Industry Insiders: Technological Advancements (Part 1)
Hollander Excellence caught up with Caleb Lindquist, CEO of Heritage Used Car and Truck Parts, in Mobile, Ala. Lindquist was one of the first in the salvage parts industry who revolutionized how parts could be purchased online. In this conversation, Hollander Excellence learns how Lindquist got into the industry, how gained his competitive edge, and how platforms like eBay and Amazon simplify his business. Part 1 of 2 upcoming posts is below.
Hollander: Hi, Caleb! Thanks so much for taking the time to sit down and speak with us. To start, can you tell us a little about yourself?
Caleb Lindquist:I’m the CEO of Heritage Used Car and Truck Parts. I’m married; I have five boys— five young boys, so I’m busy, busy for sure. My family moved here from California when I was young, so I’ve been in Alabama pretty much my whole life. We’re down here on the coast, in Mobile. It’s pretty hot, but it’s actually great climate for auto parts since we don’t have to deal with any of the rust issues that all of the northern and eastern states have to deal with. I’ve worked in the auto industry since I was 15. I grew up with the business, it’s kind of different and interesting, but you see a lot of that with the second and third generation auto owners, but my story is a little different.
Hollander: So how did you get into the business? What’s your background?
Caleb: It was actually my mom that started a salvage yard--which is kind of interesting because it’s not anything that she'd ever thought about before, it was just something she kind of wanted to do. It would’ve been about ’96 or ‘97 when she started gathering information and looking into what was available--learning the industry. She literally knew nothing about it, so she delved into it. It wasn’t anything in the family; she didn’t have anybody in the past—her dad was an engineer—so it was really strange. My dad was an executive in a music company, so not automotive-related by any means. He wasn't an automotive type. He was a "put gas in the car and have the number to your mechanic" kind of dude. So yeah, no automotive experience in the family per se.
Hollander: What was your mom's draw to the business?
Caleb: I’m not really sure. It was just something she wanted to do. She went and found a manager, and they went ahead and invested in a business, found some land, and there wasn’t anything here. It was just out in the country. We’re probably about 10 miles from mostly-developed Mobile. So a little on the outskirts, close to the interstate, it’s just some undeveloped farmland.
The salvage really started when we went to go do the building. I would’ve been about 14 or 15 at that time. There was a Walmart—do you guys remember the old Walmarts that were in the supercenters and the neighborhood markets? It was just one of those old brown Walmarts—and they were demoing it to replace it with one of the new ones. My family actually arranged to purchase the demo job, and that’s kind of where we began to salvage. That was the first piece we salvaged before the business was even there—and it was a building, not automotive. We ended up using pretty much all of the structure from that Walmart to create the structure of the physical location. The business was all made from that Walmart building: we recycled the beams, the metal, the crushed concrete for the foundation, even the sheet rock and the light fixtures; pretty much everything. So it’s kind of interesting. We literally started in the salvage before the business actually had any brick or mortar to it.
That was completed in ’98, and it was just “your typical salvage yard”—it was a walk-in. A lot of time was spent dealing with insurance companies, with other salvage yards in the area, as well as mechanic shops that did deliveries. However, what they also ended up doing was delving into a full-fledged body shop, as well as a transportation automotive business, where there was a wrecker service as well as long-haul. It was a disaster actually. During that time, I basically worked in the back, learning the trade, breaking down rims and tires around the age of 15-16. From there, I did dismantling--all during summer or after school hours. And from there, I started doing inventory, and then progressed into a sales position. Again, it was kind of hemorrhaging money just because there were too many sides to the business at once, so that came to a head in 2004 where it just basically imploded.
During that time, I started going to the University of South Alabama here in Mobile. I started there when I was 17 and worked here while I got a degree in accounting. I accelerated my degree to graduate a bit quicker, so I took a bunch of hours to graduate and actually ended up graduating at 20. I was getting out of school basically at the same time that this business was going under. My mom came to me with a proposal: at that point they were either going to shut down the business and sell it for whatever they could get, or she asked if I was interested in actually running the business. So it was kind of a crazy thing as I was planning on going the accounting route, getting my CPA license and probably signing on with one of the Big Five firms. But I had no intention at that time of running a salvage industry.
Hollander: Wow. So you’ve seen a lot of success since then right? Has that really turned around?
Caleb: Correct, that would’ve been 2004. So the company that was here is now defunct, and we basically restructured. We had to rename the business name and we took a look to see what we could do. Mobile actually has a lot of salvage yards in this area, and a lot of these salvage yards in this area are 3rd, 4th, some even 5th generation from the very early 1900s.
