New packaging energizes business

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In the first years of this century, Jeff Holmes noticed a disturbing trend in his packaging business.

His sales figures were flat.

"You couldn't replace business faster than you were losing it, and we weren't losing it to competitors; we were just losing it," he said.

Wal-Mart and Kohls had opened stores in the area and the smaller shops to which Mr. Holmes' business, Babcor, was selling bags, were closing.

"I started working harder and harder and harder just to keep myself going."

Then on Sept. 11, 2001, after the terrorist attacks, the phones stopped ringing.

"Orders stopped. Deliveries stopped. It was really, really scary."

In 2002 he was at a trade show for the packaging business lamenting the business to a manufacturer's representative who said Babcor should diversify its products. At the time Mr. Holmes had owned the business, which sells paper and plastic shop bags, gift bags and wrapping paper, for 14 years.

He decided to take the advice. He revamped himself as Mr. Food Service Packaging. For the next couple of years, he would introduce himself as "Mr. Food Service Packaging" every time he went to a restaurant or take-out place, presenting a card with the moniker in large type over his real name.

It was not catchy.

There was no new spike in business.

Even his own sales staff was not buying into the concept.

It was time to repackage his new packaging.

Enter Mr. Take Out Bags or, more precisely, MrTakeOutBags.com.

But before we jump to the end, it's best to go back to the beginning.

In 1988, Jeff Holmes was selling cars and casting about for something to do that would allow him to attend his son's soccer games on Saturdays. Saturday was problematic, because it is a really big day in the car business but also a big day for youth sports. He remembers his son crying and not wanting to get out of the car because he wanted his dad to stay and watch his game.

At the same time, Ida Stewart was in a nursing home and had been for about seven years. Her family's business, Samuel Stewart Co., which sold boxes and bags to businesses, had been pretty much running on autopilot and her three sisters decided to sell.

The business had been running for 81 years in a building that had been built in the 1880s. There were no computers, no calculators. When invoices needed to be photocopied, someone would walk up to the post office at lunch time to do it there.

Mr. Holmes, who was 34 at the time, bought the business and the building. The building, he said, was his smartest purchase, even though he needed to repair the roof.

When he walked in, the records were gone. Miss Stewart's brother-in-law, Harold Pittler, who had worked in sales, helped him resurrect them and talked to clients on Mr. Holmes' behalf. Mr. Holmes made deliveries and would visit other businesses when he had time. He learned about the products and the pricing on the job.

"I didn't know what I didn't know. I thought it would be easy," he said.

The first year he owned the business he had $300,000 in sales. By 2000, that was up to $2 million, he said.

But that was as far as he got. For all his efforts, he realized that he could take home as much by renting the building as he was running the business.

In 2003, he started working with a Web designer on the Mr. Take Out Bags site. For two years he devoted evenings and weekends to the Web site, determined to get it right before taking it online. Mr. Take Out Bags sells packaging for food, such as catering boxes and take out containers, but not the polystyrene boxes that aren't biodegradable. Instead, Mr. Take Out Bags sells coated paper boxes that won't leak.

The MrTakeOutBags.com site went live at the end of 2005, In the fourth quarter, there were 76 sales from the site compared with 2,859 from Babcor, the bricks and mortar part of the business that same quarter. But then the sales from Mr. Take Out Bags started to climb.

First-quarter comparisons from the two companies show what the Web site is doing for the company. The sales in the first quarter for Babcor were 1,507 in 2006, 1,432 in 2007 and 1,316 in 2008, or declining. During that same period, Mr. Take Out Bags sold 161 orders, 836 and then 1,871 orders, respectively, to overtake the sales of Babcor.

Now at 54, Mr. Holmes is learning the tools of Internet business and has hired some tech-savvy employees right out of college to help track the use of his site. Ryan Caugherty, 25, who plays soccer for the Riverhounds, kicks around ideas to get the site to come up on searches by developing the keywords people will use. The phrase "food service packaging" is not a popular search; "take out bags" is.

Using Google's tools, he can show that about 1,000 people a day look at the Web site, and even though only 2 or 3 percent buy anything, it is visibility that the company never could achieve before.

The Detroit school district, for instance, purchased $80,000 worth of recycled paper lunch boxes over the Web site. Sunoco bought 200 cases of coffee cups. Other customers have included Wolfgang Puck, CBS and the Smithsonian Institution.

So, while Mr. Take Out Bags has yet to achieve the stable of repeat customers the way Babcor has with the Carnegie Museums, Toadflax and Mad Mex, it does have a reach that the company could never achieve with a traditional sales force.

"You'd have to have 100 people to hit 1,000 businesses a day," Mr. Holmes said.

So, while the building is now full of products on the upper five floors and the space on the first floor has been converted to a large shipping area to accommodate the increase in UPS pick ups, Mr. Holmes also has figured out how to rent the building without giving up the space.

A cellular phone company rents his roof to place antennas along the edge. Another company will pay to hang banners with sports figures on them from the side walls.

"We might not have been here if we hadn't done this," he said about Mr. Take Out Bags. "Because you're wondering, 'What am I doing here if I can rent out my building for more?' "


Ann Belser can be reached at abelser@post-gazette.com or 412-263-1699.


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