Why Success Online Often Is in the Details

Staff Reporter of The Wall Street Journal.

From The Wall Street Journal Online

John Turton has just walked through the doorway of a small record shop in Oakland, Calif., when his eyes lock on a target. There, on the wall above the cash register, is a copy of the Grateful Dead's self-titled debut album.

Mr. Turton takes it down, handling and examining the collectible like a delicate piece of fine china. It is priced at $50. If it is in mint condition, he could sell it for $120 on his Web site. But as he gently slides the album from its cover, he finds a small imperfection on the vinyl playing surface, a tiny bubble on an inner track. "That's a shame," he sighs. "It makes it not worth it for me. It's a nice little record. But that's going to drive somebody nuts to hear a big thud" every time the phonograph stylus passes over the flawed spot.

Later, the man sitting behind the cash register tries to assure the discerning shopper that the blemish is probably inaudible. But Mr. Turton isn't buying. "The guys I sell to are picky, picky, picky," he explains. "And I'm picky for them."

That sort of personal attention to detail has become a hallmark of Mr. Turton's Web site, Audiophileusa.com, for its 2,000 regular customers. It helps explain how he and his wife, Marianne, took in nearly $500,000 in sales last year as co-owners of Audiophile International, whose sole business is the Web site.

But customer satisfaction is only one aspect of their success. The Turtons are constantly dealing with problems of time management, inventory control, pricing, shipping and marketing, all of which present themselves in ways particular to the running of a mom-and-pop Internet business.

Experts say this is no small feat for Web entrepreneurs. "The biggest challenge is the constant change that they're having to deal with," says Paul Edwards, an author and expert on home-based businesses. "You're constantly having to keep up with the changing nature of the Web -- changes in distribution models. Who buys what? Who your competition is, and will they be able to offer what you do in a way that undersells you or improves upon what it is you are doing? You're constantly having to stay ahead of the curve."

Mr. Edwards says statistics from the Small Business Administration show how much tougher it is for home-based businesses in the Web era. Today, a little more than 15% of such businesses close each year, including Internet and traditional enterprises. That contrasts with the late 1980s and early 1990s -- before electronic commerce took off -- when 5% of such businesses closed each year.

The challenge for the Turtons is to stay far enough ahead of the curve to stand out amid a smorgasbord of similar Web sites available to any audiophile with a browser. Among the many options available to the Turtons' potential customers is eBay Inc.'s massive online marketplace, where on any given day dozens of sellers might post as many as 175,000 vinyl albums for sale. To compete, the Turtons hustle nonstop from the basement of their suburban home outside Sacramento, Calif., to serve all those "picky, picky, picky" customers.

The Toughest Part

The couple runs Audiophile International with the help of only one employee. Their 1,700-square-foot basement is packed with an estimated 30,000 vinyl albums and about 1,500 compact discs. As the Turtons and their assistant work away at their respective computer terminals one recent day, the challenges become clear for a family running an international, 24-hour business out of their home.

Consider that the Turtons gave their older son the master bedroom in the living quarters upstairs, so that they could sleep in a bedroom closer to the basement staircase. "It does help being able to creep downstairs without disturbing anyone," says Mr. Turton. "Not being able to get it out of your mind" is the toughest part of running such a business, he says. "It's hard to divorce yourself from it. You wake up at five in the morning, and it's too easy to come down and start work."

Indeed, there is plenty to be done. Mr. Turton estimates as many as 20,000 of the albums in the basement have yet to be entered into his Web site's database. That means his customers don't even know about -- and so the Turtons are unlikely to sell -- about two-thirds of their inventory. "It'll probably be the middle of the year," Mr. Turton predicts, "before I get close" to cataloging the rest of the inventory.

Each month, he assembles a list of his newest offerings. He figures it takes him five to seven days to type in entries for the 600 to 800 albums he will feature.

Why not let someone else do it? Again, it comes down to the business approach that gives the Turtons their edge on the fiercely competitive Internet: personal attention to detail and product knowledge. For every album on the Audiophileusa.com Web site, Mr. Turton either knows something about the music or will take the time to listen to it before he writes a short note about it for the site.

Pricing It Right

Mr. Turton also feels he is the only one who can accurately price the albums. He can charge more than the local record shops, in part because he can reach more dedicated audiophiles, who are willing to pay for the selection and convenience offered by the Internet. But online pricing also is tricky, because it is more transparent -- competitors' prices are available in an instant. The Turtons keep an edge there by virtue of their track record of more than seven years of quality and service, built largely on Mr. Turton's attention to detail.

"It's so easy to miss something," he says. He is always looking for something that will increase the value -- and, so, the price -- of the albums he is putting up for sale. For example, notations in the vinyl that surrounds the album label, where no music is engraved, might include the initials of a well-known recording engineer or the mark of a highly respected album-pressing plant, or indicate an early pressing, which usually means finer sound and less noise on the album.

Mr. Turton usually is familiar with each of the albums and, as he puts it, "their subtleties," because he goes out and finds most of them himself. He estimates he makes 20 shopping trips a year to the many used-record stores around San Francisco and Los Angeles, and to a handful of major swap meets as far away as Austin, Texas.

Hot Finds

During a recent shopping trip in the San Francisco area, Mr. Turton took along a reporter and a friend who sometimes helps him shop, Roy Sharpe, a retired software salesman who makes some cash buying albums and reselling them on eBay. The crew hit five stores, shopping for more than six hours, and Mr. Turton ended up spending about $775 on about six dozen albums. The day's business lunch consisted of corn chips and soft drinks in the car between stops.

