Keeping a focused eye and a well-stocked inventory have enabled this tooling distributor to thrive in the land of catalog giants.
In 1968, when Edith and Garvie Ballew opened Ballew Saw & Tool, Inc., in Springfield, Mo., it was little more than a tool sharpening and reconditioning service. The original location was basically just a storefront with a counter. "It probably measured a whopping 20 ft by 60 ft," says Steve Ballew, Edith and Garvie's youngest son and now company vice president. He says their annual gross sales for new merchandise at that time was only about $10,000.
Today, their business is pushing the limits of a 12,000-sq ft location that seemed spacious when it moved in less than six years ago. Last year the company posted gross annual sales of over $3 million, according to Steve, and much of this growth is the result of a company catalog produced in-house for direct mail sales.
"The first year I came into the business, we did $100,000. And it just sort of developed from there," he says.
Looking around for new ways to grow the business, his brother Jack, now company president, and Steve began to notice how successful mail-order businesses were becoming. They decided to give it a try and started importing brass goods, such as door knockers, candle holders and lamps, from the Philippines, where Jack had been stationed during his stint in the Navy. But it just wasn't working.
Steve says they were discussing their failed attempt in the direct-mail business when his brother said, "What is wrong with us? Why don't we mail order what we know how to do? Something that the family already has established, that we can just expand." So, they produced a small catalog of cutting tools, and within five years it was producing 80% of the company's sales at the original, small location.
"We started strictly with cutting tools. That's all that was in there. Saw blades, router bits, shaper cutters-because that's what we do," says Steve. "That's what we knew the best. We weren't selling power tools, electric tools, any of that stuff at that point in time."
The original mailing list for the catalog consisted of only about 10,000 names, according to Steve, put together from their own customer lists and lists they managed to persuade a few of their vendors to hand over. "We picked through the names and developed a customer list, then we just started sending it out," says Steve. They also took out a very small ad in one of the largest woodworking trade magazines out there. "It was expensive as hell," says Steve. "A little twelfth-of-a-page ad, a little squinter, something you really have to squint to read, but it was worth it. We advertised three or four items that we were just giving away. And we offered them a free sharpening when they returned it. That was enough of a gimmick that nobody else was doing to help us develop a larger mailing list. "It was just to get our name out there and get recognized," Ballew says.
The tiny catalog of cutting tools was very primitive in the beginning. "We started with just a two-page, folded thing," says Steve. "We just cut and pasted. Cut, paste and go to the printer." When it reached 63 pages, they had to move the process to a PC-based desktop publishing system. Now, nearly everything they sell in the store is sold in the catalog. But the major emphasis is still on tooling. "That's what we know best and that's also where the money is," says Steve.
Minding those margins, plus a narrow focus on products and services, keep Ballew Saw and Tool a step ahead of mail-order giant W.W. Grainger, Lincolnshire, Ill. "Grainger doesn't sell a lot of the things that we sell," says Ballew. Plus, he says Grainger actually charges a higher price on a lot of things. "You're paying for the convenience they provide," he says.
Steve says catalog sales account for 50% of their business now, and he expects that figure to continue to rise. He thinks one key to making mail-order work is good inventory. "You have to have inventory in place for immediate shipment when you're in the mail-order business," he says. "Expediency is the backbone of it." He says people have a tendency to want something immediately once they decide to order from a catalog. If the item has to be back-ordered, it can cost you the sale."
Steve predicts catalog sales will eventually make up all but a small portion of the company's business and he bases that assumption on the demographics of his customers. "We deal with so many people who live or have their plants out in the middle of nowhere. They would have to commute too far, spend too much time and money getting what they need if they didn't order by mail," he says. "They're working people who want to pick up the phone and say, 'I need this, this and this. Here's my credit card number. Get it on the truck.' Then all they have to do is wait, then sign the manifest when the driver of the truck hands it to them." He says the logic behind expanding the catalog just makes good business sense. "If you can pick up the phone and call somebody and have the little brown truck deliver it to your house, why in the hell would you fight traffic to go all the way into town and get it?" he says. "That's the key. Making it convenient for the consumer to buy your product."
Steve is confident the next catalog will easily add $1 million in sales to the company next year, and at that point will be responsible for 60% to 70% of the company's gross annual sales. The plan for the next five years is to concentrate on developing catalog sales. "The more business we can do over the telephone and through the mail, the more profit we'll make and the more efficient we can be. And besides, it's just so much easier than standing in the showroom all day trying to peddle stuff."
Top executive: Jack Ballew, president Founded: 1968, by Edith and Garvie Ballew 1996 Sales: $3 million+ Employees: 15 Headquarters: Springfield, Mo. Products: Carbide-tipped tooling, tooling reconditioning services, electrical hand tools and stationary tools for the woodworking industry. Primary markets: Seventy-five percent of the customer base is made up of commercial cabinet makers, 10% of the business is from furniture manufacturers, 10% is from general woodworkers (hobbyists, do-it-yourselfers, etc.) and 5% of the customers are woodworking contractors. Philosophy: Make a stocked inventory the top priority, and make buying as hassle-free for the customer as possible.