Catalog kings Featured

6:29am EDT April 28, 2004
Automobile enthusiasts talk about their cars with a glee that might only be rivaled by Rush Limbaugh discussing politics.

To the uninitiated, listening to the jargon spoken by those who love to repair and modify their vehicles is like listening to a foreign language. And for those who need an improved constant velocity joint boot kit or halogen driving and fog lights with seven-color LED rings (because, let's face it, six is just not enough), the J.C. Whitney catalog is the place they turn to for materials to repair or enhance their ride.

That suits Tim Ford, the company's president, just fine. And while his expertise is in direct marketing, Ford also knows his way around under the hood -- at least a little.

"I've done enough to be dangerous," Ford says. "But I don't do any of the heavy stuff. I'm considered a light DIYer. I can do the oil. I can do the brakes. But I can't do an engine repair."

That's OK, because J.C. Whitney, the largest direct mailer of aftermarket auto parts and accessories in the United States, doesn't need Ford to roll up his sleeves and hop under the hood. The company -- one of three enterprises within Automotive Specialty and Parts Inc., a holding company which belongs to leveraged buyout firm The Riverside Co. -- simply needs him to devise J.C. Whitney's vision and implement it.

Ford, who also serves as vice president of Riverside's automotive holding company, arrived at J.C. Whitney from outdoor specialty retailer Gander Mountain Inc. in 1995 as its CFO, just around

An aftermarket empire

J.C. Whitney was founded in 1915 by Israel Warshawsky, who launched it as Warshawsky Co., a scrap metal yard on Chicago's South Side. Two decades later, he launched the catalog side of the business.

But Warshawsky's son, Roy, thought the family's Lithuanian roots might make landing customers more difficult outside Chicago, so Israel came up with a neutral name, J.C. Whitney.

"Both entities were really one, but they kept both names until 1997," Ford says.

In 1995, when Ford joined the company, years of customers and vendor confusion had finally caught up.

"They (customers) would order from J.C. Whitney and end up getting a box from Warshawsky Co.," he says. "We got in here and transitioned the Warshawsky customer base over to J.C. Whitney over a year-and-a-half, two-year time frame by putting both names on the catalog. Eventually, we just dropped the Warshawsky name off the catalog. I'm not sure why they didn't change it sooner."

The Warshawsky family owned the operation for 87 years before tiring of the business and selling 100 percent interest in the company to Riverside in 2002.

Says Ford, "Riverside bought J.C. Whitney with the strategy of making (it) a better business and using it as a platform for acquiring other automotive-related direct marketers."

It was a drastically different approach for the company.

"The (Warshawsky) family had made a number of investments in the time period from '95 to 2001, and they had become weary of making more emotional investments in J.C. Whitney," Ford says. "There was a little bit of a holding back on what we could do with the resources we had. When Riverside came in, all those barriers to do more things, like acquire other companies, opened up."

Riverside moved quickly, first creating ASAP as the consumer-direct automotive aftermarket accessories platform. The holding company then acquired Stylin' Concepts and Carparts.com to supplement the well-entrenched J.C. Whitney.

"Those management teams have created a relationship with their customers that is unique and distinct," Ford says. "We don't want to disrupt that. In order to maintain that unique relationship and to keep the management teams in the different business units that are added on motivated and focused, we've decided to have everything acquired through the ASAP holding company."

To understand how Ford operates J.C. Whitney, it's important to understand how ASAP is structured. J.C. Whitney provides accessories and parts for nearly all American-made vehicles and a few of the more popular imports. Stylin' Concepts serves the sport truck, street truck and SUV accessories market, and Carparts.com services the repair and replacement parts market.

Carparts.com is almost 100 percent Web-based, while J.C. Whitney and Stylin' Concepts market through catalogs, consumer magazines and the Internet.

"One of the things that we realized was that in looking at any other company to add on, the things we're looking for are complementary product lines, complementary customers, a somewhat unique way of marketing to those customers and a strong, proven, capable management team," says Ford.

Among the three business units within ASAP, there are well over 200,000 part numbers, which satisfy more than 4 million applications. Some parts satisfy multiple makes, models and years.

 

Streamlined operations

While Riverside transformed J.C. Whitney's business approach, Ford realized the company's physical needs had outstripped its location.

