Do you have a favorite client success story?
Tom Mann: We love long-term relationships with our clients. That’s what every business thrives on. One client sells a product line that has been literally unchanged for twelve years. It sells very consistently and they make very good margin on it. It’s a private label product and they have found very little need to spruce it up or change it. They just continue to make money on it year in and year out with such low maintenance because all they do is send us an order. They don’t have to get involved in any other level. They send us an order and then check it in when it arrives. They have to sell it, of course, but they’re very good at that. So they focus on what they’re good at — sales and marketing — and allow us to handle the rest. And in real dollar terms, that product is about thirty-five percent less expensive today than it was when we first started to provide it for them because the supply chain has gotten more and more efficient. So in essence, they’ve been able to sell the product for the same price and inflation has taken place resulting in the relative value of that product getting better and better. Over the years, we’ve been able to provide that product in an ever more streamlined fashion.
Mark Erickson: I like the one about the customer that went from zero to twenty million and only has two employees…
Who’s your competition?
Tom Mann: There are very few people who provide the whole package of services that we do. One one hand we compete with free-lance designers, but they can’t usually supply the bulk production services that we can. Sometimes we compete with brokers or agents, but they don’t usually offer the extensive product development services we do.
Mark Erickson: I think our competitive advantage is our product development capability. Few people understand how long it takes — or how involved is to actually develop a product from a sketch on a page to get it ready to actually go into production. There could be three, four, five, or more samples that are made just to get the fit to the point where the customer is happy. But we can do it all right here in our facility. We have four fulltime sample makers, three fulltime pattern makers on CAD machines, and that’s what they do.
Tom Mann: Well, there are factories that have bigger sample rooms than ours — but those are the factories that expect an order for a zillion pieces…
Mark Erickson: OK, so let me modify it a bit: our competitive advantage is the combination of in-house product development and flexible production sourcing. Are you happy with that?
Tom Mann: …and we’re nice guys too.
What accounts for your longevity?
Mark Erickson: Funny story. When we first started the business, we had a supplier in Taiwan. We had one of our first meetings with him in Taiwan to say, “Please, sir, will you be a factory for us? Can we bring you orders?” And he said yes, but the other thing he said was, “You guys are just too nice. You’re going to fail in this business. You are destined for disaster because you’re too nice.”
Tom Mann: That sentiment was echoed by a gentleman from a Japanese trading company a person who helped us tremendously in the early going, basically putting resources of this enormous corporation to work for us. And his comment was, “Erickson Outdoors, you guys are too reasonable.” He didn’t think we had enough killer instinct.
But even without that killer instinct you’ve built a good company?
Mark Erickson: Why does that work? I like to think that we have a lot of goodwill even among people whom we’ve parted ways with. We’ve been honorable and we’ve stepped up and done what we said we were going to do. People may find alternatives and decide to do things different ways… business comes and goes. One of the realities in our business is that just about every customer that we have now, someday we won’t have, and some customers are out there that we haven’t even imagined that will be customers of ours. That’s just the way it is in our niche of the apparel business. We don’t control brand so we don’t have those enduring long-term relationships like selling Levis to Macy’s. We don’t do that. But I’m comfortable saying that we have a lot of goodwill among current and prior customers.
Tom Mann: A testament of that is the fact that we really don’t do any advertising. Any business that comes to us really is word of mouth or referrals. And I think that speaks to this goodwill and our good reputation out there. There must be one satisfied customer who’s telling another, ”Hey, check these guys out at Erickson. I think you’ll get a square deal from them,” or something like that must be going on because it certainly isn’t the media advertising we’re doing and it’s certainly not all the new business development trips that we’re making trying to find this new customer or pitch that new customer. We just don’t do it. And yet somehow people keep coming to us.
