Alfredo Velasco was raised to take care of himself. He grew up as one of five siblings in a low-income family which his father sustained on $1,500 a month. Work ethic was engrained into Alfredo and his siblings at an early age.
Velasco’s mother also had to work, which is where he believes he learned to be more self-sufficient.
“That’s where we learned to cook and clean,” he says. "I can cook like nobody’s business. That’s how we were brought up, to maintain our own.”
Under the age of 30, Alfredo Velasco has already gained a lifetime of experience. He sold cars at a dealership after graduating high school, owned two different auto repair shops, established his own surf and skating clothing line and has managed and toured with an internationally acclaimed Mexican mariachi band.
Now, he’s tackling the independent mobile tool selling business.
Based in Modesto, Calif., Velasco began his mobile tool business in February 2011. He initially rode with a flag before transitioning to independent two years ago.
Today, Velasco’s work ethic and values still hold true. In addition to running his route full-time, he also raises and sells cattle, and shows horses, when he’s not running his route.
“This is my bread and butter,” Velasco says of his tool truck. “But that’s my heart. I love doing it,” he adds, about farming and raising his animals.
General business approach
“I’m old school,” says Velasco. “My word and my handshake is all you need to make a deal. My word is worth more than any piece of paper.”
Velasco says that he’s living the “American Dream,” meaning he has the opportunity to make his own success, and the freedom to make his own decisions on how to achieve that success.
Being a “one-man show,” Velasco’s business motto is to “work smart, not hard.” He works approximately 28 hours a week, designating one day a week to his other business and passion of raising cattle.
“It doesn’t come down to 'how much are you going to pay me?'" says Velasco. "It comes down to 'how much am I able to do?' I can go take off for the day and head to the farm with my cows. Or I can leave for Sacramento and spend the day with my nieces and nephews. No one is going to give me that benefit."
“That’s what I think the American dream is, you know? Do what you enjoy doing, and have that natural freedom. A lot of guys work a 9-to-5. Not me, I’m spontaneous.”
Velasco’s spontaneous approach also means that he has no qualms sharing his thoughts. “I’m really direct. I’m really forward, and I voice my opinion freely.”
While he can be straightforward in dealing with customers and the business, he still offers a laid back approach to his customers.
“If the tool truck is here, I know it’s here [as a customer]," says Velasco. "If I need something, I’ll go out to the truck. I think that’s why I’ve been so successful. I don’t push. Some guys will come on and ask what’s new. Then I’ll show them the catalog.”
Types of customers
Like many distributors, Velasco sees a variety of different customers.
Velasco, who is of Mexican decent and speaks fluent Spanish, says that about 90 percent of his customers also speak Spanish.
He has a customer base that is he considers his “bread and butter.” After Velasco went independent, he revamped his route to pick and choose his top customers. He only goes to a reliable customer base that will buy and pay consistently each week.
He has built trust with those customers as well.
“I get guys to vent to me," he says. "I don’t mind that; they trust you with their personal life. That’s another step on its own. That doesn’t mean they’re all my friends, it doesn’t mean we’re going out to dinner. But they trust you that much. It comes back to, they’re buying from you, not your truck.”
Velasco will also continually tweak his route. He says he’ll occasionally change up the time that he sees his customers. He’ll see them on the same day, but doesn’t consistently show up at the same time to keep the arrival fresh.
“I think that’s what makes a difference," he says. "You catch guys off-guard like that. But then they like that. As much as they’re used to seeing you at a certain time, you’ve got to change it up for them as well. You can’t let these guys live by the clock.”
Regarding the tools Velasco sells to his customers, he has had great success with consumables, especially selling painting tools and supplies to body shops. Approximately 30 percent of his stops are collision repair shops.
“It’s probably higher than most, but that’s because I only focus on 30 percent," says Velasco. "I could do 50 percent. It’s just a body shop is a little more time-consuming.”
He adds that body shop customers can be a bit more hands-on.
“Guys want to see things," he says. "They want to know about new products. They want to go check what their inventory is and come back and buy. They’re back and forth. They’re non-stop. They’re writing estimates.”
Velasco will sometimes deliver specific paints or primers to a customer through special orders instead of having them stocked on the truck – to account for space needed on the truck, and to ensure customers don’t purchase products intended for a specific shop. Of products specifically stocked on the truck, Velasco keeps paints, primers, respirators, sanding blocks, orbital sanders (referred to as a DA by his customers) and spray guns. Orbital sanders and spray guns have been especially successful, he says.
In addition to body shops, Velasco also services an assortment of other businesses including independent repair shops. He also calls on local farms and wineries in the area.
“[Agriculture] is probably the easiest to sell to, but it’s the most time-consuming," says Velasco. "What I like about it is, you handle one invoice, and you get paid for that one invoice.
Unique inventory practices
About 80 percent of Velasco’s sales are made on the truck, versus the other 20 percent that are special order.
“That’s because I’ve grown to know what guys want," Velasco says. "I’ve learned to have it in stock. Then, my approach is to go after what’s new and what’s on sale.”
Overall, Velasco aims to keep a balance of his truck inventory, and not have too much stocked on the truck at one time.
“I’ve been on trucks that are super crammed,” he says. “I have probably another 30 percent of this inventory at the shop. But I’ve been on trucks that are overly crammed, and the guys automatically assume they’ll have it [the product] next week so they don’t buy.”
This approach also dictates the number of items per SKU Velasco generally keeps stocked at any given time; he usually won’t have more than one of anything on the truck.