"We were originally located in a Chicago metropolitan area warehouse and call center," Ford says. "They were multistory facilities and they were not conducive for receiving, maintaining and pick-packing automotive products. We tried a few things over the course of about a year to modify the facilities to see if we could get some productivity improvements. We couldn't get any tangible benefits for our customers in those facilities.

"The old facilities were not built for a direct mail operation. They were built for manufacturing and regular office space. Direct mail distribution and call centers are a different animal than what those facilities were built for. We just couldn't modify them enough to get those productivity gains."

After trying to negotiate with the city and getting little response, Ford began working with the state of Illinois and the county of LaSalle and was able to get some tax relief. The company built a 340,000-square-foot facility that offers many benefits the old site couldn't.

"We've been able to cut our distribution center costs -- where we receive, store, pick, pack and ship -- somewhere in the neighborhood of 60 to 65 percent," Ford says.

Though J.C. Whitney traces its roots back nearly nine decades, it has fully embraced modern business practices. It counts more than 200,000 products in its line and lists about 90,000 products in its various catalogs, but keeps only about 50,000 products on hand at its warehouse. All of its products are listed on the Internet, and because of the relationships it has with more than 1,200 vendors, it can get even those products it does not keep on hand to customers within a couple of days.

"(The Internet) has changed things in a lot of ways," Ford says. "It's sped up our abilities to get new products out in front of our customers. Where it used to take us months to present a new product, now it takes literally days, weeks at most. We have the ability to update the information we provide to our customers about the product on a shorter cycle time. We also can present more information about our products than you can in the print catalog and you can carry more products.

"The other thing the Internet has done, it has allowed us a different channel for marketing to customers," Ford says. "Whereas before we had just the catalog to mail out to people, now we have e-mail programs, we have affiliate programs,where we hook up with other automotive-related Web sites, and if they send us traffic that ends in an order, we pay them a commission.

"They're like outside sales reps for us on the Internet. We also work with the major search engines to get placement on their sites when people search on things like weather stripping or door handles or mufflers. The Internet has allowed those three new marketing channels for us."

Riding economic cycles

As powerful as technology has been for J.C. Whitney, it has not immunized it from fluctuations in the economy.

"We do well in slow economic times, but we also do well in good economic times because people want to accessorize their vehicles more," Ford says. "Where we don't do real well is in those transitional periods, where the economy is softening and people are unsure, or on the flip side, where the economy is improving and people aren't sure -- (when) they're not sure whether or not they want to keep their car and fix it up or sell it and buy a new one.

"What happens then is they don't do anything until they decide that. Depending what they want to do with their car will drive what happens with us. If they keep the car, then maybe they'll buy more replacement and upgrade things. If they buy a new car, then they're usually looking to accessorize it with things they just didn't want to have the dealer do."

So as a market indicator, what is business saying about the economy?

"Things are starting to improve on our front, which is a little bit of a lag to the overall economy," Ford says. "Now what we haven't seen is the big jump in employment, which gives people a comfort, and then they start deciding what they'll do. That's what we're waiting to see. It definitely isn't getting any worse.

"People are, at least right now, thinking their employment is safe, and they are starting to either buy new cars or fix up their old ones."

Ford says there is enormous opportunity to expand the $200 million a year operation.

"We think there's close to $40 billion a year consumed in automotive aftermarket parts and accessories," he says. "If people got serious about maintaining their cars, it could go up by another $60 billion. The industry estimates that there's a $60 billion gap in unperformed maintenance on vehicles every year."

Ford sees an opportunity for J.C. Whitney and ASAP to snatch as much of that as possible.

"Some of the growth areas that we've seen and will continue to investigate are in the truck enthusiast and the off-road enthusiast, people that want to take their vehicle -- bike, truck or car -- off-road," he says. "Our focus is really on automotive enthusiasts, as opposed to people that are just driving their cars. There are about 200 million vehicles out there on the road. Not everyone is an enthusiast.

"We estimate that there is somewhere in the neighborhood of about 50 million people in the United States that consider themselves (do-it-yourselfers). Whether they're enthusiasts or people trying to keep their cars running, we don't know. We want to satisfy both, but our real focus is on people who are enthusiastic about it." How to reach: J.C. Whitney, (800) 529-4486 or