Jack Sandbach walked through his busy Sayreville warehouse, greeting workers as they assembled shipment of cosmetics and perfumes bound for retailers like Neiman Marcus and Saks, and consumers who had ordered them from the Home Shopping Network.
The warehouse has grown much busier since the economic crisis hit a few years ago. Sandbach said revenue is up about 40 percent since 2008, to more than $10 million a year, and his company now employs more than 90.
Sandbach founded Packaging Distribution Resources in 2003 to provide third-party logistics services to health and beauty companies. PDR warehouses the inventory, then packs and delivers the goods to consumers and retailers, such as Bloomingdale's and CVS.
PDR was ready to take advantage of an explosion in demand for its services that was ignited by the economic slump, he said.
"A lot of people just decided they don't want to have their own warehouse and their own fixed overhead," Sandbach said. "It's easier to go to a company like ours. We have the computer systems, we have the know-how; we do all the work for you."
His 21 years of experience in the cosmetics business has opened doors. "We have never formally advertised the company," Sandbach said. "We don't have salesmen, and most of what we've done has been through word of mouth."
Sandbach, 43, joined the cosmetics industry after graduating from New York University's Stern School of Business. He started out developing software for Orlane, a New York cosmetics company, rose to chief operating officer and oversaw the move of the company's back-office operations to New Jersey in 1992. Orlane eventually outsourced its logistics to a third party; Sandbach bought out the supplier and launched PDR with Orlane as one of his first customers. Revenue has grown from $1 million in 2003 to more than $10 million a year today.
Initially, the operations were split among four different locations, and PDR had the expense of trucking inventory from place to place. Sandbach consolidated everything in Sayreville, where PDR now has 250,000 square feet. The challenge was to bring in enough business to keep on the payroll an experienced core of assembly line leaders, who make sure the orders are assembled correctly. Customers penalize PDR if they have to reject an order for errors, "so you can't make mistakes," Sandbach said. So the temporary workers hired when business surges are supervised by experienced managers.
Consumer spending slumped during the recession, but Sandbach said demand for personal-care products held steady. "If you look at history, it's one area
that really doesn't get hit hard. We saw a little bit of a hit in high-end stuff in
the first year-and-a-half of the recession," but eventually demand for luxury cosmetics also recovered. The NPD Group reported that sales of "prestige cosmetics" rose 9 percent in 2011 through May, to $1.4 billion.
Sandbach said PDR's 60 clients include both luxury retailers and discounters, "so the volume moved from one place to another, but it didn't stop." Today, about 80 percent of his deliveries are to retailers, and 20 percent to consumers; Sandbach predicted that, in a few years, the split will be 50/50.
He said PDR is now exploring an expansion into the manufacturing side of the business.
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