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Have I Got A Deal For You

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From the entrepreneurs-turn-up-in-the-most-unlikely-places file, consider this:

Jeff Ostrovsky -- a 24-year-old Russian immigrant -- runs a small New York-based mail-order company, and things are going well. After just two years in business, sales have hit $5 million and pretax earnings constantly hover around 10% to 15%. Ostrovsky could hardly be unhappy, but there was one thing that troubled him. "About 15% to 20% of our sales were coming from people who would order seven of one item and six of another. They were spending $500 per order, eight times our usual order size, and I couldn't figure out what was going on."

A few phone calls to those big spenders solved the mystery. They were using Ostrovsky's business to go into business for themselves.

Here's how. Like many other homeshopping services, Ostrovsky's American Shop at Home Inc. charges customers a fee -- $149 for three years -- to receive its catalogs, which contain more than 11,000 items of non-brand-name merchandise. But Ostrovsky has a gimmick. While the catalog lists the manufacturer's suggested retail price, members get half off. However, only they know it.

Enterprising members go to their friends with the catalog, point to an item such as the Bentley portable television set -- manufacturer's suggested retail price $169.95 -- and say isn't that a great deal? If the friend says yes, members write up an order for $169.95, send $84.98 plus 10% for shipping and handling to Ostrovsky, and pocket the rest as profit. Members who are particularly good at this -- or feel guilty about hoodwinking a buddy -- offer friends a 25% discount, saying American Shop at Home gives them a break if they place bulk orders.

"I never thought about this," says Ostrovsky, who is thrilled with the increased sales. Now, as part of the membership literature, he explains how members can go into business for themselves -- and he's thinking about trying to set up a door-to-door sales force to do the same thing.

Ostrovsky, who came to America eight and a half years ago, shakes his head as he tells this story. "Where and how people find opportunities in this country never ceases to amaze me." Us, too.

Last updated: May 1, 1987

PAUL B. BROWN | Columnist

Best-selling author (and Inc. magazine columnist) Paul B. Brown's latest book, Own Your Future, has just been published. Brown's blog appears every Tuesday, Thursday, and Sunday.

The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.



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