High Performer Series: Appliancepartspros.com

Roman Kagan has built a successful niche business selling hard-to-find appliance parts to do-it-yourself types around the country. The site, Appliancepartspros.com was launched in 1999 featuring about 300 products and in seven years has grown to showcase more than 1 million parts for 170,000 appliance models. Along the way, the business has grown to about $5 million in annual sales with the site having about 150,000 unique visitors per month.

PeC: Why sell appliance parts?

Kagan: I first had the idea of selling appliance parts online in 1997 while working for a local parts distributor and right after I placed my first order with Amazon. It was not until the end of 1999 that our first order was shipped. It took me about a month to make the first version of our site. There was no shopping cart. Orders were placed through a contact form. It’s funny and maybe a little embarrassing looking back now, but I was very proud of it at the time.

PeC: What was it like for you in the early days with the business?

Kagan: I was also working as an appliance technician back then. I would print out the orders from the site in the morning and then, during my lunch break, I would stop by my local parts store to fill them. Then on to UPS to ship them out. I did this for a couple of years.

In 2002, I was better prepared both mentally and financially to get more serious with the business. I quit my job, rented a small warehouse and hired a programmer. We began to work on the new version of the site.

A 16-hour work day was the norm, and I am very thankful for my wife’s support and understanding. She’s a very talented person and besides holding a full time job, she was (and still is) taking care of the financial aspect of the business, something I am really not good at. Everything we did was through trial and error and by watching and studying the “big shots” like Amazon. We spent countless hours trying to figure out the reason behind every aspect of their business and their websites. We took their sites for a spin, placing test orders to see how their system worked. It was an interesting process and I think we’ve learned a lot from it.

PeC: When you redesigned the site in 2002, what did you change?

Kagan: It took about four months to finish the new site. We were very excited and anxious to see the results. We finally had a shopping cart. In addition, the site offered a searchable database of almost 1 million parts for about 170,000 appliance models, near real-time inventory, “my account” features and order tracking. There was also a pretty powerful backend program.

But as the new site was near its completion, I knew this was only the beginning. More functionality was needed, things to make it easier for both us and our customers. I also knew that it would take time and money, and I did not want to get stuck in the never-ending development stage.

So, the decision was made to launch the site, begin to acquire market share, gain experience and plan for the future. As the business began to grow, I was fortunate enough to convince my friend, Matt, to join the company. We used to work together for an appliance parts distributor some years back. He’s one of the most knowledgeable people in the industry, but more importantly, he is someone I can trust and rely on completely.

PeC: Did you design the site yourself or hire a designer?

Kagan: I designed every version of our site and our developer wrote all the script. I plan to have a professional designer in on the next version, but I assure you, I will be greatly involved in the process. After all, it is my baby.

PeC: Do you sell at online locations other than your website?

Kagan: We haven’t tried any channels other than our site. We do have a fairly large number of affiliates. More focus will be put on growing our affiliate program and utilizing shopping comparison sites in 2007.

PeC: How do you market your store?

Kagan: We use pay-per-click extensively. In the beginning I was setting up and managing campaigns myself, and I’m probably pretty good at it. But then again, I was trying to do everything myself, because I didn’t have money to hire someone, and because I didn’t trust anyone.

I found that it’s a very lonely and, more importantly, a slow way to grow your business. Now, I try to outsource as much as possible, I just make sure that I spend the time to find the best company or person for the job. We now have a reputable firm taking care of our pay-per-click campaigns, and I couldn’t be happier. Traffic is up, while cost-per-click is down. Can’t ask for much more.

PeC: Do you incorporate any email marketing?

Kagan: One of the biggest mistakes I’ve made is not paying attention to email marketing. Lesson learned. This year, it will be a big part of our marketing efforts.

PeC: How does Appliance Parts Pros distinguish itself from other companies in the marketplace?

Kagan: I think the main difference between us and our competition is that we have always put our customers and their repair problems first. Every business is out there to make money and be profitable. However, there are different approaches. It’s always been my belief to do your best to take care of the customer, and the financial rewards will follow. And, I’ve yet to be proven wrong.

PeC: Do you manufacture any of your products?

Kagan: We do not manufacture any product. Instead we sell the highest-quality, original appliance parts.

PeC: How do you acquire products for so many older appliances?

Kagan: I think it takes a certain knowledge and experience and a willingness to go the extra mile. It is very easy to tell the customer, “Sorry, it’s not available‚” especially when there is really not much demand for those old parts.

However, that’s not the case when your business model calls for putting the customer first. So we make sure that first, we know what your 1950 O’Keefe & Merritt stove uses, and second, we make our suppliers stock it.

PeC: Do you offer a catalog of products?

Kagan: We find that because of the nature of our business it would not be very helpful to publish a catalog. Most parts are model-specific, and our site does a very good job of locating the right part. We may be publishing a catalog for some of our wholesale customers though — for example, apartment maintenance companies or hardware stores.

