New Posting! 3/11/15 See Below:
Who is ELECTRIFIED.COM and Where did They Come From? -8/12/14
An Old-Fashioned American Success Story.
Electrified Discounters Inc was the brain-child of two young men in 1983 who had worked in retail audio sales for a number of years and wanted to do it better and more efficiently, thus making it cheaper and easier for the average customer to buy products. They knew from past experience that the overhead in a Brick and Mortar store directly caused higher prices for the consumer. Heating and air-conditioning and all the other associated costs of operating a large retail space had to be paid for by charging customers more for their purchase. By selling directly though the mail, costs were reduced and the savings could be passed directly to the consumer who now was not limited by geography. Electrified’s customer could be anywhere if they could be found and told what was happening in a little two-story walk up in West Haven Ct.. It was an obvious win – win situation and with that ideal – High Quality at Lower Prices, Electrified Discounters Inc was born! Now 31 years later, Electrified stands as one of the oldest and most successful independent, single ownership companies in the modern electronics era. As we will see this was no accident, but the result of hard work, innovative techniques, and totally out of the box thinking.
Who are these guys anyway?
– Founder, President, and the owner of the aforementioned, and now long gone, audio store that was named after him, Krasco Stereo. This is where Phil first learned the joys (and horrors) of owning a business. He was the whole company for a while, selling to college “reps” who would then resell to the friends and relatives. He did well and expanded to a small retail store, hired a couple of people and sold stereo equipment as well as car stereos and installation. In 1977 he needed a sales person and put an ad in the paper. He interviewed and hired someone who was to start the following Monday. The next day Jim Sonet walked in and applied for the job. He was told that the job was taken but that maybe he should talk to the owner. Phil and Jim met and talked for two hours and that evening Phil called and offered Jim a job. That was 37 years ago and they have worked together every day since. (We really do not know what happened to the guy that was originally hired for the job. Some claim he started making cookies and started “Famous Amos”, others insist that he became one of the founding members of the Talking Heads, one of the great rock bands of the late 70’s, but seriously we have no idea where he ended up and wish him well in whatever endeavor he decided to pursue.)
– Co-Founder, Vice President - A school teacher by training, Jim was looking for a summer job until the Fall semester started up. He walked into Krasco Stereo, was hired, became a salesperson, and two weeks later knew he would never teach formally in a school again. There was something about the opportunity to be creative, outrageous, and teach people about electronics that struck the right chord and basically that was that. Two guys, totally different in most every way (except that they are both incredibly silly at times) but united in an old school work ethic and a desire to succeed doing things differently than the traditional way. In 1982 after a number of years of reasonable success as a small independent retail audio company with two stores, it became clear that the future was not going to be rosy trying to compete against the ever growing chain audio stores that were popping up around the country. They got together one weekend and after consuming a few adult beverages they began to talk about what was good and bad about business. The people you talked to and helped, that was great they both agreed. The hours were horrible. 6 day weeks and usually 9 or 10 hours a day (not even counting the emergence of Sunday as a retail day and the occasional Midnight Madness Sale). The satisfaction of helping people, educating them and steering them in the right direction to what they needed as opposed to giving them the hard sell was paramount. They went back to Phil’s original idea about using college reps, but instead of selling just to them, why not just offer great pricing via mail-order to everyone? Slowly the concept of Electrified Discounters Inc. came into being. Selling electronics of all kinds to all kinds of people at the lowest possible prices and delivering it fast and trouble free. This was the beginning of it all. A mail order catalog company, and they rushed to tell their parents about their ideas. Of course as most parents of children born in the 60’s know, the parents had only one comment. “What are you crazy? You will lose every penny you have!!” Armed with that kind of support they decided to go ahead and do it anyway. The company was based in the remains of one of the two audio stores that Phil already had a lease on. The rent was low (as were the ceilings) and the cost for heating and air-conditioning was low as well since neither worked very well either. All in all it was a perfect fit. Of course every time a large delivery was made that had to be carried up a flight and a half of stairs piece by piece it seemed a little less than so. Regardless, the first catalog was produced, mailed out, and perhaps even moré surprising the phone began to ring.
: How do we decide what to sell? The Past, the Present, and the Mind-blowing Future…
September 11, 2014
Robec takes a chance.
Now the phone was ringing and our Heroes were trying to figure out how to sell everything without committing to anything a strategy many people who have absolutely no money are familiar with. There was a small amount of car stereo and audio equipment left over from Krasco but hardly enough to support a large amount of sales and even more concerning was the fact that very little profit could be made from those items. A great deal of time was spent every day calling distributors of every shape and size to see if there was any product they would drop ship directly to customers for Electrified and if price sheets with specifications could be obtained so someone would have a clue as to what was being sold and how much it would cost. Air-conditioners, Refrigerators, Audio and Video equipment, 35 Millimeter Cameras? Sure why not? Anything and everything electronic and for that matter anything at all that someone would sell to us was fair game. We drove every wholesale salesperson nuts with questions and begging for spec sheets and better prices. (A practice that still goes on today.) Eventually the “pricing bible” was created. This was a large metal open binder that held an A-Z divider set and allowed us to add price sheets in alphabetical order as we received them. When a customer would call, we would leaf through, find the product and a price, mark it up and sell it. Of course it was not rare to sell something to a customer - get off the phone with them – call the distributor and be told. “That model? Yeah those were great. We sold out of those two months ago.”
