Gathering wool? Hardly, for fast-growing online yarn retailer

If innovation and energy were hard currency, Jimmy Beans Wool would be a Fortune 500 company by now.

As is, the Reno yarn shop that got its start in a 500-square-foot storefront in Truckee nine years ago is on track to post $6 million in revenue this year, up from $4 million last year and $1.3 million in 2007, placing it 1,369th on this year's Inc. 5000 list of privately-owned companies.

You read that right: a yarn shop with millions in revenue, growing about 200 percent annually in this down economy.

That's thanks in large part to the resourcefulness of its owners, Laura and Doug Zander, two software engineers who fled San Francisco after the dot com boom went bust in 2001 and parlayed their Web experience, and her love of knitting, into a thriving retail business that now sells to customers worldwide.

"Our tag line is 'your local yarn store ... online,'" said Laura Zander, sitting in the retailer's new, 20,000-square foot-location in a mixed-use facility at 1312 Capital Blvd.

To create that sense of place online, the shop helps customers match yarn colors, provides knitting instruction via links to videos on YouTube, responds to email inquires within a few hours, ships orders within 12 hours and maintains a flexible product return policy.

"We follow the Nordstrom model of service, or Crutchfield," said Laura Zander, referring to the high-end clothing retailer and the online electronics merchant. "Our whole goal is to form a long-term relationship with our customers."

Jimmy Beans Wool last month moved into its new spot, which features an 850-square-foot storefront, offices and a warehouse, from its original Reno location in the Smithridge shopping center where it had outgrown its 3,600 square-foot patchwork of adjoining office suites.

The move is reflective of the store's fast-growing reliance on the Internet, which now accounts for more than 90 percent of the retailer's sales. Doug Zander developed and manages the store's Web site, www.jimmybeanswool.com. The shop showcases the colorful yarns, needles, books and other needlecraft wares and caters to local customers while its offices house the majority of the company's 28 employees fulfilling orders and shipping hundreds of packages a day to about 50 countries. The warehouse stocks about 15,000 stock-keeping units "SKUs" for short from about 100 distributors.

Jimmy Beans Wool is also expanding into fabrics, adding between 500 to 1,000 SKUs to its stock this month.

"It's a natural fit, half our customers also sew and three quarters of the employees sew," said Laura Zander. "The fabric market is significantly larger than knitting, but we're starting with a modest amount of fabric. We're 100 percent self-funded and we've always grown organically."

The company's success, while phenomenal, did not happen overnight. After moving to Truckee, where the couple already owned a home, Laura Zander started marketing her skills as a web site developer to local businesses, including Lorna's Laces, a wholesaler of hand-dyed yarn in Placerville.

"I had just learned to knit and Lorna (Miser) convinced me I could open a knitting store and she introduced me to some people who had owned a store in the past," said Laura Zander.

So Zander opened Jimmy Beans Wool, named Jimmy after her husband's nickname for her and Beans because the Truckee store featured an espresso cart Zander had received in trade for some web site design work she had done.

Soon the couple opened a second shop in Reno and after three years closed the Truckee store when its lease expired.

Sales grew slowly until a turning point in the summer of 2007, says Laura Zander. That's when she pitched the shop to Fortune magazine for a five-page business makeover feature in its small business supplement. Executives from Google, Deloitte & Touche and a public relations firm spent a few days giving the retailer advice on how to grow its business.

"It was a combination of the publicity and the advice, especially from the PR firm," said Laura Zander. "It started snowballing from there."

A woman who was running the swag suite at that year's Emmy Awards read the article and asked the shop to put together 100 baskets to give to the award-nominated TV professionals.

Zander continues to find innovative ways to market her brand. Each order, for example, ships in an envelope featuring a free knitting pattern printed on the outside. Zander established a college scholarship program that last year received 3,500 applications and awarded $18,000 to six recipients. And the store is spearheading Stitch Red, an industry-wide campaign to raise awareness of heart disease and publishing Knit Red, a book of 30 knitting patterns designed by celebrities to benefit the effort.

All this has garnered the store, and Laura Zander in particular, recognition well beyond its storefront in Reno. Earlier this month Zander spent a few days in New York City as one of 10 women selected by Ernst & Young to take part in its annual Entrepreneurial Winning Woman program.