Sunday, April 19. 2009We Need To Become A 'Major' Hardware Re-SellerJohn Linton We have never paid much attention to hardware sales and have basically the only hardware we have offered has been Netcomm modems since we sold our first ADSL connection in February 2004. We have also had to supply quantities of Unwired wireless modems and, more recently, HSPA modems in growing quantities. Over that time our customers and agents have bought over 60,000 modems and well over another 80,000 other devices - the customer purchases being overwhelmingly as part of of an ADSL service purchase. This has been because we have never had any buying power to obtain 'super good' prices for hardware and we never saw ourselves as making any money out of the provision of hardware which we usually passed on at our cost plus a small handling fee. And so for all that time we have simply acted as a conduit for those customers of ours (we never made the pricing available to non-Exetel users) who wanted to acquire a modem or peripheral with their ADSL service. We only sold Netcomm products because we could get a competitive (if not wonderful price) and by not adding anything but a token mark up it provided agood low cost option for those who wanted it. Our relationship with Netcomm remained solid throughout that time and the simplicity of the order/delivery/payment processes we developed and then maintained made it as a hassle free service for everyone concerned. We now find ourselves if not exactly needing to widen this small part of our operations we do need to generate larger sales volumes of the new products we are looking at supplying for HSPA and other services to be able to buy direct from the various factories to be able to get the customer price points we need to reach. For instance, to make HSPA more viable in regional/rural areas we need to make quantity commitments for Yagi aerials to the factory we gave the specs to and while we could carry the cost of ordering multiple thousands we would prefer not to to do that so if we could develop an on line 'shop/store' then hopefully we could generate more sales more quickly. Similarly we have opportunities to buy the Huawei 'sticks' from the massive over stock situations in the EU where the financial downturn has combined with the change to faster network speeds than 7.2 mbps to leave more than one major provider with tens of thousands of pretty much unsaleable units - the only trouble is that these people want money before shipping and they want order quantities of 5k plus and preferably 10k - far too big an investment for us unless we can find a way of selling to non-Exetel customers. The same situation applies to the 'magic' box we have been looking for over the past 18 months - we will need to order in multiple thousands to get the price we need and we have no way of selling those sorts of numbers to our own customers. Moving forward there will be more rather than less of these situations and we need to put in place the on line processes and, much more importantly, the fulfilment processes required to handle thousands of monthly transactions - we obviously can't do it ourselves. No-one in our small company has any 'retail/fulfilment' knoledge whasoever so it's a daunting prospect in many ways but we need to make some attempt at doing it and we ned to do that much sooner rather than later. Like every part of our business it seems that each month brings something new to be put in place and therefore, even in smallish ways, makes the overall business more complicated to operate and to manage. Right now I don't see any alternative other than to learn some new skills very quickly. Whle that is going to be very difficult the need is obvious. Assuming we can handle the financing of the purchases (not by any means a 'given) we have the opportunity of reducing the cost of the varous hardware components associated with HSPA and VoIP by quite significant amounts. A prime example is that we currently pay around $A135 (plus GST) for a U169 while at a 5k price from an EU provider we could get 'distressed stock' for less than $A50.00 (plus GST). We may well have to do this anyway as it seems the U169 is being discoontinued and being replaced by a lower cost 3.6 mbps unit or a much higher cost 14.4 mbps unit - so we have a very real need in the not too distant future. Similarly the best 'local price' for a 'magic box' is close to $A400.00 while a 'manufactured to order' price from the PRC factory is well South of $A200.00. The same story with Yagi aerials, ATAs, VoIP handsets and even HSPA mobile handsets. Old dogs are going to have to learn new tricks. Trackbacks
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Theres definitely a market for someone in the low-cost business to supply those units at the prices you've mentioned, But one of the major parts would be being able to continue that pricing.. What do you do once those 10k units @ $50 are gone? Replace them with 14mbps @ $200 each?
The current price of $150(2nd hand) for a U169 is a bit much for many, I could see a $75 price point for example selling quite a few more HSDPA setups. In the end, Its a payoff between spending the capital to get the product, And hoping that people -want- products at that cost, and then making them realise your services also fit the correct pricepoint. Having an online store where the public could see the hardware prices would probably attract some more sales, The only question would be, How many, And how much Human resources of Exetel is it going to take up.. Comment (1)
It's a whole new world and one we know noting about.
