Just six months removed from opening a new warehouse in Orchard Park, NY, it seems like the ribbon just hit the ground for Genius Tools’ third distribution center. Upon entering the U.S. market in April 2005, the company has been slowly carving away at its niche in the market by offering a quality product the company stands behind, and at a reasonable price.
A Unique Philosophy
Genius Tools isn’t exactly standing at the innovation forefront in terms of cutting-edge technology or ultramodern tool ideas. According to Vice President of Sales and Marketing Andrew Hwang, the Genius Tools philosophy is “a little different. Our company only manufactures products with a proven market and demand.” The reason they favor this approach? “We know there is a market for us.”
“Some companies will come out with a hot new item, and they’ll push it through the distribution channel as hard as they can,” Hwang says, “but there may not be a market for that product. You hear distributors say, ‘I bought 400 units and sold 20. What do I do with the other 380?’ We know there is a demand for the products we offer, so our distributors feel comfortable when they order those items.”
Many companies place a shiny new wrapper on a variation of something old. Then they send the revamped product to the consumer to buy. “I don’t think it’s very responsible. I can understand why they do it—because they have to continue to grow, sell and push product out the door.” But Hwang asks, “Are they really doing a service to their customers?”
Progressively Pacing The Market
How well and efficiently a technician works determines what he makes in wages. Tools can help improve on these assets. The downside? Technicians must continue to purchase these tools to further their capability to earn money. Therefore, techs are becoming more and more hard-pressed to pay a lot of money for tools. As a result, Genius Tools’ premise is value—a lifetime-guaranteed product at a reasonable price.
But Genius Tools distributors don’t feel any pinch: One of Genius’ corporate philosophies is to ensure everybody is happy: “We don’t want to saturate the market with our product, and we don’t want to cause pricing competition on the distributor level. Everyone in the distribution channel makes money or else business doesn’t happen.”
Being a privately held company, Genius isn’t bound to stock prices or shareholder sentiments. Thus, the company’s well-paced business practices may not reap the benefits of a fat bottom line now, but they are likely to build a sturdy foundation for the future. “The company doesn’t like to push product through the distribution system that doesn’t really need to be pushed out. All we would end up doing is cannibalizing tomorrow’s sales,” Hwang says.
While this philosophy may seem radical, Genius’ extremely low return rate is a testament to the company’s quality standards. In the last 18 months, there were just enough returns to fill three bookcase-sized shelves in their California warehouse. The company attributes the low cost of Genius Tools products to this unprecedentedly low return rate.
Coming To America With Global Roots And Vision
Genius Tools USA is new to the U.S. automotive aftermarket industry, but the company itself has been in global operation for more than 30 years. With global headquarters and a manufacturing plant based in Taiwan, and regional headquarters in Belgium, Lebanon and Canada, Genius sells $50 million a year to 75 different countries.
Coming to America was no easy task: Five years were spent in an initial attempt to tap into the New Jersey market, but the mission was quickly aborted.
This time, the Genius Tools USA team put three years into planning before they made the move to the United States. Even though this team had the history of being employed by a successful global operation, they soon discovered American buying habits are very different. Americans aren’t as price-driven, but they like value—they want more for their money, but they’re even more concerned about getting more service.