An Old Kamaaina Company Changes Course

The Tamamoto family has had to make major adjustments to its business since it started Aala Produce in 1963 and sold produce to vegetable peddlers in Honolulu.

With changes in the economy here and abroad, they have had to look at other ways to stay afloat. When supermarkets led to the extinction of peddlers, they formed Aala Ship Service and supplied Japanese fishing vessels that came to port.

When the Japan economic bubble burst in the 1990s, the Tamamotos shifted directions and catered to container ships and also vessels at Pearl Harbor. That wasn’t generating enough revenue, so they added a cargo distribution business.

Jerry Tamamoto, vice president of Aala Holding Co. Inc., said the cargo distribution business was doing OK, but his family still wasn’t satisfied.

“We like it. It pays the bills. But it’s not really a money maker,” Tamamoto said. “So we started looking.”

As part of the distribution business, Tamamoto worked with a firm run by Andrew Riehemann of Utah. Riehemann founded Ship to Hawaii in 2004 and Tamamoto found it to be an interesting business concept.

The family liked the business so much that it acquired Ship to Hawaii, as well as sister company Ship to Alaska, this year and began operating them May 1.

Ship to Hawaii caters to local residents and businesses that shop online and are looking for inexpensive ways to bring the goods here. Many Mainland firms will ship a product free of charge anywhere within the contiguous 48 states, but not to Hawaii or Alaska.

At Ship to Hawaii, customers take advantage of the free shipping and have their items sent to one of two distribution centers in California. The center in Gardena deals with ocean freight, while the other in Hawthorne handles air freight.

Tamamoto said Ship to Hawaii consolidates the orders, or “piggy backs” them with other shipments so it will cost Ship to Hawaii customers less to bring an item to the Islands than it would through the postal service or other parcel deliverers. The savings can be as much as 40 percent to 70 percent, he said.

Ocean freight is shipped each Wednesday and Saturday, while air freight is brought in at least twice a week. The goods are brought to Aala Ship Service in Iwilei, where customers can pick up their packages. Neighbor Island customers retrieve their goods at a will-call center.

“These shipments go onto somebody else’s load and it’s combined, so it’s one big pallet,” Tamamoto said. “That’s how we’re able to reduce some of our costs.”

Ship to Hawaii is a members-only business with three levels of annual dues ranging from $20 to $150, depending on the amount of goods a customer expects to ship. Tamamoto said there are 1,300 active members with Ship to Hawaii, and another 350 with Ship to Alaska.

Laraine Agren is remodeling her Hamakua Coast home on the Big Island and has been using Ship to Hawaii for about a month. Because she expects to bring in a lot of items, she signed up for the top-level membership plan, which has an unlimited shipping allowance.

Agren said she recently had 700 pounds of tile shipped to her by Ship to Hawaii at a cost of $197. She said a much smaller package that was sent to her via the postal service cost her more than $400, so she figures she made up her membership fee on one delivery alone.

“It’s rare that in Hawaii you can save money dealing with a local business because Hawaii is expensive,” Agren said. “But here’s a way to support a Hawaii business and save money too.”

She said another big advantage to using Ship to Hawaii is being able to deal directly with someone in Hawaii.

“Having somebody to work with on the shipping end is really nice because you never know where your package is going to go,” Agren said. “They keep me informed and they also call me when it’s in.”

Tamamoto said it hasn’t always been smooth sailing since his company took over Ship to Hawaii in May. He said his employees had to grasp “a whole new concept” of doing business on the Internet.

He said the software was in place, but it was a matter of learning how to use it.

“To study the business and to do it are two different things,” he said.

Luckily, he said, Riehemann agreed to be available for questions for the first week of the new ownership. Since then, Tamamoto’s employees have slowly picked up the nuances of running the business.

Customer Agren praised Ship to Hawaii for its customer service, and Tamamoto said he stresses this to his employees. To prove a point, he forwards after-hour phone calls to his personal cell phone.

He said he also instructs his employees to let customers know that if they can find a better shipping price they should take it.

“We tell them the truth,” Tamamoto said. “You compare and I’m not holding you hostage. You can choose. If your vendor can offer you a better rate, by all means go for it.”

The Tamamotos believe in treating their customers like family. They feel the same way about their 23 employees.

Since the beginning of Aala Produce, the owners have provided lunch for their employees. Each day, someone in management cooks a meal or brings in takeout and the company encourages its employees to eat together.

“You have the drivers eating lunch, and you have the operations staff and you have the accounting people coming in, you get to eat and work together,” Tamamoto said. ”You eat lunch and talk story. That’s really important.”

With all the corporate adjustments the company has made over the years, Tamamoto said the family-style lunch is one thing that won’t change.

“It’s ‘unbusinesswise,’ when you think about it, because you have to have somebody cook and somebody clean — that’s not productive,” he said. “But morale wise and camaraderie wise, it’s really important.”

by Curtis Lum, Pacific Business News

Posted on March 12, 2015