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The Toronto Star

Friday, August 20, 2010

Small Markham company is on the ball

Knetgolf no one-hit wonder as owner's firm corners reused market

by CARMEN CHAI

Mention golf balls to Shaun Shienfield and he licks his lips with enthusiasm.

There are at least one billion golf balls lost every year and Shienfield, eBay Canada's 2009 entrepreneur of the year, will have found and sold 20 million of the recovered balls by the end of 2009.

Shienfield, president of eBay operations for Knetgolf, knew he caught onto a trend when he was only 15.

In 1995, Shienfield, his father Gary and brother Korey bought 5,000 pre-owned golf balls and a fax machine to contact a rented list of potential customers. The tiny orbs sold within a week and clients wanted more.

"It's like this: golf balls are like food for our customers. They buy it, consume it and then come back for more," he explained. "It's repetition. It's the one commodity in golf that keeps getting lost and found."

Knetgolf continued to buy balls to cater to eager clientele and significantly cut marketing costs in 1998 when the company's website, www.knetgolf.com, was launched. Bill Birss joined the firm as a partner to handle the technology and website aspects, and a call centre was also incorporated to handle customer orders.

Suddenly, thousands of dollars spent on postage, packaging and brochure expenses were cut and their response rate drastically increased with online exposure.

But what launched Knetgolf's multi-million-dollar success was eBay, Shienfield said. His `eureka' moment to create an eBay account happened in 2001 while he was surfing the internet.

"I'd Google golf balls and nine of the 10 listings were eBay auctions. They dominated anything with the words `golf ball' at the time," he explained.

Knetgolf's eBay account became the No. 1 seller of premium pre-owned golf balls online within three years, and now accounts for 20 per cent of the company's overall revenue. Their online profile draws in 400 orders a day from clients in 28 countries. About 250,000 clients are golfers, 600 are golf courses and Shienfield also exports to wholesalers and major retailers in North America.

Shienfield said the balls all play the same way, and the need for new balls is purely aesthetic. Golfers save a minimum of 40 per cent off mint golf balls and 80 per cent off lower grade balls. Knetgolf's packaged mint golf balls sell for $5 to $30 a dozen.

Business for Knetgolf has jumped by 20 per cent in the last year, while new golf ball sales were down 12 per cent.

"Golfers know the game is not cheap and any way they can save money to help make it more affordable is good," he said. "The stigma is removed from recycled balls because friends are telling others that (pre-owned balls) play the same way."

Shienfield doesn't mind if golfers purchase new balls, though, because these balls contribute to his supply. In fact, the more fresh balls are purchased, the less Shienfield worries about back orders and demands to give clients what they want. The company recruits scuba divers to scour the waters, recovery people to scan desert floors, and machine operators to uncover the little spheres on golf courses. Nearly 400,000 golf balls are recovered each week from 2,000 golf courses in the United States – primarily in Nevada, Arizona and California.

The balls are then transferred to factories in Arizona or Shienfield's base in Markham, Ont.

Shienfield's elaborate Markham factory holds five million cleaned, sorted and bagged golf balls ready to be exported. About 30,000 recovered golf balls are processed daily in Markham and along with another 50,000 at the firm's Arizona facility. The balls are cleaned, sorted by brand and grade and repackaged. During his teens, Shienfield would spend his spring break holidays sorting through golf balls, but now he's hired employees to help with the process.

"We went from a basement in a house in Thornhill to this 25,000-square-foot location," Shienfield boasts.

Mint condition balls have been nicknamed "one-hit wonders" that have never touched water when they were played. Some clients prefer to purchase a type of brand that has been discontinued meaning they may be purchasing the same balls they've bought before from Knetgolf.

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