Consumer electronics salesman Rich Kullback remembers the day Drew Alan Kaplan called to complain.
Kaplan, owner of a thriving mail-order electronics firm in Canoga Park called DAK Industries, has a reputation as the ultimate gadgets freak, someone who literally takes things apart to see how they work.
Kaplan had agreed to buy some portable speaker systems, but had discovered that there was only one speaker in each unit, not two as promised. "He called me up," Kullback remembered. "I sat listening on the speaker phone. He said, 'OK, I'm opening up the left one.' You had to take a hammer to it to get inside to look at it. I could hear the hammering. You had to destroy the plastic to get in there. Ouch."
The manufacturing company Kullback represented agreed to put in the second speaker. Only then did Kaplan take delivery.
Approach Yields Returns
Kaplan has used this hobbyist-turned-fanatic approach to build one of the nation's biggest mail-order consumer electronics firms. As sole owner of DAK Industries, he presides over an estimated $120-million-a-year business. His 68-page DAK catalogue is mailed across the country, and its hallmark is the unusual first-person style of the ads, each with Kaplan's byline and with up to 1,400 words of text per page. Every word is his own.
He sells everything from radar detectors (to alert drivers to police speed traps) and stereo speakers to security lighting systems, hand-held photocopiers and televisions with 2-inch screens.
"Normally, you look at a catalogue and you see a picture of an item with some description. But this man writes a story. It's like reading a novel," said a DAK supplier, Al Mucciarone, vice president of marketing for CBM America Corp., a Los Angeles marketing arm for Citizen Watch Ltd. of Japan.
"Kaplan is one of the most brilliant people in the audio business," said Roland MacBeth, national sales manager for Cerwin-Vega, a Simi Valley maker of stereo loudspeakers. "There are a lot of talented engineers needed to produce a product. But it takes a brilliant merchandiser to bring it to the attention of the public."
Yet, while making a name for himself as the L.L. Bean of consumer electronics, Kaplan remains a reclusive figure. Friends describe him as a loner who spends much of his time holed up in his $700,000, gadget-filled hillside home in Tarzana preparing his five or six catalogues a year.
"When he's producing a catalogue, you can't talk to him," said one of his suppliers. "It can take 10 minutes to 10 months to get him on the phone."
Kaplan, 41, rarely talks to the press and refuses to be photographed. "I'm not a publicity hound," he said in a telephone interview, declining to be interviewed face-to-face. "No. Then you'd take a picture of me."
"Drew is an aficionado of adult toys," said another DAK supplier, Gary Stines, Western regional manager for Emerson Radio. "Everybody who works for Drew is a gadgeteer. It's like Santa and his elves. I go up to his house for a meeting and end up spending half my time playing with his new toys."
Kaplan founded his business in the 1960s while studying psychology at UCLA. On the side, he sold reel-to-reel tapes and installed stereos. "I had nine tape decks in my dorm room. I started selling tapes to support my hobby. I'm still doing what I did then. It's just on a grander scale," he said.
He shies away from selling readily understood products such as VCRs and color TVs, and hunts for consumer electronics that, in his words, require "an explanation." To move his merchandise, Kaplan uses hyperbolic headlines: "Ego Basher" (for a computerized chess game) or "Stealth Bomber Plus" (for a cassette tape deck). He drops names: William F. Buckley is a satisfied customer of DAK's electronic thesaurus.
He also uses colorful product descriptions. Of a computer modem, he writes: "Sex Education 1A. You need to determine whether your computer's . . . connector is male or female. If you look at the picture above, you'll note that . . . connector has holes going in it. It's a female. If it had copper pins sticking out, it would be a male. Now wasn't that simple? So, if yours is female, order our male cable and modem program. . . ."
Marshall Buck, chief acoustical engineer for Cerwin-Vega, calls DAK a gadgets catalogue. "I went through one of his catalogues recently. Because my sales resistance was strong that day, I thought every single one of those things was a useless gadget. Nobody needs any of this stuff."
But Kaplan claims 2 million active customers, and Arnold Fishman, who runs Marketing Logistics, a direct-marketing services firm near Chicago, pegs DAK's sales at $120 million last year and growing 20% a year.
Sears is the top mail-order firm with about $2 billion a year in sales, Fishman said, and dwarfs DAK, but he said DAK--along with The Sharper Image in San Francisco and Cincinnati Microwave--is among the biggest consumer electronics mail-order firms in the nation.
