A Chat with June’s Profile, David Lorsch, founder, president and CEO, DBL Distributing Inc.

© Profile of Success, Catalog Success magazine, April 2007
Interview by Gail Kalinoski

Catalog Success: When was the catalog established?
David Lorsch: The company and the catalog were formed concurrently in 1989 with my fiancé and now wife, Cindy. Our first catalog order was Sept. 29, 1989. The order came from a dealer in Clovis, New Mexico.

CS: How did the company get started?
David: I was out of work. I had been working in national sales for a video accessory manufacturer. When I started thinking about what I could do, I realized there was a gap in the electronics accessory distribution market. There were a few people in the eastern U.S. that were growing the market via catalog and flier. But there was nobody in the West. Around the point I started my company, there was no distributor specializing in accessories to independent retailers west of St. Louis. I identified what I perceived to be a hole in the market. And luckily, I was right.

CS: How did you grow the company?
Lorsch: We’d originally taken a mailing list of audio retailers and video retailers. The third list was taken in a recovery campaign from some local photo dealers. So we added photo and camcorder accessories to the catalog. We aimed at selling one to three-store operations. We started mailing the catalog into 13 western states. Over the next, let’s call it four years, we slowly moved east, taking down three or four states at a time. I was national by 1994. It was always very interesting that as we took new states, the catalog was always where we got good response. As a wholesale cataloger, we’re dealing with repetitive business. Our catalog response against our mailing list is 40 percent.

CS: What is your primary merchandise?
Lorsch:Consumer electronics is the catchall category. We’re into digital cameras and camcorders, GPS, two-way mobile radios, telephones and audio. We’re also reverting back to our roots in accessories. I can make the dealer a profit with attachment selling.

CS: What is the number of SKUs?
Lorsch: 17,000.

CS: What is the current number of employees at the company?
Lorsch: 350. We’ve actually worked very hard at leaning out our organization. We’re down from a high of 425 full-time. We go up to 600 at Christmas.

CS: What has been your biggest challenge?
Lorsch: It was finding a customer. I really started with nothing. I had not been a distributor. I did not have a customer base. I literally started from scratch, from an idea and I proceeded from there.

CS: How did you overcome that challenge?
Lorsch: The first thing I did was look for product lines, create a catalog, which I didn’t know how to do and then buy a mailing list. I sent it (the catalog) out to somebody and waited for somebody to call.

CS: You’ve said you started with a 12-page catalog. How many mailings did you do initially?
Lorsch: The first year we put out about four mailings of 6,000 to 8,000 each. We grew a little bit each time. We just built it one customer at a time. We just kept building it. We had about 125 customers in about 90 days and then we had about 750 customers after the following year and then it was just consistent progression and building of customers.

CS: What are your keys to success?
Lorsch: It’s very easy. Good price, good product, good service and take care of the problems.

CS: Where is the company’s headquarters?
Lorsch: Scottsdale, Arizona, but we started out in Tempe. This is finally DBL number six. We’re in this location two and a half years. This building has 144,000 square feet. I started out in 1,500 square feet.

CS: What about the business appeals to you?
Lorsch: This is what I do. This is how I make a living. I am consumer electronics. I love the business. I have been making a living in it since I was 15 years old. Everything about it appeals to me. I’m very passionate. It’s been very good to me.

CS: What is your biggest challenge right now?
Lorsch: Diversifying marketing communication. With 17,000 SKUs and some rapidly changes prices in some of our product categories, it’s very difficult to keep the catalog current. It’s always been a challenge, but there’s a lot more price volatility today in some categories.

CS: How are do you plan to resolve it?
Lorsch: We’re developing more frequent communication by smaller subcategory catalogs, vendor specific catalogs and more frequent fliers, which would allow to communicate more frequent price drops. Our e-mail marketing is ongoing daily and evolving daily. We’re putting out at least six to eight e-mail blasts a week and trying very hard to balance that so that we’re not spamming them.

CS: What kinds of changes have you been making at the company?
Lorsch: As a company, we’re constantly investing in system enhancements, data mining. We’re just rolling out right now a very extensive data analysis tool. We’re making investments in our pick, pack and ship operations. Over the next 18 months, we’re making a $3 million to $4 million investment in infrastructure. The “Turbo Line” is the first of that long line of enhancements.

Editors Note: “Turbo Line” is an integrated order fulfillment system, which employs state-of-the-art order management technology that automates the scanning, weighing, taping and shipping label process for each order. It’s designed to decrease the error rate and increase the number of packages shipped each day. DBL Distributing tested it in the fourth quarter of 2006 and began using it full-time in the first quarter of this year.

CS: How are you dealing with the postal rate increase?
Lorsch: We’ll have to go into a higher growth mode … because the increase is so significant. We will probably reduce some of our mailings this year. We just did one catalog drop very specifically before the increase. We’ve tried to put the catalog (the most recent one was about 1,150 pages) on a diet.

We kept adding pages, now we’re scrutinizing. It had grown a little bit without scrutiny. The products are being scrutinized a lot harder and the product mixes are being tightened up. We’re taking out items that are unneeded.

We’re not mailing millions of copies. We’re mailing a hundred thousand copies to a very targeted market and it’s a significant return on investment.

It’s got a four- to six-month shelf life. It’s a substantial document. A dealer, even if they don’t buy from us, is hard-pressed to throw it away. It becomes used as a reference. Somewhere along the way, they’re going to call me with an order.

CS: What sets your company apart from the rest?
Lorsch: I think we’ve got the broadest and deepest mix of accessory parts in the industry – the products, product categories and brands. We’re constantly adding new things. In consumer electronics, you will not make money tomorrow on what you’re making today.

CS: What was the biggest mistake you ever made in the business and how did you recover?
Lorsch: One time we printed our catalog without pricing for our dealers so they can have a counter copy and show it to a customer. We made a custom copy and the DBL logo was supposed to be stripped but it hadn’t been stripped off three pages. A dealer said he couldn’t use it. I had to refund $15,000 to $20,000. That was about 10 years ago. We stopped doing custom jobs.

The key in all these things is not that you make a mistake; it’s how did you respond and react to the error. You hope everyday you make good decisions most of the time and react very quickly to the bad decisions and minimize the damage.

CS: What do you do to keep things fun at DBL?
Lorsch: We have barbecues every month if we make our sales quota. We have DBL Wars (like Star Wars) and other sales competitions where we split into teams.

CS: Have you had any mentors?
Lorsch: A guy I worked for when I was just out of college was very influential to me. I was a manufacturing rep. He taught me how to do business. He took me in and showed me the ropes.

CS: Do you have any hobbies?
Lorsch: I like to play a little golf when I can.