Candy Industry February 2012 : RC-36

Retailer Pro À le Offering some pretty ‘ sweet services ’ Sweet Services, Inc.’s Mark Lehmann (left), operations manager, and Pete Chronos, vice president, offer consumers and retailers access to 1,000 different treats right at their À ngertips with a booming online business. By Crystal Lindell ASSOCIATE EDITOR t fi rst glance, the Sweet Services warehouse can be visually deceiving — piles and piles of boring brown boxes fi ll the horizon. But as you walk over the threshold, the sweet smell created by the fusing of hundreds of different candy products hits you like a lollipop on the back of the head — in a good way. And you suddenly realize that all those boring brown boxes are in fact loaded with sweets. Sweet Services, which sells candy at wholesales prices, is the kind of lucky company made for the Internet before there was an Internet. It started humbly in a garage in the 1970s, after founder Alan Clements tried his luck running a Ben Franklin store and realized the demand for wholesale sweets. Clements is semi-retired now in Scottsdale, Ariz., and Pete Chronos has 36 RETAIL CONFECTIONER February 2012 A taken the reins, as vice president; along with Mark Lehmann, who serves as operations manager. Based near Chicago in Frankfort, Ill., they’ve come a long way from that garage. The main warehouse is 5,500 sq. ft and there’s also a satellite facility in Scottsdale, Ariz., where Clements lives. That location is used to ship products to the West Coast. The company’s ability to go from local Chicago-area candy supplier to national business is in large part due to the World Wide Web. It’s been about 10 years since Chronos and Lehmann fi rst started www.sweetservices.com, and they’ve never looked back. “We used to do a lot of catalogue business. We’d do [20,000] or 30,000 and mail them out across the country and that was the main source of advertising back then,” Chronos explains. “[And] we were just trying to fi gure out what to do. Obviously, when everybody got online, it just went gangbusters.” In fact, Sweet Services is in its third warehouse in 10 years. After fi rst outgrowing a 1,500-sq.-ft. location, they moved into a 3,000-sq.-ft facility. Then, when they outgrew that, they moved into their current 5,500-sq.-ft. warehouse, which offers plenty of room for expansion. “That’s probably the biggest hurdle, because you can only grow as fast as you can have room for the stock,” Lehmann explains. Now, they not only have a website, but also an active blog that helps showcase new products, e-mail blasts that go out to more than 15,000 customers, and a Facebook page. “It’s funny how times have changed,” Chronos says. “Seven or eight years ago, a www.retailconfectioner.com

Cover Story: Sweet Services Inc.

