Funeral Chain Exploits Demise of Tradition

Funeral Chain Exploits Demise of Tradition

 

As Originally Published in Inc. Magazine

 

Funeral Chain Exploits Demise of Tradition
Pioneers thrive as old ways die

From: Inc., April 1998 | By: Hal Plotkin

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Catskill Casket Co. founder Joe White began receiving calls last year from consumers wanting to purchase caskets directly from his then-year-old distributorship, based in East Meredith, N.Y. “I finally agreed to make that first sale as a favor,” he recalls about the $700 deal, which netted him a $400 profit. The only person upset was one of the local funeral directors, who had been trying to sell the same casket for $2,800. Word got around, and other funeral directors quickly filled White’s driveway with returned caskets. “It got really nasty,” he recalls. “We lost our entire distribution network in New York, New Jersey, and Massachusetts.” Sales quickly recovered, however, vindicating White’s embrace of the direct-sales approach.

To augment sales over the Web, White is now opening 10 storefronts around the country. “We see this as moving from the back room of the funeral home right into the mainstream,” he says.

White is just one of the beneficiaries of a 1994 Federal Trade Commission rule that, among other things, requires funeral-home operators to present itemized price lists and permits customers to substitute caskets without a surcharge. In addition, more and more Americans are opting out of expensive funerals, to the detriment of traditional funeral parlors. Cremations, which accounted for 7.3% of the market in 1976, reached 21.3% nationwide in 1996, the last year for which figures were available. Aided by those developments, numerous start-up companies, most notably casket makers and cremation-urn manufacturers and resellers, are carving a tidy chunk out of the funeral-home industry’s estimated 37% profit margin by selling products directly to the consumer.

Direct casket sales still represent a tiny fraction, estimated at less than 1%, of the $1.1-billion annual market. “There is a lot of room for competition,” says Dr. R.E. Markin, who wrote a book, The Affordable Funeral: Going in Style, Not in Debt, designed to help people reduce funeral expenses. Markin’s Web site refers consumers to a variety of casket suppliers, including vendors selling inexpensive do-it-yourself casket kits, which, once assembled, can be used as coffee tables until the time of need arrives. Most buyers, however, prefer to have caskets shipped overnight to their funeral home when needed.

Kevin L. Boudle’s company, Urns Direct, based in Ellington, Conn., sells cremation urns over the Internet. Value is becoming increasingly important in the cremation industry, where the average urn price is well under a thousand dollars, Boudle notes. A lot of families are spread across the country, he says, and “don’t have five or six thousand dollars for a traditional funeral” that many relatives aren’t able to attend. As cremations become more popular, the urn business is an obvious winner. One example: wholesale-urn marketer Terry Dieterle, president of CEI/Bayco Inc. Dieterle forecast first-year sales of 50 urns when he started his company, in September 1996, but instead sold more than 250. — Hal Plotkin

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Final Reckoning: $4,965

The costs of a full-service, traditional funeral can add up. Here is a typical bill, not including cemetery charges or money paid to other vendors such as florists, sent last year by the Everett Funeral Chapel in Massachusetts to the family of an 80-year-old man:

1. Basic services of director/staff $995
2. Embalming $275
3. Casketing and dressing $100
4. Hairdresser $50
5. Viewing/visitation $350
6. Funeral ceremony $175
7. Church service $325
8. Transfer remains to funeral home $195
9. Hearse $250
10. Limousines
$185
11. Casket
$1,985
12. Acknowledgment cards $25
13. Register book
$25
14. Prayer cards $30

About the Author /

hplotkin@plotkin.com

<p>My published work since 1985 has focused mostly on public policy, technology, science, education and business. I’ve written more than 600 articles for a variety of magazines, journals and newspapers on these often interrelated subjects. The topics I have covered include analysis of progressive approaches to higher education, entrepreneurial trends, e-learning strategies, business management, open source software, alternative energy research and development, voting technologies, streaming media platforms, online electioneering, biotech research, patent and tax law reform, federal nanotechnology policies and tech stocks.</p>