This will probably divulge more than I care to, but here it is:
There were two reasons we were able to sell so cheaply on the internet: (1) we buy a monthly monster pile of filters from Wix and for that we get a minor discount, and (2) we used the old-school “kickback” system to sell filters to everyone at very low prices. We then took those savings and rolled them over to the customer with extremely aggressive pricing. Our profit margins are slim, but we kept the site going because we could occasionally get large customers who would buy $8000 in filters and because we have hope that the site can grow into a several million dollar company, and we stay profitable because of the volume. I’m into this for the long-term.
Now, our suppliers told us that we can only use the “kickbacks” if the customer buys $125 or more. They fined us late last week and told us to change the site immediately. We had little warning. They like what we do, but the people above us are trying to cover their butts from their bosses. Without those “kickbacks” now for the small guy, we are forced to rely on our pallet purchases to keep the website at the lowest prices possible, but I promise you 100% that we are making less money now than we ever have. But I know the site is a good thing and it still holds the possibility of growth due to the large volume purchasers and because the large volume in sales we might do in a few years.
It’s not only Wix that uses this system of “kickbacks” – the other major filter manufacturers and many auto parts manufacturers do the same thing. It’s an old-school system that I and many in the business don’t like; that’s why there aren’t many auto parts stores doing what we’re doing on the internet. We spent all weekend coming up with pricing formulas that were the best for the customer while keeping us in business – we looked at free shipping, different price structures, different discounts, and a variety of all three. The pricing we set on Tuesday was the best we could do for the small customer. I’d love to offer you free shipping, but if I do, I’ll fall under the profitability line, and if I do that,
www.fleetfilter.com will have to close.
This is the nature of the auto parts business that most of the “outsiders” don’t know anything about. I’m doing everything I can to sell filters at aggressively low prices while bending every rule my suppliers throw at me. Here it is 2007, and I’m the only filter internet company doing it right (great prices, easy in, easy out, filters in a few days). How backward is that? There should be tens of companies like mine, but the industry as a whole thinks old-school, and they don’t know how to deal with my business model because it’s not a traditional business model. So I’ll keep bending their rules as long as I can continue to go forward, and maybe someday they’ll catch up.
Brian Schneider
Owner