PeC: What types of software/technology have you deployed to improve customer experiences?

Kagan: We’ve been using live chat since 2002. It is very effective and our customers love it.

Our part search is extremely functional. By entering your appliance model, you will see it broken down by categories, with breakdown diagrams and a parts list for each category. This makes finding the right part very easy. Our customers tell us it takes them 3-5 minutes to find what they’re looking for, less time than it takes just to sit on hold trying to contact the manufacturer or a local parts store.

Our cross-reference database is very powerful as well. Manufacturers may change part numbers for a part 10-12 times in 20 years. Let’s say you take a part number off your 20-year-old dryer timer and put it in our part number search. It will go through every change and bring back the most current and correct information. I’ve been told that part distributors across the country are using our search on a regular basis.

What shopping cart do you use? We built our own shopping cart. It made sense, since we built the rest of the site ourselves. However, I know there are excellent shopping cart scripts out there and I wouldn’t think twice about using one of them under different circumstances.

PeC: Is search engine optimization a priority for your site?

Kagan: SEO is a very high priority to us, especially with extremely high pay-per-click costs. ‚”White hat” SEO is the only way to go. It may be more difficult and it may take much longer to achieve good results, but it makes much more sense to be patient and see great results long term than to try to get results overnight — only to see your site banned from the search engines.

Also, find a reputable SEO company or person and pay them what they want. Don’t even ask for a discount. One hundred thousand dollars a year? Fine. Just make sure they are good.

PeC: Any particular struggles in the early days you can share that can serve as an inspiration to young companies building a business?

Kagan: I think the most important thing is to stay focused. Plan everything out, then work according to your plan. Do not expect quick results. Something you do today may not bring any results until six months from now. This is especially true with SEO and bringing traffic to your site. It can get a little frustrating, so telling yourself to be patient and stay focused will help greatly.

I found that there are a lot of advice- and opinion-givers out there, whether you asked for it or not. And, more often than not, their opinion and advice are based on their experiences and set of mind. Obviously, there are a lot more losers than winners out there, people that had given up but need to justify their failure to everyone in a form of an advice. They may actually think they’re trying to help you.

I can’t tell you how many times I’ve been told to quit, get a job, do something this way or that way, and that’s from people who never owned a business or achieved any success. You may be the type that likes to hear things like that, if only to prove them wrong, but I prefer to keep away and stay focused instead. I’ve been very lucky, though, to have a supportive wife and parents.

PeC: Were there any mentors that helped you along the way?

Kagan: Back when I was working for a local parts distributor, my manager, Dan Doti, really taught me a lot both about the parts business and, more importantly, how to run a store. I was 18 to 19 years old and foolish at the time, and I really didn’t have any business discipline or knowledge. He really helped me a lot with that and showed me the ropes. Most of the things that helped me with this business I probably picked up from him. He’s been in the parts business for a long time, and I really appreciate what he’s done. I probably couldn’t have done it without him.

PeC: What advice would you give to an ecommerce novice trying to decide which direction to take?

Kagan: Take care of your customers. Be honest with them. They will spread the word and be your best sales team. Don’t give up. The Internet is a wonderful thing. With so many opportunities, I wouldn’t dream of doing business any other way.

What is a high performer?

Five sites have built dynamic businesses in unique niches

Some people may define that purely based on gross revenue numbers or by having a 30 percent pretax profit margin. Others might say a high performer is a company that dominates its market sector or boasts a double-digit conversion rate.

We are all familiar with the success of Google, Yahoo!, eBay, Amazon and other sentinels of online commerce. However, rather than focus on the handful of ebusinesses you might read about in The Wall Street Journal on a regular basis, we felt it was important to showcase online businesses we see doing a terrific job in highly-targeted niche markets.

The five businesses we are showcasing will not be considered among the 10 highest-grossing revenue sites on the web. However, each of these has built a successful business. What one thing do they each have in common? The owners built their businesses around a passion. As you’ll see, those passions run the spectrum of diversity — they include bow ties, appliance parts, horse tack, organizational products and pet supplies.

Each of these sites generates millions of dollars — from $2 million to $125 million in gross revenues — and has stood the test of time by operating for the better part of a decade.

These high-performing sites have proven that online success isn’t reserved for businesses in Silicon Valley. From small-town Vermont to Southern California to rural Massachusetts to the woodlands of Northern Wisconsin, our five high performers show that success has no boundaries.

If there are central themes to each message from the featured businesses, they are: Success generally comes to people who love the products they sell; be the expert in your niche and, above all, take customer service very seriously.

The five sites we will showcase include: Drsfosterandsmith.com, Organize.com, Appliancepartspros.com, Doversaddlery.com and Beautiesltd.com.