Crystal Lindell

Sweet Services, Inc.’s Mark Lehmann (left), operations manager, and Pete Chronos, vice president, offer consumers and retailers access to 1,000 different treats right at their fingertips with a booming online business.<br /> <br /> At first glance, the Sweet Services warehouse can be visually deceiving — piles and piles of boring brown boxes fill the horizon.<br /> <br /> But as you walk over the threshold, the sweet smell created by the fusing of hundreds of different candy products hits you like a lollipop on the back of the head — in a good way. And you suddenly realize that all those boring brown boxes are in fact loaded with sweets.<br /> <br /> Sweet Services, which sells candy at wholesales prices, is the kind of lucky company made for the Internet before there was an Internet.<br /> <br /> It started humbly in a garage in the 1970s, after founder Alan Clements tried his luck running a Ben Franklin store and realized the demand for wholesale sweets.<br /> <br /> Clements is semi-retired now in Scottsdale, Ariz., and Pete Chronos has taken the reins, as vice president; along with Mark Lehmann, who serves as operations manager.<br /> <br /> Based near Chicago in Frankfort, Ill., they’ve come a long way from that garage. The main warehouse is 5,500 sq. ft and there’s also a satellite facility in Scottsdale, Ariz., where Clements lives. That location is used to ship products to the West Coast.<br /> <br /> The company’s ability to go from local Chicago-area candy supplier to national business is in large part due to the World Wide Web. It’s been about 10 years since Chronos and Lehmann first started www.sweetservices.com, and they’ve never looked back.<br /> <br /> “We used to do a lot of catalogue business. We’d do [20,000] or 30,000 and mail them out across the country and that was the main source of advertising back then,” Chronos explains. “[And] we were just trying to figure out what to do. Obviously, when everybody got online, it just went gangbusters.” <br /> <br /> In fact, Sweet Services is in its third warehouse in 10 years. After first outgrowing a 1,500-sq.-ft. location, they moved into a 3,000-sq.-ft facility. Then, when they outgrew that, they moved into their current 5,500-sq.-ft. warehouse, which offers plenty of room for expansion.<br /> <br /> “That’s probably the biggest hurdle, because you can only grow as fast as you can have room for the stock,” Lehmann explains.<br /> <br /> Now, they not only have a website, but also an active blog that helps showcase new products, e-mail blasts that go out to more than 15,000 customers, and a Facebook page.<br /> <br /> “It’s funny how times have changed,” Chronos says. “Seven or eight years ago, a customer would call and we’d say, “Do you have Internet access? You can go to our website and look at pictures.’ Now, it’s like, ‘Well, we have all the pictures online.’” <br /> <br /> Of course, no matter how good a company’s website it, the business will fail if the product isn’t worthy. This is why Sweet Services offers more than SKUs — ranging from the mainstream M&M’s to the hard-to find Candy Sticks (candy cigarettes).<br /> <br /> The key though isn’t just what they carry, but where; Sweet Services stocks about 95% of its products at any given time.<br /> <br /> “That kind of separates us from a lot of other companies selling online, because we have everything in-house,” Chronos says. “So a customer calls last minute and says, ‘I need 50 cases of candy canes, can you do it?’ Sure, we can do it, no problem.” <br /> <br /> Lehmann says customers appreciate the near-immediate gratification, even if they’re not on a deadline.<br /> <br /> “You’ll find a lot of [companies] who have every candy imaginable on their website, but when you order it, it’s ‘OK, that takes four to six weeks,’” he explains. “We can do just regular shipping anywhere in the United States in less than five days. We can overnight anywhere.” <br /> <br /> The company’s success online has had the added benefit of attracting a new segment of customers just as their old stand-bys were pulling back because of the economy. Whereas before, they did mostly business–to-business orders, Sweet Services now gets a lot of calls from average folks throwing weddings, birthday parties or other events.<br /> <br /> And, customers also turn to Sweet Services when they’re looking for something they can’t find at the corner grocery store, such as nostalgic candies from the 1950’s and 1960s, or sugar-free treats.<br /> <br /> “Years and years ago... we’d sell to the local hospital or a bank or something like that if they wanted to have a candy dish on their reception desk,” Chronos says. “With the economy changing, that has changed.” <br /> <br /> The transition to more individual customers has led Sweet Services to expand its product line to include more expensive treats, such as Ghirardelli chocolates.<br /> <br /> “When we were dealing with businesses in the past, they tend to not want to spend as much... but since the landscape’s changed, and we’re selling more to individual consumers, we’re expanding to higher end and higher quality items,” Chronos says.<br /> <br /> And if even if the item a customer is looking for isn’t on their website, there’s still hope. Lehmann says if a customer can tell them who makes a certain candy, he can almost always track it down.<br /> <br /> “We’re always willing to go that extra mile,” he says. “And, you’ll get the same low, wholesale price, because what we do is we put it on our next order.” <br /> <br /> However, even with all the individual customers, Sweet Services still gets its fair share of big clients. Chronos says they often supply cities or park districts for large events, and their wide selection of quality candy gives them the edge.<br /> <br /> “They’ll come to me and say, ‘Hey Pete, I need 500,000 pieces,’ and we’ll take the time to come up with a nice assortment for them,” he explains. “We do the work for them. You don’t want kids going to events where the candy’s boring.” <br /> <br /> Offering so many products though means they’re constantly on the look out for the next big thing. Chronos says they find most of their new products in a very traditional setting, the annual NCA Sweets and Snacks Expo in Chicago.<br /> <br /> “We make new contacts there, because there’s a lot of smaller manufacturers there that maybe we’ve never heard of or who are new to the industry,” Chronos says.<br /> <br /> They’re usually looking for anything that might spark interest — such as the Shrek Lollipops that did really well few years ago. They also try to balance out their product line, Lehmann says.<br /> <br /> “A lot of people buy from us for their children’s birthday parties, you know, different themed events, so we try to carry a wide variety,” he says. “So if we’re carrying a lot of red candies, but not a lot of blues, we look to find some blues.” <br /> <br /> The company’s non-traditional retail model doesn’t deter manufacturers, and in fact the opposite is usually true.<br /> <br /> “We buy truckloads, so they really want to talk us,” Chronos explains. “That makes their life easier, it makes my life easier because we can buy it at really good price, and therefore keep the prices lower for the consumers, and that’s the name of the game. “ <br /> <br /> One of the obvious disadvantages to selling candy on the Internet though is summer. When the weather heats up, Sweet Services almost completely stops shipping any chocolate, although they will still deliver it to the Chicago area.<br /> <br /> “It’s hard to ship chocolate, even in the winter months, to places like Florida and Texas,” Chronos says. “Halloween is a big season for us and we’re constantly looking at the weather maps, saying, ‘Can we ship to Orlando or Miami?’ And it’s tough to make it, even by Halloween.” <br /> <br /> With all those issues, it’s good news that Sweet Services’ best selling candy is the lollipop, which doesn’t fear summer in the least.<br /> <br /> And it’s unlikely they’ll have many problems shipping chocolate to the market they’re hoping to crack next — Canada. Chronos says they hope to be selling to consumers there within the next year and then eventually move into the European markets.<br /> <br /> They also hope to expand virtually by creating a mobile version of their website specifically designed for smart phones and tablets.<br /> <br /> If those moves prove even half as valuable as their decision to start a website 10 years ago, Sweet Services could be moving into a new warehouse sooner than they think.<br /> <br /> At a Glance <br /> Sweet Services<br /> Headquarters: Frankfort, Ill <br /> Employees: 12 <br /> Sales: Less than $5 million annually <br /> Average number of customers per month: 1,000 Average <br /> order: Between $75 and $100 <br /> Founder: Alan Clements <br /> Current leadership: Pete Chronos, as vice president; Mark Lehmann, operations manager. Alan Clements is semi-retired, but still serves as president.<br /> Website: www.SweetServices.com

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