New Stanton's Online Stores grows by focusing on under-served areas

There is no theme in the hodgepodge — 40,000-plus American flags, work boots, hard hats, inflatable pool toys, boxes of English tea and other items — that Online Stores LLC stocks in a warehouse about the size of two football fields in New Stanton.

But there is logic behind the random mix of goods, co-founder and CEO Kevin Hickey said, and it is helping the company carve out corners of the online retail world. Hickey soon may add LED lights to the assortment.

“I'd like to tell you it's all very scientific,” said Hickey, noting that the company he started with his wife and brother-in-law in 2001 looks for markets where there isn't an already-dominant online retailer. It offers lower-priced options to stand out from competitors, he said, and chooses markets “where we can become the biggest.”

In other words, he doesn't want Online Stores to be another Amazon, delivering almost anything at the click of a mouse. In 15 years, the company has shown it can be successful by specializing in niche markets.

Hickey describes his strategy first by listing products that didn't work — gift baskets, baby strollers and automated external defibrillators, or AEDs, are a few examples. What Hickey and his team have found over the years is product categories are profitable when a sizeable portion of the customer base is companies, because they tend to be repeat buyers with higher-value orders.

Online Stores is the nation's second-largest retailer of flags, behind Wal-Mart, Hickey said. As the company's biggest product category, flags generate about $16 million a year in sales, or nearly half the company's $33 million in revenue last year.

Most of the flags are produced by other companies, but Online Stores makes about 10 million handheld American flags a year, which are big sellers during election season and in advance of patriotic holidays such as the Fourth of July, Hickey said. The company also sells flags from other countries, flags for sports teams and decorative flags.

The company still sells Confederate flags, a very small part of the business, he said, even though there was public backlash against the items last year in the wake of a racially charged mass shooting in South Carolina. After the shooting, South Carolina removed a Confederate flag that had flown in front of its statehouse for a half century amid protests over the flag's association with racism.

Hickey, who was born in England and became a U.S. citizen six years ago, began building e-commerce websites for other companies in the 1990s and recognized the opportunity of selling products online. Online Stores was launched months before the terrorist attacks of 9/11, which sparked huge demand for American flags.

“Not many other people were doing it and it took off,” he said.

Online Stores' second largest business started in 2006 selling construction clothing, work boots and safety equipment through a trio of websites, including SafetyGirl.com, which offers a line of products targeting the under-served women's market for work gear. Those products generate about $12 million in annual sales and are the fastest-growing area for the company, he said.

Sales from EnglishTeaStore.com, which Hickey started in 2003, and ToySplash.com, a website the company acquired two years ago, account for the remainder of Online Stores' annual revenue.

Hickey predicts 2016 sales will hit $39 million, an 18 percent increase over last year, as women's construction clothing and boots continue to pace growth and the company expands sales in Canada. Most of the company's sales come from the United States, but Hickey is looking to contract with a third-party logistics provider in Canada that will fill orders for that country.

The addition of LED lights also will grow sales, Hickey said. The company plans to launch a website for commercial LED lighting within the next two months. There's opportunity in the lighting market, he said, because businesses are beginning to replace their fluorescent lights with LEDs to save money.

It's a $2.5 billion market that retailers are only beginning to tap, he said.

“American businesses are starting to (make the switch) but we think we can help them do that faster,” he said.

Alex Nixon is a Tribune-Review staff writer. Reach him at 412-320-7928 or anixon@tribweb.com.