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BikeBandit.com Has Big Part in Aftermarket Sales

As economic woes pummel retailing, BikeBandit.com is posting double-digit growth.

The Web site ships out 10,000 parts a day for motorcycles, ATVs, jet skies and snowmobiles.

The Otay Mesa-based business, one of the largest online retailers for such products, is among the top 100 privately held, fastest-growing companies in San Diego.

Revenues will reach $30 million this year, a 60 percent increase over last year, said CEO Ken Wahlster, who hired 22 employees this year to bring the total to 74.

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The business has been recession-proof. He’s even doubling operations to 60,000 square feet.

“Where the retail meltdown has been in power sports is new unit sales,” Wahlster said. “Bikes that are out there need to be maintained. We don’t sell new motorcycles. We sell parts.”

Maintenance costs increase as motorcycles age. That’s a plus for BikeBandit. And owners do repairs themselves, as opposed to taking them to dealer service departments.

Then, there was the gas crisis over the spring and summer.

“The stars are aligned in our favor,” said Wahlster, a racer turned M.B.A. graduate.

“Ken is experiencing incredible growth rates,” said Jay Goldstein, chief financial officer for Tucker Rocky, which sells parts to BikeBandit. “Not because the market is up, but he’s taking business away from competitors. He’s deployed a model and sophistication providing customer service that is working for him.”


Full Inventory

BikeBandit carries 8 million items from 28 suppliers. Customers can order original equipment manufacturer, OEM, parts and aftermarket parts , from single screws to entire bike frames , as well as accessories, like tires, helmets, tools, chemicals and manuals.

The site, which doesn’t take advertising from its suppliers, has 700,000 customers. Many write reviews about the parts they’ve purchased and installed, which don’t get censored.

“We read all the reviews every week. We will remove a product if people are giving it poor reviews,” he said.

But the strength of BikeBandit is its delivery speed, Goldstein said.

“Ken has a very sophisticated computer system,” said Goldstein. “If I live in Georgia and my bike broke down the BikeBandit model will give you the part as soon as possible.”

“We’ve got seven warehouses across the country. Ken will run software that basically ties into our computer system and he can see that we have that part in our Jacksonville warehouse.”

BikeBandit will ship the order from Jacksonville, Fla., Goldstein said, saving time and money.

Wahlster said a $50 part needed to fix a $10,000 motorcycle is actually worth more to the customer than $50.

“I think Ken is definitely one of the leaders in technology and understanding in our industry,” said Randy Hutchings, CFO for Helmet House, which distributes a high-end helmet through BikeBandit and other retailers.

“His IT department and our IT department have gotten in touch so his computer can go into our real time online inventory. So before you click ‘buy,’ you know if it’s in stock,” Hutchings said. “I think that’s where he’s heads and shoulders above everyone in how to do that.”


Business Sense

Wahlster launched his company , named after Bandit, his dog , with $400,000. By the third year, it had turned a profit, he said. He considers the nation’s 14,000 neighborhood motorcycle shops his biggest competition.

At its headquarters, employees work in an open area around monitors suspended from the ceiling.

The monitors chart daily sales against other metrics, such as average day sales and best day sales.

On a recent day, sales were below average, which Wahlster attributed to seasonal fall-off.

After a few moments, the screens switched to a sales ranking by employees, who participate in contests for prizes to boost their pay.

Every employee, including the managers, IT staff and Web site content managers, receives those incentives.

The average employee is about 24 years old. At 37, Wahlster is considered the old man of the business.

“You’ll notice that plenty of people here have tattoos and piercings,” he said.

He said a lot of people in the power sports industry focus more on the lifestyle of the industry than the business.

“We are passionate about the business of power sports,” he said. “Not just power sports.”

The warehouse is almost automated with carousels containing 34,000 bins filled with parts that can be spun around to computer stations where workers handle the orders.

“We stay as efficient as possible,” he said. “Some items cost 10 cents. By the time an employee has run down the aisle looking for a screw, you’ve lost money.”

“We compete on service more than money , time to delivery and accuracy of order,” he said. “Price is competitive, but there will always be someone cheaper and willing to go out of business. And many do, often.”

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