So they were really well established, had a good buddy-buddy system with a lot of the dealerships around and a lot of insurances companies. The market here was actually really dead for us. Newcomers didn’t have much of a chance. So at that point, our only chance was the Internet. So that’s how we made a progression from doing the typical salvage to doing Internet sales. It was kind of forced upon us. During that time it was very different— Internet salvage and parts sales. eBay was out there, but you guys [Hollander] hadn’t partnered with eBay at that time. But everything had to be done through individual listings or using Turbo Lister, but these were kind of pricey, very difficult to work with.
Hollander: Absolutely. We’d love for you to speak more to that and your experience: how you grew your business and what gave you the competitive edge to thrive.
Caleb: What we had at that time was your typical normal salvage yard where you had several hundred vehicles outside. We had your basic advertising with Yellow Pages or walk-in customers. But, because we were so far out from any populated areas and municipalities, if we didn’t have any walk-ins, we didn’t have any business. The Internet actually gave us business. By that time our sales were very minimal and overhead was extremely high. So we went ahead and just completely dove into the Internet--that required a complete restructuring of the business.
What we discovered was in doing it the old way, as far as keeping the vehicles out here, actually contradicted what we were trying to do because on the internet, you find out what you sell are mostly knick-knacks, parts that customers and do-it-yourselfers need. This would be like armrests, sun visors, radios—stuff that usually does not require a certified mechanic, and so, there was a big market for that that was not being fulfilled. But in having the vehicles out there languishing in the salvage yard wasn't right for our plan. Say you sold a piece of glass from a vehicle that was then exposed to the elements, then the entire interior would be ruined. Or if somebody went out there to pull something from underneath the dash, they would just go ahead and break all the dash pieces to go get it.
We actually ended up just doing away with all the vehicles there and sending them to storage buildings. When a vehicle came in, we’d just work on processing the vehicle completely down at one point, so you don’t handle the vehicle multiple times, you put it in the stall one time and then go ahead and strip it completely down, and then haul the vehicle off and that’s the last time you touch it. It’s kind of different because you do away with any of the jobs that would be like the parts floor jobs. You don’t really have to have a yardman to clean the vehicles outside, so it’s different than I’d say probably 95%, or even more, of the salvage yards.
That actually changed pretty much everything. We were then able to start marketing strictly towards the Internet because when people walk in here as customers, they typically want to look at the vehicle and we don’t have any out there. It changed from what we were, we’d have to have sales people reaching out to the customers, where the customers would be among the auction platforms and actually reach out to us. So it’s completely different. You know, we offer the product, and then the customers come to us instead of vice versa where you’d reach out to the customers in the typical “old-fashioned way” of doing it.
Hollander: Do you find that customers like that kind of model? Is it making their lives easier? What kind of feedback have you gotten?
Caleb: We’ve actually gotten great feedback. You still have your mixture--there are some people that still want to just go out to a salvage yard and pick around, just kind of look through and inspect the wrecks because there’s an allure to that. And we’ll still get that feedback from the local you-pull-it yards. There’s a mixture, but we’ve actually been very successful at marketing it this way.
We’ve had to go through some different ways. In the early days, there really wasn’t much of a platform. You didn’t have eBay, Amazon, Hollander Parts, and those other platforms that sponsored much of the parts where you could list them. And we would have to subscribe to these part leads. There were tons of those that we would subscribe to, pay a monthly subscription, and they would send you a lead, “Hey this guy is looking for this part, here’s his phone number, their contact information.” And you would go ahead and reach out to them and try to sell the part, and then ship it to them. Which is all great, and that actually still occurs. You know we still sign up for stuff on those.
The problem with that is you’re kind of limited to how much your sales people can handle. If you want to grow your business based off that, you have to keep on expanding yourself fast and the margin that you’re going to get in is going to be completely tied to the amount of people that you can hire, since they can only handle so many phone calls per day, or calling people and then taking their orders.
There’s been an advancement from that. In the beginning, that’s all we had so we did that, ran hotline services, etc. It then changed drastically with the implementation of the Hollander and eBay software combination, as well as some of these auction sites that have been getting onboard. So that’s truly been a game-changer since we went from having to staff sales and making phone calls to people, to basically listers of inventory personnel that are taking pictures and boxing these and getting them presentable to put out there so people could self-find and self-service.
You know it handles every type from their checkout to their tracking numbers, which are very easily submitted and implemented with the software. It’s been quite amazing how it has been a huge advancement all within the last—I’d have to check to see when the partnership with Hollander began—but I believe it was 2008, 2009 is when they really made the connection with eBay.
This concludes part 1 of our blog post series with Heritage Auto Parts owner, Caleb Lindquist. To learn more about him and what his company is doing, please visit http://www.heritageautoparts.com/.