Stiff competition: funeral director Rob Karlin uses humor as a secret weapon in his crusades to sell caskets at a lower rate than rivals operating traditional mortuaries. (Small Business).

ROB Karlin isn't your typical funeral director.

Dressed in a Hawaiian-style shirt emblazoned with classic cars, Karlin, the 57-year-old president of California Casket Co., crosses a floor of vibrant Persian rugs and points to one of his favorite boxes.

The casket, painted to look like a string-wrapped package, sports the words "Return to Sender" on the side.

"Some people deal with death by crying. Some can laugh," he said, smiling. "You have to have a sense of humor. You have to have funeral humor."

Karlin's jokes stop when the subject turns to business. One of only two dozen or so such retailers in California, he says he's selling caskets for up to 50 percent less than those sold at funeral homes.

His selection ranges from brown wicker caskets made in Colombia to plain pine boxes used in many Jewish burials. The average casket retails for $1,200. The cheapest, a box made of particleboard, goes for $395. "There's no other transaction where the buyer is at such a disadvantage to the seller," he said. "It's so unbalanced."

Besides caskets, California Casket sells urns, prayer cards, flowers and headstones. The company also contracts out limousine service.

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Karlin, a Boston-born mortgage banker, learned first-hand about the business in 1995 with his father's funeral ($7,500, not including the cemetery plot).

The other impetus came one afternoon while reading an ad in the Wall Street Journal. A casket manufacturer, responding to a 1994 Federal Trade Commission ruling outlawing handling fees charged by funeral homes to customers who purchased caskets elsewhere, was offering to sell directly to retailers.

Karlin put $175,000 of his own cash into the Culver City business partly from investments and partly from the sale of his mortgage business to City National Bank in 1992. Karlin started buying caskets from the New Hampshire manufacturer that had advertised in the Journal, later adding product from other manufacturers.

The retailers, while few, have caused traditional funeral homes to re-think their business, said Todd Beckley, president of Inglewood Cemetery Mortuary.

"Is there competition? Absolutely," Beckley said. "A few years ago, we might have offered prices in higher ranges, but now, because of casket stores, a lot of funeral homes are offering a well rounded selection room and medium-priced caskets."

But many casket stores have not survived. Unable to charge handling fees, funeral homes countered by offering discounts on bundled services if the customer buys a casket, he said.

That practice, Karlin said, is a "handling fee in disguise."

Federal and state legislators proposed bills a few years ago to eliminate the practice, calling it anti-competitive behavior. After the bills failed in 2000, four casket retailers, including Karlin, filed suit against several funeral homes to eliminate the discount practice. Karlin said they lost the case and don't plan to appeal.

While California Casket was profitable in its first years, there have been some image challenges, such as neighboring business owners and passersby complaining about the window displays and the word "Caskets," painted in black-and-white along the outside wall of his store.

In his second year, Karlin set up a booth at the Los Angeles County Fair. A number of fairgoers were "aghast" by the company's presence, he said, but he gained more business than he lost from the booth. "We still have people recognize us from the L.A. County Fair," he said.

This year, he has seen sales decline, projecting revenues of $750,000, down from $775,000 in 2002 and $880,000 two years ago. The decline comes as some funeral homes have matched California Casket's prices.

Plus, consumers remain reluctant to shop around. "It's like buying a bottle of wine at a restaurant," said Bob Achermann executive director of the California Funeral Directors Association, a trade group. "You'll get charged more at a restaurant than at a liquor store, but a funeral home has other services."

To compete, Karlin, already a licensed funeral director, plans to obtain the necessary licenses to convert California Casket into a funeral home. That entails expanding his 2,000-square-foot warehouse in Glendale to at least 5,000 square feet and contracting out refrigeration and preparation rooms to a nearby funeral home. He would also contract out embalming of the body.

He said the change would allow him to sell more caskets earlier in the process, rather than relying on "at-need" buyers in the wake of a death. That group now makes up 90 percent of California Casket's business, he said.

As for himself, Karlin has already picked out a simple, $1,000 natural poplar wood casket and a plot at the family gravesite in Boston.

"I've lied down in it" he said. "I like the view."

PROFILE

California Casket Co.

Year Founded: 1996

Core Business: Retailer of caskets and urns

Revenues in 2001: $880,000

Revenues in 2002: $775,000

Employees in 2001: 5

Employees in 2002: 5

Goal: To open a funeral home and generate $1.5 million in annual sales within five years

Driving Force: Assisting people by providing an alternative to the existing funeral establishment