In 1886, a box of gold watches sat at a small railroad station in North Redwood Falls, Minnesota. A Chicago manufacturer had shipped them to a local jeweler named Edward Stegerson. He hadn’t ordered them, and he refused them.
The station agent was a 23-year-old named Richard Sears. He didn’t send the box back. He made a deal with the wholesaler to keep anything he made above $12 a watch. Then he offered the watches for $14 to the people he could already reach: other station agents up and down the line.
I’m Damon Nelson. I have built marketing software for more than twenty years, and this is one of my favorite business stories, because Sears didn’t build anything new to make that first sale. He used what was already sitting there. Here’s the story behind the story, and how to use it in your own business.
Why the jeweler said no
The refusal wasn’t an accident. According to the Wikipedia biography of Sears, a common scam at the time worked like this. A wholesaler shipped goods a retailer never ordered. When the retailer refused, the wholesaler offered the same goods at a “discount” to save the cost of shipping them back. The retailer thought he got a bargain. The price had been padded from the start.
Stegerson knew the trick and flatly refused. That left a box of watches and a young agent with an idea.
The network was already built
Sears had worked for the Minneapolis and St. Louis Railway since 1880, first as a telegraph operator and then as a station agent. So he knew the other agents along the line. They became his first sales force.
The timing helped. Railroads were growing, and time zones had only recently come into use. Farmers and railroad workers now needed to keep accurate time in a way they never had before. A gold watch was also seen as a bit of city style. The agents had no trouble selling them to people passing through.
Within six months, Sears had netted $5,000. He moved to Minneapolis and started the R. W. Sears Watch Company. He placed ads in farm papers and mailed flyers. His ads spoke directly to rural and small-town readers and asked them to buy by mail.
Roebuck, and a catalog of only watches
In 1887 Sears moved the company to Chicago, a major rail hub for the Midwest. That same year he hired a watch repairman named Alvah Curtis Roebuck to fix watches that came back. Roebuck was his first employee. The two later formed Sears, Roebuck and Company.
The first Sears catalog came out in 1893. It offered only watches. By 1897 it had added men’s and women’s clothing, plows, silverware, bicycles and sporting goods. A later 500-page catalog went to some 300,000 homes.
Sears grew up on a farm, so he knew what rural buyers needed. He had worked for the railroad, so he knew how to ship goods to remote places. Two things he already had became the whole business.
| What Sears already had | How it became the business |
|---|---|
| Friends at stations along the rail line | His first sales force for the watches |
| A farm upbringing | Knowing what rural buyers wanted and how to talk to them |
| Years of railroad work | Knowing how to ship goods to faraway towns |
| A knack for plain, personal ad copy | Farm-paper ads and flyers that sold by mail |
What happened after the watches
The company kept using networks that were already there. In 1895, short on cash, Sears sold half the business for $75,000 to Aaron Nusbaum and his brother-in-law, Julius Rosenwald. Rosenwald became president when Sears retired in 1908.
That same year, Sears started selling whole houses by mail. Back in 1906, a Sears manager named Frank W. Kushel had been put in charge of a building materials department that was losing money, with unsold stock sitting in warehouses. He is credited with suggesting that the company bundle all the parts and sell complete house kits. The first house catalog, in 1908, showed 44 styles.
Between 1908 and 1942, Sears sold more than 70,000 of these kit homes in North America, according to the Sears Archives as cited on Wikipedia. Most were shipped by railroad boxcar. Many buyers put them up with the help of relatives and neighbors, the way farm families raised barns.
Look at that again. The railroad that carried the first watches later carried entire houses. A stalled warehouse became a product line.
| Year | What happened |
|---|---|
| 1880 | Sears starts at the railroad as a telegraph operator |
| 1886 | The refused watches arrive. Sears sells them through other station agents. |
| 1887 | He moves to Chicago and hires Alvah Roebuck |
| 1893 | The first Sears catalog, all watches |
| 1895 | Half the company sold to Nusbaum and Rosenwald |
| 1897 | The catalog now sells clothing, plows, bicycles and more |
| 1908 | Sears retires, and the first house-kit catalog comes out |
Your version of the station agents
Most small businesses already sit next to a network like this. It might be an email list you’ve stopped writing to. It might be past customers who would buy again if you asked. Or it might be a partner who already reaches the people you want.
- List every group you can reach today without spending a dollar on ads: past buyers, your email list, your followers, your partners and your local groups.
- Pick one group. Start with the one that already knows and trusts you most.
- Write one clear offer for that group this week, and send it. Sears didn’t wait until he had a store. You don’t have to wait until you have a funnel.
- Look at your stalled inventory the way Kushel did. Bundle the slow sellers into one complete package and offer that instead.
Sources
- Wikipedia, “Richard Warren Sears”, which cites Kevin and Laurie Collier Hillstrom, Industrial Revolution in America, and the New York Times obituary of September 29, 1914
- Wikipedia, “Sears Modern Homes”, which cites the Sears Archives
I write about stories like this, and what they mean for a small business, every week. Join the Pit Crew, my weekly email. One email a week, no pitch parade.
