Riding the Waves of the Online Retail World:
The Story of Air & Water Inc.
by Luke Peters
“Get out before your brain turns to mush.”
That was the mantra my first year as an environmental scientist for the state
of California. This was my first job out of college, and I was significantly
younger than the other engineers and geologists who worked there. They all told
me the same thing – “Get out now before your mind turns to mush!”
It was my brother that first told me about the online business world – he had
successfully started up his own online business. I started to research the
industry, and saw there was a high demand for air conditioner-related searches
online. This was it – the niche market that I could dive into. I had been going
over the idea in my head for a while, and then one day while driving home from
work, I was going over the freeway and the name “Air & Water” randomly popped
into my head. Call it a moment of inspiration or whatever you want, but I went
home that night and immediately began working on the site. I wish at this point
I could simply say “the rest is history,” but I think you and I know that’s
never the way it goes for small businesses. The actual history is always a lot
more interesting than that.
My background was in microbiology and chemistry – so initial development of
the site was slow. To make things as easy as possible, we first started
developing the site as a Yahoo store. My wife and I had just had our second
child, and I would come home from work every day around 7 PM, eat dinner and
play with the kids until they went to bed, and then work on the site until 11 PM
or midnight. This process repeated every day in an effort to roll out the site
right from our condo in Huntington Beach, CA.
The initial products we were able to list were a few basic heaters as well as
some thermostats from a company called Virtual Returns. When I first started
negotiating with suppliers, they didn’t want to deal with me at all since we
intended to sell their products online. Moreover, they didn’t want to give us
any credit either. To this day, we still run into the same issues with vendors
who just do not want to deal with online retailers, despite the obviously
successful results! Though we’re seeing more and more companies finally coming
around to the idea of ecommerce.
I finally realized that I could run Air & Water full time while I was on
another business trip for the state in 2002. All trip long – while I was sitting
in important meetings – my phone would ring nonstop with questions from my wife
about different thermostats that people were ordering. That was the last trip I
went on for the state of California.
Before I left my government job for good, my wife and I decided to upgrade
from our condo to a house. The only problem was that the escrows were off by
about six months, so we ended up moving into my Mom’s house while waiting to
close on our own home. I don’t think she knew what she was getting into, as
shortly thereafter we were shipping between 20 and 40 products a day from her
garage. We would drive out every morning to pick up orders directly from the
manufacturers and then ship them out from my mom’s house by that afternoon. As
things got busier, we would miss the UPS pickup from time to time. My wife would
load the van with different orders and drive around Orange County looking for a
UPS truck that would stop and let her drop off the shipments with them.
Amazingly, she was able to find a willing and able brown truck every time!
When we finally moved into our new house, I was ecstatic about the great new
warehouse we had – our 400 square foot garage! It was so nice to finally have a
place to put our products. We eventually turned the entire garage into an
operations center, and were finally able to hire employees to help out with the
daily operations. It wasn’t long before we outgrew it, though. So we moved
operations down the street to an 1800 square foot warehouse, a location that I never
imagined we’d outgrow. We made a few more hires at this point, including finally
adding some much-needed IT help. Yes, we waited that long to hire a real IT
professional. But not only did we eventually outgrow this warehouse, but two
more as well!
We truly did everything by hand at this point, until we just couldn’t stand
it anymore. Prior to buying our first forklift, we actually would move pallets
of product onto the trucks by hand! It typically took four or five of us just to
move some of the larger orders.
Two orders stand out in particular from those early days. In one instance,
one of our vendors drop-shipped too many products to a customer – way too many.
Rather than the single heater someone had ordered, they sent him an entire case!
The customer was located in San Francisco, and it just so happened I was
scheduled to head there for a work conference. I spoke with the customer and
told him not to worry about shipping the heaters back to us, and that we instead
would send a courier over to pick them up. Once I got to San Francisco, I
hitched a ride in our rental car with a few coworkers, and had them drop me off
at his apartment building. I walked up to his apartment and picked up the
product myself, as if it was straight out of a movie. He just couldn’t believe
the service!
We’ve always had a loyal local customer base here in southern California, and
we try to make a big deal out of offering will-call pick up for orders. That
process started early on in our, too early perhaps. In our infancy, one vendor
was again supposed to ship some heaters to a customer in Corona. Well, rather
than have them shipped, the customer wanted to come pick up the units from us.
The only problem was that we were still running the company out of my condo! We
improvised and told the customer we’d save him some time and meet him halfway –
at Anaheim Stadium in the parking lot. There we were, just like in a mafia
movie, handling a transaction in an empty parking lot at a baseball stadium.
Jump ahead four warehouses and eight years later, and we’re now operating out
of a 35,000 sq ft space in Santa Ana. With all the moves, I’ve just stopped
making predictions about how long we’ll be in any one location, but I will say
that our latest spot is perfect for us right now, and we’ve certainly enjoyed
working with the city.
I’ve learned a lot through all of us, the most important being – if I can
borrow a slogan from Nike – “Just do it!” Sometimes you just have to jump right
in and do something. You can plan and plan and over think every minute detail,
but there’s nothing that can really prepare you for actually doing it. Plus,
your ideas make it to market faster this way, without wasting any times. Some
may call it reckless, but it was the one thing that kept us ahead of the
competition. We spent much less time thinking than doing.
The other important key I learned is to just keep moving forward. Again, it’s
nothing new, but I never liked getting stuck on projects. Even if the current
results are not 100%, keep moving forward and don’t let yourself get bogged down
with analysis and over-planning. With these two philosophies we keep things
fresh and new. We also get to test our new ideas in the best lab of all – the
real world market!
Like any business, there were a lot of hurdles along the way. But we managed
to overcome anything and everything thrown our way, because I believe we’ve
found the formula for success. While we’re in a relatively new business, it’s
the same simple concepts of hard work and having great people that have worked
for businesses for years. The best part is that it’s simple enough that really
anyone can do it. Our combination of great people and hard work makes me
confident that we’ll be able to withstand whatever the future holds.
Luke Peters is the founder, owner and president of
Air & Water Inc., an online retailer
focused on meeting customers’ heating and cooling needs. Established in 2002,
Air and Water has grown into one of the Internet’s premier online retailers of
portable air conditioners, swamp coolers, space heaters and other home
appliances.
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