Prosperity by Mail

Europeans like to pat, pinch and pry before they buy, and find the prospect of haggling with a mail-order catalogue distressing. Yet lower prices, at-home convenience and prompt deliveries have won them over to U.S.-style mail-order retailing to a degree that seemed impossible only a few years ago. Largely responsible for this change of heart is West Germany's pioneering Die Quelle, a household word in Germany and Europe's biggest mailorder firm.

Quelle sold more than $300 million in merchandise last year, most of it right out of the 404-page catalogue circulated to 5,000,000 families. Gustav Schickedanz, 68, Quelle's mustachioed founder and owner, knows the perils as well as the profits of selling to Europeans by catalogue. "Just imagine the enormous confidence the customer places in us by paying for goods he has not seen," he says. His standard: "When the customer unpacks them they must be even better than he had expected."

Cut-Rate Tours. Schickedanz was running a small wholesale textile house in the Franconian city of Fuerth when he first decided, in the 1920s, to send a list of goods directly to housewives. The idea worked so well that he expanded his line, was flooded by desperate bargain seekers when the Depression began. Bombed out during World War II, Quelle (meaning Source) reopened in 1948, built back its business by selling simple, basic goods to refugees. But it was not until the early '50s, when a prosperous Europe created its own mass market, that Schickedanz borrowed proven U.S. mail-order techniques and began his vast expansion.

From a million customers in 1952, Quelle has won so many fans that last year it shipped 16,200,000 packages to 76 countries. It operates twelve garment and assembly plants, 75 order offices, its own credit bank, and branch offices in Austria, Sweden, Luxembourg, Canada and the U.S. It also runs seven department stores for those who want the price advantage of Quelle without the catalogue, plans to open three more this year. By shrewd purchasing and low-cost production, Quelle keeps the prices of most of its 22,000 items 15% to 20% below those of other retailers. It introduced the first inexpensive fully automatic washing machine on the German market, Germany's first 23-inch TV set, and a simple $59 sewing machine that has become one of its best sellers. It also sells prefabricated houses that it will build within eight weeks, last year introduced a mail-order travel service that sells some tours at 40% below usual cost.

Everything but Selling. While it has adopted many of the practices of Sears, Roebuck and Montgomery Ward, Quelle has tried to go them one better in one area: automation. With 135,000 orders often pouring in in a single day, German efficiency was called upon to prevent chaos. Quelle set up the largest commercial data-processing installation of its kind in the world. For each incoming order, it determines in a few thousandths of a second if the item is available, computes the total price and shipping charge, prints instructions to the warehouse, and readjusts inventory. Quelle also installed a complicated packing and shipping conveyor operation that can be run from central control panels, can handle 150,000 packages a day.

The machines, in fact, do just about everything but sell the merchandise, and Schickedanz is proud but somewhat wary of them. He has never forgotten that he started his business by piling packages in an old wooden cart and pulling it to the post office himself.

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