Firm Racking Up Sales By JEFF WEISS Contributing Reporter You can call Jeff Salmanson the Colonel Sanders of the reverse logistics industry. While fried chicken and the creation of easily disassembled racks to carry trees and plants from nursery to retailer seemingly have little in common, the founders of Kentucky Fried Chicken and Westlake Village based E-Z Shipper Racks LLC both shared massive initial rejection in their first attempts to build a successful business. Like Sanders, Salmanson drove up, down, and around the United States, traveling from business to business, doing his best to coax them into trying out his product. Salmanson’s efforts paid off, as he and managing partners David Czerwinski and Mel Harner have guided their company to dominance in their field. Salmanson possesses creativity and persistence two crucial attributes of a successful entrepreneur. He’s one of many talented Valley businesspeople who have taken an idea, stayed focus on their vision and have successfully marketed a product from the idea. Salmanson’s company is one of three businesses that the Business Journal highlights this week showcasing some of the best in Valley-area entrepreneurial endeavors. As the clich & #233; goes, necessity is the mother of invention. In Salmanson’s case, his moment came while he was selling corrugated shipping boxes in San Diego. A major company decided that they didn’t want boxes anymore because they didn’t display plants very well and they accumulated too much waste. Salmanson began to search for a recyclable container that could be shipped over and over again to his clients. “Our first idea was to make the container out of wood, but it didn’t work. We switched to metal, we did a lot of modifications, the first metal ones had a lot of problems, we had to use metal and screws, it wasn’t easy to put together and take apart,” Salmanson said. “Then we came across a way to attach metal to metal using a boltless racking system which has been around for a long time. People had it in their garages for years but we figured out a way to make it mobile. That’s when the program starting taking off.” But even though he had discovered a product that would soon change the way nursery products were shipped, Salmanson still had to convince the intransigent nursery owners to rent his wares. For approximately a year, Salmanson traveled on and off to find buyers, going to any nursery he could find and selling quite a few of his E-Z racks. It wasn’t an easy process. “One of our biggest customers right now is up in Oregon. When I was traveling around the country I went up there and had the racks shipped up there so I could show them to him. I rented a trailer and was out delivering them, just to show people how high quality the product was,” Salmanson said. ‘I was charging them $50 for a sample. One of the stores’ general managers told me to leave it so he could take a look at it. When he got the bill for $50, I got a call from the now retired owner, who said ‘I’m not paying for this. Come and pick it up.’ I told him I was in LA and he was in Oregon. He said, ‘I don’t want it, come and get it now.’ I said all right, I’ll see if I can find someone to come and get it. The next day he called me up and said, ‘You know what this thing is pretty good, can you send me a small order?” Big customers That same reticent nursery owner currently rents 27,000 racks a year from E-Z Racks. One of E-Z Racks’ first customers, Heinz Nursery in Irvine, continues to purchase from them in vast quantities. “It is the most economical and most versatile plant delivery system in the marketplace. It’s a rack that has been accepted and in many cases the only rack that accounts like Home Depot, Lowe’s will accept for product. It is the preferred rack in the Nursery industry for shrub and plant delivery,” Heinz’s distribution manager Gene Onufer said. Since 2000, when sales of the product began, growth has been constant. In 2000, E-Z Rack reported sales of just $1 million. But by the next year, revenues jumped to $2.5 million, followed by $5 million in 2002, $9 million last year, and E-Z Rack projects sales of $15 million for 2004. They will rent 300,000 racks this year to 2,500 different stores. Czerwinski and Harner purchased 50 percent of the business from Salmanson’s original partner co-founder Jon Dickey in 2002. All three men are currently managing partners. “The thing about E-Z Rack is it’s not only a wonderful product but it’s a whole system that attracts the racks. We have a system all over the country from our inventory to the growers to the stores and we send people in once a week to the stores to break them down,” Harner said. “When a store gets to a certain level of inventory in our system, we send a truck to come in and break the racks down, repackage them and bring them back. Furthermore, there’s no waste that accumulates like it does with corrugate product.” In order to maintain an efficient nationwide system, E-Z subcontracts these rack retrieval and delivery tasks to other companies. “We have 120,000 of these racks and we need to shuttle them quickly between 2,500 retailers. We have to move 2,500 different locations a week and to break them down, there’s a lot to keep track of,” Czerwinski said. “There’s probably 750 agents to do the breakdown for us. There’s hundreds of trucks. There’s 35 retrieval yards throughout the country that we have to manage. That’s the backbone of this business. It’s not just the fact that we get a great rack in place, but it’s the fact that we get them back and re-rent them again.” All three partners forecast an extremely bright future for the company and its hard not to considering that it has doubled sales, total rentals, and employees almost every year. Home Depot, Lowe’s, Sears are major renters and even Wal-Mart has demonstrated a degree of interest. Preferred system “Right now it’s the best system that exists out there to transport nursery goods into retail stores. It reduces the amount of labor required in unloading trucks which is a major benefit,” Vinny Naab, divisional sales merchant and head of Home Depot’s Mid-Atlantic division said. “It used to average three hours to unload a truck, now it takes 15 minutes. That time savings can be spent merchandising, signing, watering the product. It’s a simple logistical solution to what had been a big problem in the marketplace. We continually use more E-Z Racks every year.” However, the managing partners of E-Z Rack are determined not to grow complacent with the product’s success and are determined to develop other uses for the product. “Joining E-Z Rack has been the best thing we ever did. It has unlimited potential. We’re doing large racks for the nursery business and smaller racks. We’re making mini-racks to be on displays that can hold a few thousand pounds of plants,” Harner said. “We think that this new display can be put inside the store and can potentially sell a couple of million units each year. That’s the next step that we’re working on right now. We’re very close and working with some major companies on the verge of selling to them.” Even the United States Department of Defense has shown interest in the technology that E-Z Rack has pioneering, exploring the possibility of using the product to aid in rapid deployment plans. Potentially, an innovation originally used to mobilize plants may be used for the distribution of medicine, replacement parts, and food stuffs for all branches of the military. “We expect to have continued growth into different channels. One of the biggest opportunities we’re looking forward to is the mini-racks that we have developed,” Czerwinski said. “At Home Depot there are 100 corrugate displays at one time, if can go in there and take a piece of that market than we can save Home Depot labor and disposable cost. The military application is also a huge opportunity. The racks can be used for so many things. It’s limitless. We plan to grow rapidly over the next four or five years,”