That would start the calling to other distributors all over again trying to save a sale that never should have happened in the first place.
Most long term electronics people were very old school. They had been through the wars, selling white goods (appliances etc.) and moving though audio and other like products. They had little interest in helping two young guys make a sale. In fact they often resented the silliness and somewhat irreverent way that Electrified went about its business. Why lighten everything up and have fun? That is not the way business was to be done. They liked to do business the way they always had done business. They believed in quantity sales with low margin. Credit was for established businesses and there was no way they were going to sell to Electrified unless it was on a cash up front basis. They had no vision of the future, nor did they care to hear how anyone else might plan to grow a business. They did not use computers. They did not understand them, nor did they even believe that a market existed for them. (Of course at that point even though we used a Radio Shack TRS-80* computer for our customer database, neither did we.)
Robec joins the team:
One day a salesperson showed up at our door from Robec Distributing in Massachusetts. They specialized in computer and computer accessories. He had heard about us calling their office and begging for information and thought he would check us out on his next foray into Connecticut when he visited his other customers. He was a young, pleasant, guy with a great sense of humor and a bond was formed at once. Amidst a lot of repartee that had everyone laughing, a key in the way Electrified would do business was forming. Direct contact utilizing our natural zaniness made us stand out and helped form a bond with other young people in the computer business. He offered us an opportunity that he thought would be a great fit. Robec was distributing Okidata dot matrix printers throughout the country. Part of their agreement with Okidata was to remarket all the refurbished printers that they had. These consisted of returns from overselling to dealers, as well as customers who had exhibited buyer remorse.(For those unfamiliar with the term, this is the moment when you purchase something with the unpaid rent money and are setting it up in the house just as your wife walks in.)
Basically this product was in pristine condition, in original boxes and contained all parts and accessories. The units came with an Okidata warranty so there was no risk to the consumer. The best part for Electrified was that Robec was willing to give us thirty day terms to pay for the product. We could actually stock and advertise and ship immediately when we made a sale. It was risky since we were unknown and it was unclear if the small business world was really going to buy into small computers and printers but the discounts were huge and the opportunity was there. Phil wanted to gamble and Jim, while playing devil’s advocate as always, went along. The resulting explosion in sales was remarkable, the lights went on over their heads and a new way of selling computers and peripherals was born.
*Known throughout the industry later as the Trash-80.
Coming soon: The Staff grows.
January 12, 2015
Epson and Esprit come on board.
The relationship with Robec was growing and now our favorite Heroes in business started to call manufacturers and see if they had returns or closeouts. Phil always felt that to get to the source was the only way to get the lowest price and Jim always thought that the more Electrified offered in terms of being a one stop place for a manufacturer to unload their leftovers the more likely the manufacturing “Giants” would pay attention. After all, Okidata had thousands of printers and it seemed like no matter how many they sent Electrified was able to move them out. In fact the job was being so well done that Okidata employees were starting to tell consumers who called up looking for old models or parts to fix old models that there was a company they could buy refurbished goods from and giving Electrified's phone number as well.
It was so busy that our boys went out on a limb and hired a new kid to join the staff. His job was to help with the shipping and receiving, freeing Jim up to handle more sales and customer service calls and to spend more time taking everything apart to see how it worked. Dealing with Class B and refurbished goods had a few drawbacks. One of them was that occasionally the units came only partially assembled. All the pieces might be there and everything might work once put back together but sometimes it appeared to be boxed prior to completion. Even worse was the moment when a box was opened and loose or broken parts were found. For whatever reason still unknown to this day, Jim was able to cobble these loose parts back into working units. In fact since Okidata often just sent broken or partial machines as “free goods” just to get them out of their warehouse, it occurred to the brain-trust of Electrified (doesn’t that make us sound like we were smart?) that if a total machine could be assembled from parts and resold it allowed for pure profit. (Less the many slices and rips in the skin of Jim’s fingers when he manipulated unfinished sheet metal and other sharp plastic parts back into working devices.) Bit by bit it became obvious that in addition to buying refurbished or discontinued goods, a case could be made for assembling working machines out of partially defective ones and offering them at even lower prices than the manufacturer’s refurbished items.
