by 275 percent. According to Sullivan, the company’s revenues have jumped every year since its inception, increasing 68 percent from 2001 to 2002. Sullivan attributes the rapid growth to a simple and sometimes forgotten business axiom: “We sell a good product at a good price,” he says. “Nothing fancier than that.”

Although big-name chains such as Lowe’s and Home Depot also supply hardwood flooring, Lumber Liquidators has been successful because it cuts out the middlemen. “In our case we cut out all those people and sell it for cheaper,” he says. Whereas Lowe’s sells flooring for between $10 and $12 per square foot, Sullivan says Lumber Liquidators can sell the same wood for between $4 and $6.

In addition to selling hardwood flooring, Lumber Liquidators also has started manufacturing its own brand of wood flooring — Bellawood, which has been widely popular for the company. The Bellawood flooring comes pre-finished with an aluminum-oxide-based finish. “All you have to do is nail it in,” he says. No sanding or finishing is required. Plus, the flooring comes with a 50-year warranty, as opposed to most floors’ 25-year guarantee.

Today, Lumber Liquidators employs 180 people and has 31 warehouse stores across the nation. Sullivan expects to have 40 stores by the end of the year. Although Sullivan originally started Lumber Liquidators in his hometown of Boston, he had outsourced the manufacturing to a Canadian company. When it came time to build his own manufacturing plant, Sullivan chose Virginia, rather than Massachusetts, because of its central location. After opening the 80,000-square-foot manufacturing and distribution facility in Colonial Heights in 1999, Sullivan decided to move the entire company here.

Despite his misses early on, Sullivan always knew that he would have a successful business. “I never knew exactly what it [would be] till I fell into this by accident. But I always envisioned having a chain of stores around the country.”

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