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Friday, August 20, 2010

Recycled Success Online
By Paul Lima

It's like being in the food industry where you have captive customers. People buy food, consume food and return to buy more food. "They can't get by without food," says Gary Sheinfeld. Only the president of Markham, Ontario-based GCW Inc. doesn't sell food. Operating under the trade name, GCW sells half-priced, recycled golf balls. Knetgolf's captive audience? Golfers who can't play without their balls. They buy golf balls, lose golf balls and return to buy more golf balls from the Web site.

"Although we can't keep track, I suspect we've sold the same golf ball to the same person more than once," Mr. Sheinfeld, 53, says.
Knetgolf sells one huge whack of golf balls. This year the company will sell close to five million of the little round orbs, and it carries an inventory of about one million golf balls in its Markham warehouse. "The key is repeat business," Mr. Sheinfeld says. But companies don't generate repeat business, even if they are selling a consumable like golf balls, unless they "service the hell out of people." That's why Knetgolf employs 20 people to clean, sort, package and ship orders as quickly as they come in.

Instead manufacturing new golf balls to replenish stock, and competing against the major brands for a share of the market, Knetgolf pays crews to scrounge for golf balls at over three hundred golf courses, mostly in the U.S., and sells recycled, brand name balls at up to 50 per cent off. Although sales peak in the spring and ride high all summer and well into the fall, it is a year round business with 80 per cent of the balls going to U.S. customers who can golf the four seasons in places like Arizona, Nevada, Florida and California.

Knetgolf's unique selling proposition is "home of the half-priced golf ball," Mr. Sheinfeld says about the recycled golf balls he sells online and, to a lesser extent, by mail order. Ten years ago, when he got into the recycled golf ball business, it was all wholesale and some mail order. Mr. Sheinfeld and a business partner, Bill Birss (the founder and former owner of CDPlusonline), moved to the Web six years ago. Now its almost all retail, with 95 per cent of Knetgolf's orders placed electronically. Through a division of Knetgolf run by Mr. Sheinfeld's son, Shaun, Knetgolf also generates about 20 per cent of its revenue using eBay auctions.

"eBay is a substantial, additional channel. The eBay buyer is not the online web site buyer. It's opened new avenues and is not cannibalizing (the Web site) business," says Mr. Sheinfeld who got into the recycled golf ball business "by accident" when a colleague asked him to help finance a wholesale golf ball business. "I saw the numbers and said, ‘I don't want to finance, I want a part of it.'"

Knetgolf would not be the company it is today if it were not for the Internet, says Mr. Sheinfeld. The company has grown from a local wholesaler that did some direct mail to a major international retailer of recycled golf balls. Instead of selling to hundreds of thousands of golfers in southern Ontario, Knetgolf is able to serve millions of golfers in the U.S. and around the world with the click of a mouse, he says.

Of course it takes more that the Internet to build a business. Mr. Sheinfeld is fortunate that many golfers are like him. They resent paying full price for new golf balls they are just going to lose, says Mr. Sheinfeld who golfs with an 18 handicap and losses more than his share of balls. "You can say it helps me understand my customer, and I have fun doing it!"

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