Phil finally hit pay-dirt with a phone call to a manufacturer. Epson corporation had two types of products available as Class “B”. They were willing to offer their “Comrex” line of printers (very high end and heavy duty and very expensive if Electrified would also take their line of discontinued micro computers. The computers were an odd mix of capability. They ran MS-Dos which made them mostly compatible with software written for the IBM PC (the first really successful micro selling across the marketplace) but they also ran Valdocs which was Epson’s personal computer software and CP-M which was 8 bit software that most of the older multi-user “mini”-computers used in the industry. It was an odd machine with two quad density floppy drives and some even had a hard drive with the massive storage amount of 10 megabytes! Our boys knew nothing of this machine or how it worked, but Epson was adamant that if they allowed Comrex Class B goods to go to Electrified, then Electrified would have to suck it up and buy all of the leftover personal computers. They did warranty them and would send them with all three operating systems on floppy disc and lots of free software (Valdocs) in every machine. The price was right and Electrified went for the deal. Epson even threw in all the leftover parts which included extra floppy drives and internal chips and cards and even some extra hard drives. (This turned into even more cash since in the early 80’s a 10 megabyte hard drive was worth thousands of dollars. Jim was able to rebuild defectives into working units and even figured out a way to take apart the two floppy units and install a hard drive in the place of one of the floppy drives turning it into a machine worth thousands more than its baby brother. The printers were going fast due to Epson’s great name in the industry and everything was starting to come up roses.
Phil went to a trade show in New York City (CES) and struck up a conversation with a gentleman who was making IBM compatible computers. His idea was to create a machine that could stand alone as a personal computer but had the parts already built in to be a terminal on a larger multi user machine. His idea was sound but his marketing was poor and his company name did not catch on. He was stuck with a large amount of product he could not sell. Phil in his usual manner could smell blood in the water and before he was done the poor man practically gave us all of his stock and inventory. The “Esprit 5300” Desktop computer became one of Electrified’s biggest sellers even outdoing the Epson Valdocs machine. Jim was able to rip them apart and add memory and drives and generally tweak them to customer’s individual needs. The value-add was clear and the sales kept coming. All was going to be gravy till it occurred to our small group of geniuses that when you sell discontinued merchandise, no matter how well it sells, when it is gone, its gone. So what do you do next? If there is nothing to sell, there is no money and if there is no money there is no business. For the first time since the start-up of the company new fears became apparent.
Coming soon: The Slide and Ron Marcho
March 11, 2015
Birth of the “Slide”
The office space was a 1.5 flight walkup. This never really mattered when most of the goods sold were drop shipped from other sources but now that Okidata was routinely sending in two or three hundred printers every week, and that 20 to 30 were shipping out every day via UPS, those stairs started to become more than a little bother. They were exhausting and frankly dangerous. Jim kept thinking that there had to be a better way and soon he was walking all the way to the first flight and tossing whatever box he was carrying the last half flight to the driver who being a stout soul (We still miss you Ron Marcho) would catch them and put them on his truck. It was faster, and had less walking but the poor driver was risking his back and lord knows what else catching the propelled cartons. Jim joked that all he really needed was a conveyer belt to transport the goods down to the truck. The joke kept sticking in the back of his head so one day he called a company that specialized in making specialty conveyor devices for factories. This sounds like a perfect story but like all dreams and great ideas, this one crashed when the reality of cost came into play. Our intrepid heroes did not have the $35,000 it would have cost them to buy even a used system. Jim was unfazed (and probably slightly deranged but as we have often pointed out someone probably dropped him on his head when he was small so it is really not his fault). If a metal machine conveyer was out of the question financially, it occurred to Jim that wood was cheap and he had a hammer and nails already. Within a week the first Electrified merchandise slide was built and placed on the stairs against the wall. The landlord did not seem to mind and now when the UPS driver came to pickup, he backed up right to the lower door and Jim and the new kid slid boxes down the wooden edifice to the bottom. Those of you who are younger and do not know of the old dot matrix printers may not be aware of how efficient and also somewhat dangerous this was. These printers were often up to 75 pounds and very ungainly in their packaging. When allowed to simply slide down almost two flights of stairs they picked up quite a bit of speed and indeed delivered quite a wallop if not caught properly at the bottom. In addition, not every box made it all the way down the slide. Unfortunately if not launched carefully at the top, the boxes often flew in all directions coming to rest in various places on the long staircase. This led to general hilarity and for whatever reason the UPS driver enjoyed this nonsense as much as those dropping the boxes at the top of the slide did.
One quiet day when the phones were not ringing and Jim was a little bored it occurred to him that the slide might be good for more than just inventory. Sure enough when UPS picked up that evening, Jim placed a large Okidata printer (an ML-84 to be exact and you can look it up) on the slide and sitting right up on top of it, slid down the embankment all the way to the bottom. (Of course once there the box came to an abrupt halt and Jim went flying into the truck but as already stated, he clearly had a few issues).
Coming soon: New Office Space and lots more people