Kaplan is especially secretive about his sales figures, the markup on his products (his suppliers say it's an average of 30%) and the circulation of his catalogue. Three years ago, Kaplan was involved in a lawsuit with his former printer and, according to court records, he ordered a run then of 3.8 million catalogues. Now his friends estimate that Kaplan mails out more than 10 million. Firms like DAK that rely on catalogues to generate sales, however, will have to cope with a 25% increase in third-class mail rates starting next month.
Whatever the number, Kaplan has secured his niche in the $140-billion-a-year mail-order industry, which enjoys a higher average profit margin than traditional retailers, Fishman said.
For one thing, mail-order firms don't have the expense of staffing stores (DAK has only two outlets). Cincinnati Microwave, for example, a publicly held mail-order company that is the leading seller of radar detectors, has averaged a fat profit of 17 cents per dollar of sales over the past four years.
Cincinnati Microwave has also been one of Kaplan's favorite advertising targets. For two years, he has been lampooning the company for failing to take him up on a bet, with $20,000 going to the winner of an independent test between its $295 radar detector and the $99 model Kaplan sells.
"An advertsing gambit," said Paul Allen, senior vice president at Cincinnati Microwave. But Kaplan insists that the difference among radar detectors is so slight, "why spend $300 when you can spend $100?"
Last year, Cincinnati Microwave's sales slumped 21% to $81 million. "Drew was probably a pretty big reason for their decline," said Joseph Sugarman, who runs JS&A;, a mail-order firm outside Chicago.
How many radar detectors did Kaplan sell last year? "You don't really expect me to answer that," he said.
In a way, Kaplan's business traces back to his cello playing when he attended Fairfax High School in Los Angeles. "I love electronics, and I was a cellist. The culmination of music and electronics is tape," he said. Kaplan spent five years at UCLA, but never earned a degree, then went into business full time, setting up shop in North Hollywood to sell recording tapes.
"He had a hot tub there and a bed, and he lived and breathed what he was doing," Kullback recalled.
Marshall Buck of Cerwin-Vega also recalls Kaplan's operation during the 1970s. "I drove over there, and it looked like a cement mixer in the parking lot grinding iron-oxide particles for his tapes. I bought one and took my tape home and put on a record to record a song," Buck said. "I rewound it and played it back, and it made such a god-awful screeching sound, the quality was so poor, I burst out laughing. It was a nothing business then. It just shows how far this guy has come. He has done an incredible rags-to-riches thing."
The turning point in Kaplan's career, by his admission, was in 1978 when he paid $2,000 to attend a seminar run by Sugarman, then a legendary figure in mail-order. Sugarman was selling plenty of electronics products by writing colorful ads with a long personal story.
"When he attended my seminar," Sugarman said of Kaplan, "he was not doing that well." But Kaplan was an attentive student and absorbed Sugarman's ideas. Sugarman's aphorisms include: "If people are interested in a subject, they will read as much as necessary to buy something." And: "Never sell the product, sell a concept."
Soon, Kaplan's business was growing like a weed, while Sugarman's slowed as he battled Federal Trade Commission charges that he wasn't filling orders promptly. In 1985, Sugarman agreed to pay $115,000 to settle the case without admitting to any violations. Kaplan, meanwhile, had shot past him, and Sugarman gave up on electronics altogether and switched to selling health and fitness products.
"Drew picked up on the style to such an extent that people think he's the original and I'm copying his style," Sugarman said, laughing.
As Kaplan's business grew, he developed a reputation for being a shrewd bargainer. Some items he sells are "close-outs," products that aren't selling well that the manufacturer wants to unload. Mucciarone said he once sold Kaplan 10,000 videocassette players that were to be replaced by a newer model.
Not that Mucciarone always looks forward to doing business with Kaplan. "Normally, anyone in our industry, they use people like Drew more or less as a last resort," he said. "In most cases, they are selling products at their cost or less. That's where Drew is making his profit."
Kaplan remains dogged about finding the best deal. For a couple of years, DAK bought some loudspeakers from Cerwin-Vega. "They wanted us to cut the price in half. Our thing is high-performance speakers, and we were not willing to compromise the integrity of the product. They went elsewhere," Buck said.
Although Kaplan has about 175 people working for him today, "we're not a committee. I make the decisions," he said. After a catalogue is mailed, he might treat himself to some scuba diving in Hawaii, but keeping DAK growing is what fuels him.
But, as DAK keeps getting bigger, it will need more capital. Kaplan ruefully concedes that he probably will have to sell some stock to the public one day. And that will mean opening his business to the prying eyes of outsiders.
"It's not the way Drew Kaplan would like to conduct his business," he said.