Worst of times is best of times for Shore company USA Fulfillment thriving on rebates, catalog orders

February 27, 1991|By Pat Emory | Pat Emory,Special to The Sun

CHURCH HILL -- Keith Moore doesn't like to admit it, but these hard times are good for business.

So good, in fact, that Mr. Moore, who is president of the family-run company USA Fulfillment on the Eastern Shore, is thinking about expanding into a bigger building and perhaps even getting rid of some people -- not workers but clients.

"In improving our business strategy, we will probably fire a few clients," Mr. Moore said.

Most companies suffer during a recession, but USA Fulfillment expects to increase its business by as much as 45 percent this year, partly through improved sales efforts but also because the recession brings in more business.

The company provides a service called "promotions fulfillment," better known to consumers as rebates.

Sixty percent of its work is fulfilling manufacturers' rebates -- those offers of money back on the purchase of a new product. Manufacturers use rebates to entice consumers to buy their products, but when economic times are good, many consumers never get around to mailing the money-back coupons, usually worth $1 to $10.

"In a recessionary period, people will make greater use of rebates then when times are good," Mr. Moore said. At the same time, "manufacturers will offer more rebates and value-oriented products to move their products."

Since USA Fulfillment is paid by piece rate -- 10 cents to $3.50, depending on the value of the item being processed -- the more consumers use rebates and promotional offers, the more money the company makes. Consequently, it prospers in a recession.

The rest of USA Fulfillment's work is divided among three related areas. Twenty-five percent is filling "direct response" mail orders, usually from television commercials. Ten percent is filling catalog orders for medium-sized catalog companies that don't have the warehouse space for their growing inventories. And 5 percent is storage and other miscellaneous work.

Every workday, the company's 60 employees process 10,000 to 12,000 phone calls and pieces of mail. Some employees "qualify" the mail, that is, make sure the consumer has met all the restrictions put on the offer by the manufacturer. Others type data, including names and addresses, into computers for mailing labels, then send checks or products through the mail.

Each day, thousands of rebate checks, most for $2 or $3, and many promotional items, from Ninja Mutant Turtle jumpsuits and Playtex bras to quit-smoking kits, go out the doors of USA Fulfillment's three warehouses.

Last year, USA Fulfillment processed 3.5 million orders and paid more than $1.3 million to send those orders through the mail. After mailing costs, it had $1.5 million in revenue from its clients, which include international manufacturers such as Fuji film, RCA and General Foods.

In considering whether, and how much, to bid for new business, Mr. Moore grapples with the same questions consumers face when they spy a promotional offer in a newspaper ad or a rebate offer on a store shelf: Is the rebate worth it? Is the redemption process too much trouble? Is the economy tight enough to encourage consumers to redeem rebates?

"We see offers that are calculated to have very little response. They [the manufacturer] wanted dealers to give them more shelf space," Mr. Moore said.

But his company occasionally handles a sales promotions so popular that some consumers send much more than their rebate coupons and proofs of purchase. Such was the case with Playtex's "Buy Two, Get One Free" bra ads.

"We've had women send in pictures of themselves modeling their bras," said a bewildered Mr. Moore, who described the models not as slender young women looking for a career in modeling but as pudgy, middle-aged housewives. "Now what husband in his right mind would take this picture?" he asked.

Mr. Moore hopes to generate more catalog business, as the company did with Success, a business magazine that uses full-page ads to sell books and computer software to its readers.

"There's over 10,000 catalogs, and 8,000 do $1 million to $5 million in business a year. They're not big enough to warrant the overhead of a warehouse," Mr. Moore said.

"Direct marketing will grow, despite increases in the cost of doing business. It lends itself well to the emerging marketplace."

USA Fulfillment has come a long way in the eight years since Mr. Moore and his wife, Patty, started the business in their Annapolis home with his parents, Al and Shirley Moore, as business partners and $10,000 in capital.

The business has grown so rapidly that it now is scattered among three warehouses in three locations on the mid-Eastern Shore, including its main office near Church Hill in Queen Anne's County.

The Moores probably never would have gotten into such an unusual business had Shirley Moore not managed the operations of a similar company.

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