The Mail Order King

Into the West German mails this week went 3,500,000 copies of a 400-page catalogue that will set off a long-distance shopping spree in homes from Bremerhaven to Garmisch-Partenkirchen. The catalogue is the latest and fattest from Frankfurt's Neckermann Mail Order House, offers Germans 5,500 items at prices as much as 40% lower than those of competing retail stores. This year, for the first time, the orders (averaging nearly 40,000 a day) will pour into a massive new steel and concrete headquarters now being taken over by the expanding firm. Built for Neckermann on a swamp on Frankfurt's outskirts, the complex covers some ten city blocks, contains one of Europe's largest buildings.

The man who will get more enjoyment than anyone out of the catalogue is hard-eyed, aggressive Joseph Neckermann, 47, founder and sole owner of the company.

In ten years he has singlehandedly changed the buying habits of millions of Germans, made his firm into the biggest mail order house in West Germany by cutting prices and battling other big merchandisers who tried to put him out of business. Today, Neckermann rules over an empire of 22 retail stores, 48 electrical appliance stores, 60 repair shops, more than 100 mobile repair units and 8,000 workers--and a 1959 gross of $132 million. All this has made Joseph Neckermann a millionaire: he lives in a 16-room Frankfurt mansion with his wife and three children, indulges his hobby of riding with a stable of prizewinners. To keep his empire humming, he works 12 hours a day, often sleeps on an office couch.

Cut-Rate Morality. Born in Wuerzburg, Neckermann started in business at 21 by buying a large lot of lamps and lampshades, assembling them himself, and selling them below the market price. Enraged competitors put him out of business by getting a court ruling that it was illegal to sell at cut-rate prices. Leaving Wuerzburg, Neckermann went off to Berlin.

There, as throughout Germany, hundreds of Jewish businessmen were being persecuted by the Nazis, forced to sell their businesses at ridiculously low prices to get enough cash to flee Germany. Always a man interested in a cut rate--whatever the moral implications--Neckermann took advantage of the forced sales to buy the mail order house of Carl Joel. As a big supplier to the military, Neckermann was exempted from military duty when World War II began, became a Nazi well connected in party circles. At war's end, the Allies sentenced him to a year's imprisonment for failure to divest himself of his properties; he caught tuberculosis in jail, went to a refugee camp to recover.

There Neckermann recognized the opportunity for a comeback in the huge market created by the influx of millions of refugees, who needed almost everything, were usually far from shopping centers.

In 1950 he scraped together $25,000, sent out a crude, twelve-page catalogue of wearing apparel to 250,000 refugees picked from card indexes. His prices were aimed at the low-budget housewife--and the housewives liked what they got. Within eight months Neckermann was doing a $2.4 million a year business.

Trouble & Opportunity. Other West German businessmen saw Neckermann almost immediately as a threat to their profits. In 1951 the Association of Textile Wholesalers and Retailers pressured small firms to prevent them from subcontracting to make goods for Neckermann. He sued for damages, and in postwar Germany's liberal economic climate won his case and forced the association to rescind its edict. Moving out of his barracks into an eleven-story Frankfurt building, Neckermann fattened his catalogue, added furniture, came out with a "Neckermann Radio-Super" that had the same features as competitors' models but sold for $45, v. $75. The radio started Neckermann's real troubles--and his real opportunity.

When Germans grabbed up the radio sets, retailers pressured repair shops to boycott all Neckermann products, carried out a "voluntary" boycott even after a court ruled in Neckermann's favor. Result: Neckermann set up a network of his own repair shops throughout Germany, decided to go into other appliances. In 1954 he diversified into TV sets (selling for $100 below the cheapest set on the market), later added sewing machines, auto accessories, food and liquor.

The German radio industry refused to provide tubes for Neckermann's sets, and he found a French firm that would. The refrigeration industry refused to manufacture his refrigerators, and he got a Luxembourg firm to do it. While many German firms threw their energies into exports, Neckermann concentrated on the home market. Belatedly aware that they were losing a lot of business by boycotting Neckermann, many German firms came around. Most of Neckermann's appliances are now German-made, though he still must take the bulk of a firm's production to protect it from boycott by others.

Neckermann now hopes to dominate the mail order field in the Common Market.

He sees the day when his catalogue will come out in three languages for a potential market of 100 million people.

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