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John,
I know i have mentioned taking a more active part in the Whirlpool / Exetel forums some time ago, and so far this has only happened to a minimal degree - however the people you seek reside their, the people who can push a product or an ISP. Special Whirlpool offers are not uncommon their. Companies like iinet and internode have seen the benefit of being involved and are reaping the benefits. I would hazzard a guess and say that iinets gross hardware sales alone are almost as large as Exetels total turnover. Sometimes you have to move out of your comfort zone to achieve the next level. You discount WP but those that know how to tame the beast benefit greatly. Comments (2)
Personally, I doubt that Whirlpool does anything very much for a company like Exetel and 'adding a presence' would od even less - we'll have to agree to disagree on that.
Doubtless all sorts of ISPs and other companies derive more revenue from hardware sales than Exetel derives from all of its activities - so does Telstra and I have exactly no desire to become more like them. Exetel exists for ony one reason and tht is to provide the lowest cost services aaialble from anyone in Australia. On that note - I watched the replay of the Adelaide - Geelong game earlier this morning and noticed the Internode advertising around the fencing. Exetel spends it miniscule profits helping Australia's endangered wild life - Internode emulates Telstra by buying advertising at football grounds so they can get good seats for their executives. Get the point? Comments (3)
john,
I wish to respectfully disagree with your thoughts in this instance. Whirlpool provided an excellent launchpad for Swiftel and i can still remember to this day some of the acid comments to the nutters at that time. You are so much like a boss / general manager i had at the time during the 70's he was a most arrogant man and completely rejected everyone at Rank Arena Australia's comments at first suggestion, but during further discussions when he had time to absorb the concepts and suggestions he did seem to take onboard the merit of some of the ideas suggested, not all but some. When i churned from iinet to Swiftel all those years ago it was purely from the input i read at Whirlpool -- like you I can spot an idiot very easily, and complete idiot posts on whirlpool stand out like dogs balls. I can only disagree with you in this instance and say Whirlpool does have some part to play with increasing Exetels presence -- you have the product and the support to back it. cheers bill Comments (2)
What about a partnering arrangement with an established online seller of retail goods. I remember at one time http://www.warcom.com.au/having 'ISP x' deals for hardware.
http://jmgtechnology.com.au/ also have good reputations for service and price. Perhaps your buying power and their selling experience could create a compatible match. Indeed I would imagine a number of your agents are online sellers of hardware. I would guess that one (or more) of the online retailers would also look at providing pre-configured hardware for ease of set-up to users? This way Exetel can concentrate on their core business. Comment (1)
I am more than happy to have a chat to someone at Exetel about this. My email is sales@jmgtechnology.com.au if someone wants to arrange a contact.
I am (recently) an Exetel agent and have special deals for new Exetel customers. The prospect of getting cheap USB 3G modems sounds interesting though. A lot of the new Billion and DrayTek modems come with 3G USB ports, so there is a good oppurtunity to bundle a 3G dongle in with these. Comment (1)
I think it was jmgtechnology who "badged" a special sale of a specific ATA (or was it a modem?) a little while ago.
Something like "Sipura ATA Model xx - Exetel Special". I imagine it was a JV of some type with the particular VSP- and JV's have specified lives. H. Comment (1)
The current price of $195 for the U169 HSPA modem is likely a stumbling block for new users and users such as myself who would like a wireless connection to compliment an existing ADSL1/2 service.
Perhaps a more competitive price for current Exetel users who want a complementary HSPA service? My elderly MIL would cancel her Exetel 512K connection and move to wireless if the modem cost was lower. She's a VERY low (~200MB) user and I must get her off the 512 6GB/60GB plan. Comment (1)
The PAYU plans don't suit her? $30/m seems quite reasonable.
Comment (1)
Don't do it John, that uneasy feeling you have when you can't sleep is your intuition telling danger is afoot.
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Cormain has been a good supplier for me for all ADSL modems to date. They might be worth considering too if looking for someone with retail experience. Their website is a little dated perhaps but the service behind it is good and their pricing to us agents excellent.
Comments (2)
while it may seem a daunting task as it's not something you've had to deal with previously I think you'd be well placed to be able to deal with it actually as you have a proven track record in automation of orders and the systems required and you have the support channels in place, forums, ticketing systems etc
from a pricing perspective your business model has always been lowest cost to end user that was achievable, handling your own product could mean that an Exetel customer could have the lowest cost offer and anyone that wasn't an Exetel customer and just wanted to make a hardware purchase may pay something extra but that could likely be still much lower than current retail and perhaps even lower than regular wholesale prices so could still be attractive as a hardware only purchase, would help grow the numbers I think Interesting concept anyway and quite possibly a good opportunity, like all things though not without some teething problems I guess, lots to consider I'm sure Comment (1)
Hi John,
I am definitely interested in the Huawei 3G Modem prices you have stated. I work for a medium sized ISP and if you are going ahead with this I would like to get in contact. Thank you. Regards, Anthony. Comment (1)
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