E-commerce pioneer: BikeBandit's Ken Wahlster

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BikeBandit.com claims to offer the largest selection of powersports items in the world: more than 8 million. Yet customers have no problem finding what they want. Good organization, search by fitment, and full schematics ensure it. And people almost always receive their shipments quickly and correctly.

“Customers have learned that the value proposition [on the Web] is not solely based on price,” BikeBandit founder Ken Wahlster says. “It’s price, deliverability and order accuracy. If you look at our logo — all over our site — it’s ‘Get It Right. Get It Fast. Get Riding.’ There’s nothing about price in our value proposition because we’re not a price competitor. We pride ourselves in being the best in service and time to delivery.”

Wahlster is surprisingly candid about how he’s built his high-tech operation. Here, for example, is a rundown of the company’s revenue for the past few years (split about evenly between street and off-road sales):

  • 2005: $13 million
  • 2006: $17 million
  • 2007: $19 million
  • 2008: $30 million (“slightly under”)
  • 2009: $35 million (“around”)
  • 2010: $43 million to $44 million (prediction)

Such growth in today’s economy may seem improbable — until you learn about what Wahlster and his team have achieved.

Passion for Motorcycles, and Selling
When we spoke with Wahlster, he had just gotten back from the Baja 1000. He raced more than 400 miles atop a Ural, which, as most of you know, is a two-wheel-drive Russian motorcycle with a sidecar. “We attempted to do a thousand-mile race on a machine that was never really intended to do that,” he says. “It was holding up pretty well until we broke the frame. Other than that, it was a lot of fun.”

Wahlster, 39, has been an adventure racer for many years. His race bike is a KTM 950 Super Enduro (he also owns a KTM 450EXC and a BMW GS1200). At press time, he’d won the first two races of this year’s California Rally Championship. He’s also competed in the Adventure Rider Challenge a couple of times.

While in college, Wahlster worked for a small Yamaha/Suzuki dealership. “Parts, sales, mechanic — I did pretty much everything,” he says.

After earning a master’s in business administration, Wahlster spent a decade working in corporate finance. He was working for Gateway Computers in San Diego when he decided to combine his love for motorcycles, business and technology by selling PG&A online. In 1999, he spent $400,000 to found BikeBandit.com. An advertising firm suggested that he name the company after his Labrador, Bandit. The dog’s loyalty and trustworthiness made it a perfect mascot, the firm told him.

Wahlster ran the business from his home for the first couple of years. Van Leeuwen was his first distributor. By the third year, the company was making a profit and had opened a storefront, attracting the major distributors.

Today, BikeBandit has roughly 28 suppliers, 700,000 customers and 80 employees, and ships 10,000 items per day. It buys OEM parts from four or five franchised dealers.

After moving four times in the past decade, BikeBandit has a 65,000 sq. ft. footprint in a 107,000 sq. ft. facility in south San Diego. “When we started in this building, we started at 25,000 sq. ft.,” Wahlster says. “We have first-rights refusal on the rest of the building if we need it as we get bigger.”

BikeBandit stocks about 35,000 SKUs. Wahlster says he’s spent a ton of money to automate the warehouse with things like robots. “We pump some major volume through there,” he says. “There are certain stations in which people stand on a lift table. It picks them up and puts them close to the rafters, and they pick parts from up there.”

BikeBandit does use drop-shipping programs, especially Tucker Rocky’s, but Wahlster tries to avoid the model. “Drop-shipping is hard,” he says, “because two things happen: One, you lose quality control on your process because you’re counting on somebody else to fill the order for you. And two, the fees get out of control.”

Wahlster also has spent a lot of money integrating his website with the computer systems of his suppliers, allowing him to inform customers of real inventory levels and shipping times.

BikeBandit’s open sales area has a brokerage atmosphere. Flat-screen TVs suspended from the ceiling continually display various metrics, including salesperson rankings for the day.

Same goes for the company’s managers. “If you go into any of the directors’ offices,” Wahlster says, “they’ll have anywhere from two to eight screens on their walls showing different metrics for different areas of the company that they’re responsible for, whether it’s daily sales or phone sales or warehouse activity or website performance.”