Among their hot finds that day were a mint-condition copy of Miles Davis and John Coltrane's "Live in Stockholm 1960," for $17.95, which Mr. Turton expects to sell for $36, and a special audiophile pressing of Nirvana's "Nevermind," in mint condition for $30. "Ooh. Ooh. That's really made my day," Mr. Turton says of the Nirvana album, which he figures he can resell for "at least $100, maybe more."

While Mr. Turton, 48 years old, does the shopping and pricing, Mrs. Turton, 46, focuses on the shipping. A typical day has her up at 6 a.m., taking the two Turton boys, 13 and 8, to school. Then she heads home to pull orders -- about 12 to 15 each day -- pack them and head out to the post office by 1:30 p.m. After that, she picks up the boys from school, and then is back downstairs at corporate headquarters by midafternoon.

Between it all, there are typical house chores and meal preparation. "We don't have a cleaning lady," says Mrs. Turton. "It's us two. And it's go, go, go, until we go to bed." Then again, she points out, if one of the boys is sick and needs to stay home from school, mom and dad can both be home to care for him.

In dealing with the intrusions of daily life, it's an advantage that Audiophile International is a Web enterprise and not a traditional mail-order business. "We can fill orders when time allows, rather than diving for the phone all day," Mr. Turton says.

Still, there is little time to listen to their own music collection, which Mr. Turton says he has shrunk to its current 2,000 albums from 6,000 about a decade ago. He has sold nearly all of those albums, and has all but sworn off collecting as an occupational hazard. "If you collect," he says, "you could wreck your business."

Looking ahead, the couple believes that Audiophile International's recipe for success will continue to center on Mr. Turton's personal approach to shopping, and then his and Mrs. Turton's careful wrapping and packing of orders, the key to limiting returns of damaged products. Packaging is a particularly vulnerable area for a business serving a niche market almost entirely by shipping, a common profile for small Internet operations.

"Packing is so important," says Mrs. Turton. "For many of these albums, there's no replacement. If I don't pack it well, what's the point, then?" Albums are placed inside a plastic bag that is wound tightly with tape, then covered with padding and retaped before being placed in a reinforced shipping box; plastic-foam packing peanuts fill any excess space. Eventually, the Turtons hope to find a paper company to make them a custom box.

Loyalty and Growth

The care the Turtons take is the main reason Charles Smith of Jackson, Miss., estimates he spends $3,500 to $4,000 each year on albums from Audiophile International, mostly Beatles, Rolling Stones and other British Invasion music from the 1960s.

"He's always got a lot of good stuff I'm looking for," says Mr. Smith, an assistant professor of history and political science at Mississippi College. What's more, he says, "You can be sure it's really good quality."

Since Mr. Smith began buying from the Turtons in the fall of 1997, he has returned only one record, he says -- Joni Mitchell's self-titled debut album, because it had too much surface noise. The Turtons refunded his money promptly. Several months later, Mr. Turton tracked down a quieter copy and shipped it off to Mississippi.

Loyal customers like Mr. Smith had helped Audiophile International's sales grow between 25% and 50% annually since the Web site went up in October 1994, a time, Mr. Turton remembers, "when the general public wasn't really aware of what Web sites were. It was a very small thing."

Last year was the first that sales didn't grow. As was the case with many businesses last year, "September was like a month of nothing," Mr. Turton says of the effects of the Sept. 11 terrorist attacks in the U.S. And business never really recovered throughout the rest of the year.

Partly as a result of those disappointing sales figures, and because the Web site's design hadn't been changed since its 1994 launch, the Turtons decided late last year to invest in a redesign.

Mr. Turton hired Webscape Internet Management Ltd. (now Neale Internet) , based in Vancouver, British Columbia, for a job that ultimately will cost his company $8,000 to $10,000. While it's a major expense, it is a far cry from the $25,000 to $30,000 estimates he got from Web designers in the San Francisco area. "It's a real crapshoot out there with Web site work," he says. "You've got to have that combination of good work and a price you can afford."

The old site was really nothing more than long lists of albums, with little artwork. "The whole thing was a straggling mess," Mr. Turton says.

The changes are dramatic. The home page, which changes daily, now features nine albums, all pictured. In addition, customers can search the database by artist, type of music, label and category (new or used album, compact disc, etc.). The site also allows customers for the first time to place selected items in a virtual shopping cart, like most modern electronic-commerce sites.

The Turtons have noticed an enthusiastic response to the new site, from new customers as well as regulars, and expect sales this year to easily exceed last year's total of nearly $500,000.

Even so, Mr. Smith, the customer from Mississippi, says what would really be helpful is if Audiophileusa.com could be updated more often than monthly. He suggests a "What's New" listing, with the most current additions to the inventory, similar to that offered by one of Mr. Turton's competitors, Redtrumpet.com.

Of course, that is easier said than done, considering the massive backlog of inventory Audiophile International has stored away in the basement. But that won't deter Mr. Turton from his efforts to find even more mint-condition gems and collectibles for his demanding customers. And those little pats on the back he gets along the way do help.

"Glad to see you're buying vinyl," a young man tells Mr. Turton as he watches him write a $180.43 check in a Berkeley, Calif., shop for a tall stack of albums. "It has so much more personality and character."

"And," Mr. Turton responds, "It sounds so much better."