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Wednesday, May 21, 2003

Twins Phil and Fred Cressman are doing quite fine running two sales businesses on the Web.

Their success -- carved after starting their on-line operations in mid-2001, just as the dot-com crash was reaching a crescendo -- offers up many lessons about the right way to go about business on the Internet.

These lessons, strangely enough, have as much to do with commercial common sense as they do with technical savvy.

For starters, the 57-year-old identical twins from Waterloo, Ont., have a load of experience in running a business, from operating a turkey farm to working as tax consultants. When they turned to the Net, they began with an open mind, and a thought that selling labels for golf clubs might work.

But they quickly changed their focus, figuring that selling to business made more sense for the simple reason that businesses have more money. Now all they had to do was come up with a product businesses needed, and that turned out to be asset labels.

Called asset tags in the United States, asset labels are adhesive stickers that companies can use to identify and keep track of small assets, typically desktop computers and the like.

The brothers have expanded their offerings to include security seals as well as destructible labels. These are small labels that come apart or leave an obvious mark if tampered with or removed. There are used for "Warranty void if opened" purposes. For instance, a car manufacturer to protect tampering with high-tech parts that the dealer will warranty only if they haven't been messed-with by others.

But they didn't rush to set up shop. Their next step was to figure out whether there was a demand. They did that by visiting sites such as goto.com that offer statistics on the number of searches carried out for different search terms.

"If people aren't looking for what you're offering, you're wasting your time," says Phil Cressman.

That's somewhat basic advice -- until you look at how many dot-coms failed once they began trying to charge people for what they had been offering for free.

Once they'd found a need, the twins set out to see who was satisfying demand, and how. The competition looked thin, and they felt they could also undercut their prices by a good margin.

Even today, they say, their main competitor's prices are some 2.5 times higher, in part because their big competitors operate the old-fashioned way, which means compensating a sales force.

Another attraction of labels as an Internet business came from their slightly esoteric nature, says Fred Cressman. "If people are scouting around for assets labels, they are more the likely serious buyers," he says. "We probably get one buyer for every 10 inquires."

With a product and a name, polylabels.com, they moved on to designing their site. Unlike many product sites, they made a point of putting the price front and centre.

"Many sites won't tell you what they're charging so you have to call them up and go through a sales pitch," says Phil Cressman. "But having done a lot of surfing ourselves, that annoyed us, and we figured it would ignore a lot of other people, too."

It helped that their overhead was very low. Unlike the dot-com crash cases, the Cressmans didn't rent high-priced office space and fill it with expensive furniture and flat-screen monitors. They hunted down used and smoke-damaged printers and set them up in the basement of Fred's house. "Retail we would have paid around $4,000 U.S., but our total outlay per machine including refurbishing was $400," he says.

The brothers also had enough to fund the business out of their pockets. Says Fred, "If you don't have enough other income to live off of for a whole year, you're going to be in big trouble."

Business took off. While they wouldn't reveal exact figures, sales in the first six months were double what they had expected for that whole year, and have been steadily growing.

"We're growing by a 100 per cent a year," says an admittedly tired Fred, adding, "I don't think it will continue like, partly because we don't want to be that busy."

Interestingly, part of what's fuelled that growth is that, unlike many on-line sellers, you can get the Cressmans on the telephone. Just try that with some of the big on-line booksellers.

Using the same model -- looking for a niche market product that's easy to ship, tough for bricks-and-mortar retailers to stock, and has a significant market, but one which is spread around the globe -- they've since launched a prescription swimming goggles on-lie business -- aquagoggles.com.

A swimmer, Phil was tired of coming out of the waves and onto the beach, unable to spot his towels and family. They found a quality supplier via the Internet in China, and now take orders from all over the world. The key is that since everybody's prescription is different, a retailer would have to carry a few dozen pairs."

To understand their thinking, though, listen to what they won't expand into: The business of regular sunglasses, something that at first glance, might seem like a natural evolution.

Sunglasses are really a fashion item, says Phil, so you have to touch and feel them. "That means if a buyers puts them on and they don't think they make them look cool, they'll return them."

By contrast, prescription goggles have a very utilitarian use -- to help swimmers see. "They're less expensive than sunglasses and you're trying to satisfy fewer needs," says Phil.

But even the Cressmans are unsure as to whether the goggle enterprise could be a stand-alone business. They figure they are just breaking even on it right now, but in the meantime, it's covering their entire server and other net-related technology costs.

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