All this tracking relates directly to compensation. “Every person in the company has some sort of incentive-based pay,” Wahlster says, “whether it’s a person in the warehouse packing boxes or a salesperson or an administration person up to a director level.”

BikeBandit’s walk-in retail store is about 2,000 sq. ft. “We actually do get street traffic,” Wahlster says. “People come in and buy stuff, and it’s a valuable part of our business.” (Continued on page 2.)

Redesign, Mobile Commerce, Facebook
BikeBandit.com recently went through a redesign. The company has begun to segment customers by four terrain types: street, dirt, snow and water. Explains Wahlster, “That’s the main focus our redesign: presenting more relevant data to the customer based on what terrain he or she is focused on. It sounds easy, but it gets difficult when you have somebody like me who has a dirtbike, a streetbike and an enduro bike. How do you know what to serve him up?”

BikeBandit has long offered “one-click” access to parts. “Once you’ve purchased any part for a machine,” Wahlster says, “when you come back it’ll say ‘My Garage’ on the left-hand side of the screen, and under that will be a link to that machine. So, for example, if I came and ordered a part for my 2009 BMW, the next time I load the site, it will actually have ‘2009 BMW GS Adventure’ on one link so I can just click on that and instantly go to that machine.”

The site has always had five main categories: OEM, aftermarket parts, apparel and accessories, tires, and tools and manuals.

BikeBandit recently gave customers more payment options by adding Paypal and Bill Me Later. They were easy to add, Wahlster says, but order processing and billing can be difficult. Complications arise because it’s illegal for online retailers to bill customers until their items have shipped. But with many orders, some items can ship immediately while others are on backorder. When they finally do ship, the retailer has to get a reauthorization.

“Paypal and Bill Me Later are really set up for retailers who are going to ship one specific item to a specific customer,” Wahlster says. “Some people order 50, 60 line items from us, so it creates a lot of IT work. But we figured it out.”

Earlier this year, BikeBandit launched its own iPhone app, which Wahlster calls a “huge success.” There were more than 10,000 downloads of the program in the first few weeks. Wahlster is looking at developing similar apps for the Droid and iPad.

All mobile devices can display BikeBandit.com through a Web browser. The functionality is the same as an app, only slower. Apps, on the other hand, run on the mobile devices themselves. “That’s why they’re so fast,” Wahlster says, “because they’re not going out to the Internet to get data and coming back.”

BikeBandit launched its first Facebook page only about a month ago. Wahlster waited so long because he wanted to study how other Facebook pages failed or succeeded. “As a company, we take a much more analytical approach to almost everything we do compared to other people in the industry,” he says. “We’re very disciplined and planning-oriented. We don’t shoot from the hip too often.”

What did Wahlster learn about hosting a good Facebook page? “You can’t just throw it up there and forget about it,” he says. “It has to be managed on a daily basis. We have full-time employees who are responsible for managing the Facebook pages to make sure that customer comments are being addressed properly. One of the landmines is that customers turn your social networking sites into a forum for customer service issues instead of using customer service channels.”

He gives a real-life example: “If a guy orders a helmet and it doesn’t fit, he’ll post it on Facebook and say, ‘I ordered a large, but it doesn’t fit. What should I do?’ He does this instead of calling the customer service number on the site. So you have to have somebody who can filter those out and get that customer in touch with person at BikeBandit who can facilitate the exchange.”

Of course, BikeBandit also uses Facebook for fun. “We’re engaging our customers with contests and special offers for Facebook fans,” Wahlster says.

The iPhone app and the new Facebook page, along with the live chat function the site has long offered, are testaments to the company’s hospitality. “We’re working on engaging our customers on multiple levels rather than just as a pure e-commerce play,” Wahlster says.

As we mentioned at the beginning of this article, customers keep returning to BikeBandit.com not because of discounts, but because of its top-notch service, fast delivery times and accuracy.

Heavy discounters, on the other hand, are typically fly-by-night, Wahlster says. He orders his own tires from e-tailers that sell them as a loss leader. “There’s nothing I love more than ordering tires with free second-day shipping,” he says. “The last person I ordered tires from, I calculated that they probably lost $25 on a hundred-dollar order.

“We do tires very well,” he adds. “Customers come to us because we have competitive prices, but they really come to us because we have excellent service.”