He believes that if he carries multiples on the truck, customers will see that and not be as pressed to buy because they’ll think that product will remain available until the next week he comes to the shop.
“That’s my pet peeve on a tool truck," he says. "Don’t have multiples of the same thing, besides consumables. Once you have that, it’ll stay on your shelf forever. Because they see more than one. If you had just one of that thing – ‘Oh, I better take it now because who knows if you’ll have it again.’
“They know how the buying process works – I might reorder. I might have it the following week, I might not. It’s just a mind game, I guess. You have to stay ahead of these guys.”
Starting new ventures
“I’m the type of guy, if somebody plants a seed. I want to see where it grows, where it heads," Velasco says. "Constant brainstorming, analyzing, everything."
He heard about the idea of starting a separate group from his contact at Medco a few years into the business.
An original member of another buying group in California, Velasco parted ways with the organization and has since started his own co-op group of distributors. He established The Right Tool LLC after going independent, and currently works with four other trucks who run their own independent routes.
“A franchise is still a backbone," says Velasco. "From my guys [customers], I get a constant complaint that they don’t want to buy from an independent because they don’t know where they’re going to go. We need to be franchise driven, without the independent kind of mentality. We have territories.”
Velasco works with a number of tool manufacturers and through his main warehouse distributor, Medco. He aims to build the group to 50 members. More trucks on the road means more power to negotiate and leverage high rebates, according to Velasco.
“Anyone who comes into our buying group becomes an equal unit holder," he says. "It’s not a pyramid scheme, because at the end of the year when we get all of our rebate money from all of these companies, it gets split evenly. There’s no corporate backing. You’re an equal unit holder.”
For interested distributors, the starting package includes about $45,000 retail worth of inventory. Medco has assisted with the program guidelines. Current partners with The Right Tool LLC include Autel, Florida Pneumatic (AIRCAT), EZ Red, ATD Tools, Coast Products and more.
In addition to his own truck, Velasco also has established a second route as an extension of his own business, which he’ll manage directly.
Unlike traditional trucks, this route features a high-top van stocked with about half GearWrench hardline and half consumables. Customers of this route include only shop owners. The structure of the route includes bi-weekly stops and a different customer payment structure as well.
“Depending on how many shops there are, it will be 15-day dating, meaning [customers] will see him every other week, and it’s going to be 50 percent of everything they consume," he says. "So if they buy $1,000, they’ll pay $500. If they buy $500, they pay $250, every 15 days.”
“So if there is a $250 balance left this week, in two weeks, whatever else he has on the bill – say they add $100 and it’s $350, they would pay half of that. So you’re getting half of your money always.”
Velasco recruited his cousin, Marcos Velasco, to drive the van to different stops.
“We’re only going to body shops, and we’re only selling to the owners," Velasco says. "If one of the [technicians] wants something, it has to be done through the shop owner, via a tool allowance. So there’s no responsibility on the techs, and not much risk from my cousin’s side.”
If the customer is interested in other tools, Velasco says they are able to order other brands available through The Right Tool LLC as well.
Challenges with the business
Velasco faces many of the same challenges as other distributors. In particular, he has had objections from customers on price, mainly from online retail sites like Amazon undercutting any margin available to Velasco.
He does have methods to combat this concern with customers.
“I can match it and still make, maybe a percent or two,” explains Velasco. “But it’s more for the customer.”
When Velasco matches prices he requires full payment for the product upfront through a cash or credit card payment.
Velasco also explains to his customers that they would be responsible for a restocking fee through sites like Amazon. And, even if the product is warrantied, it’s on the customer to pay for the return shipping label.
“Either way, it’s downtime [for the customer]," Velasco says. "With me, it’s instant. I’m not going to give you any crap about it. I’ve won them over in certain ways.”
Velasco tries to stay competitive with price.
“I try to be real, real competitive," he says. "I don’t like to be undersold, whether it’s by the Internet, or by my competitors.”
“You make your own competition if you approach it with that mentality,” says Velasco. “I think if you approach it as competition, you’re going to be more worried about what they’re doing.”
That being said, he still respects other distributors in his territory. He says he has changed his focus when discussing competing distributors.
“I used to do it too, talk back about the competition," he says. "But I’ve realized customers absorb all that. They take all that in, and then they use it again."
“So, I don’t talk bad about my competition, I just outsell them. That’s what I do, and that’s what I tell my guys.
“Everyone sells a decent product. Why am I going to go talk bad about them? At the end of the day, it’s your money, you’re going to spend it on whatever truck you want.”
Overall, though, Velasco says that his biggest challenge is remaining accountable for his business and showing up on a weekly basis. While he stays on task to service his customers, he says it can be hard to remain focused.
“You do so well and you make a decent income, you want to be on vacation every other week,” he says.
But he also knows his customers are what bring him back. He likes to service his best customers, and will be more selective about the stops he makes.
The future
An additional challenge Velasco faces is what to do with his route once The Right Tool LLC buying group grows.
“Honestly I’ve kicked around the idea of someone running this truck for me, but it scares me," he says. "I don’t think I can be duplicated, that’s the problem. I don’t think anyone is going to cater to my customers the way I cater to them. I don’t think anyone’s going to give them the treatment I give them. How can you find someone identical to yourself? I don’t think I can do that to my customers.”
While he does enjoy running his business, and doesn’t plan to retire any time in the near future, Velasco still has hopes that he can someday retire from the mobile tool business.
“My dream would be to retire [on] a 1,000-acre ranch full of Angus and my horses and my family,” he says. “That would the ideal scenario.”
