If you work in the heating industry and haven’t heard of Thermondo, I suggest you take a look. It is an example of what I think could be a big disruption to current market channels. We’re not the only ones interested: the utility company E.ON recently invested a seven figure sum for a 20% stake in the company.

Thermondo, based in Berlin and with 30 employees (and growing fast), sells heating systems directly to customers through a web-based platform. They are taking the customer relationship away from installers. In most countries, installers - typically working in small businesses with just a handful of employees –account for the vast majority of heating appliance sales, and their control of the customer relationship makes them a tidy profit.

Customers enter 14 data points into Thermondo’s website and receive a tailored quote (for a range of systems – boilers, solar thermal, biomass). The company has 30 installation teams working across Germany, and supplies product from a range of leading product brands. It claims savings of up to €2,000 compared to buying through installers – which it will achieve through cutting out margins along the often long heating value chain, and potentially through bulk purchase deals with manufacturers.

We see growth in customers directly researching a new heating system (and heating controls) – rather than simply relying on the installer to specify the product and brand. And we also see limitations in most installer’s interest and capability in upselling a higher cost but more efficient heating system. Pitched correctly – and for example by tapping into the emergence of connected homes, heating systems can be viewed not simply as a building product, but also as a consumer product.  

Companies such as Thermondo are exploiting this opportunity. It is not yet clear whether E.ON will be a passive financial investor or an active partner for Thermondo. But given E.ON’s intentions to grow distributed energy and non-commodity revenues, we’d be surprised if E.ON treats this purely as a financial investment.

In my next blogs I’ll look at some other examples of this trend emerging – including a boiler company offering micro-CHP direct to customers (rather than pushing it through wholesaler and installer channels), and how smart thermostat vendors are simply hiring installers for their labour rather than using them as a sales channel.

Sign up here to receive the next instalments of my blogs. To find out more about Thermondo visit www.thermondo.de