Sunday, July 12. 2009Pity We Know Nothing About Selling Hardware....John Linton .......and even less about warehousing and fulfillment - always relying on suppliers to do that for us. I had two conversations with our contacts in the PRC and the EU yesterday about pricing for hardware. I didn't make much headway with either party but I learned a little more about pricing movements over the coming months and understood a little more about how possible it might be for us to improve the offerings we make to our agents and to those of our end customers who buy hardware through Exetel. We have never made a 'big deal' out of offering hardware to our residential end users contenting ourselves with trying to get a good buy price and then passing it on with a small mark up. In the early days, when a higher percentage of ADSL customers were 'new' it was helpful to have as large a percentage of inexperienced users as possible using modem hardware with which the support personnel were most familiar....but those days are long past. Things will begin to change again now as we move towards providing specific hardware both to our residential users and to our corporate users in terms of HSPa modems and accessories for residential users and higher end routers, VoIP 'switches' and SIP hand sets for our corporate users. Our first 2,000 Yagi antennae landed late last week and they will be the first of our attempts to 'advantage' our agents by going to the trouble to source specific hardware for our residential HSPA service at the lowest possible cost so they can make the highest possible 'add on' margin. Subject to reaching the various cost targets we ought to be able to ship a Yagi to an agent for less that $A35.00 but I need to check the final costs and work out the warehousing charges. We have almost completed the 'on line shop' software and logistical processes and will 'populate' the offerings on an ongoing basis starting next week with the agent facilities being done first as the date for the start of the regional/rural TV advertising is now only a week away. Our initial objective is to provide one or two 'exclusive' items with the other items being Netcomm and Cisco hardware that could be bought from other local sources but we will try and provide it at our buy prices plus a small handling charge plus a low shipping charge. As all this is brand new to us we will need to take it slowly to ensure we understand exactly what can go wrong and address any such issues before the volumes increase (assuming they are going to of course). While we believe that the Yagis will provide a plus to our agents marketing efforts from now on it is going to be essential to get the 'magic box' delivery schedule move up from its current "October" as, from what I can see it is a really essential element of the HSPA strategy and we have been looking for it for so long it sometimes appears it will never happen. A low price HSPA modem would 'kluge' the gap but it isn't 'elegant' and it isn't going to reach the true target price point. That being said we have still not put in place a contract to obtain the low cost HSPA modems though we are getting closer. Similarly with the selection of a business VoIP box - there are a multitude of choices but finding the right combination of features at the right price with some sort of manufacturer credibility is a very different matter. I would hate to buy the latest Cisco takeover with Cisco's only contribution being to put their label on it just so the end user is reassured that "you can never go wrong with Cisco" when the box is simply one of dozens made in Taiwan or the PRC similar to, maybe even the same as, the many we have considered from those sources. However we must make a decision on that by the end of the month to maintain hitting our plan milestones. (plans are tyrranous even when its only the 12th of the first month). The major looming consideration is the wider topic of warehousing and fulfillment which has raised its ugly head by having to store and then ship the 2,000 antennae that are about to reach their storage location mid week (we can't store them in the office as they are bulky and take up around twenty pallets. We have found a temporary solution for this single shipment of one product but it is a clear reminder that if we do progress in the plans we currently have we will need a much more sophisticated scenario which will require abilities and knowledge of which we have practically none - if not actually none. While that is some months away, if it does in fact become a problem, the months have a habit of speeding past while investigations and decisions about the future tend to get pushed aside for more pressing current time needs. Annette, of course, wants to buy a warehouse on the basis that it would be small and we wouldn't need much space and therefore it wouldn't cost much in these uncertain financial times...which is probably correct but the personnel costs of managing and operating such a facility for our small volumes (even should we become successful in this unknown venture) appear to me beyond recovery and we would have to use a fulfillment house rather than invest time and money in things of which we have no understanding....however I have learned to be cautious in assuming logic will prevail over the desire to buy real estate by some people I have known for a very long time. Doubtless various brochures and plans of commercial storage will begin to 'appear' in various locations around the house in the near future dismissed on any enquiry of what they are doing there with some version of "just seeing what the options are". I wish we could quickly find a fulfillment house in the very near fuure that charges something we can afford to pay and, to stave of acquiring more real estate for our very uncertain future needs and at uncertain future value I think we had better put a lot more effort in to that project. Trackbacks
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What knowledge is required for fulfilment of orders?
Pack the items as ordered, slap a sticker on the box, call the courier... Comments (2)
It would be nice if it was that simple, but that process doesn't scale well, as the volume increases
If you get 500 orders a month (call it 20 business days), that's an average of 25 orders per day. Doesn't sound like much, but you would want to maximise shipping (the courier company would probably get annoyed if you called them 25 times a day ) so you'd gather together items shipping to a major node, for further split up and distribution. If business grows to, for example, 5000 orders per month, or 250 orders per business day, the level of complexity is even greater, and you'd be moving away from couriers to shipping companies with regular delivery runs, etc. And don't forget inventory management - making sure that you always have enough stock in the pipeline to avoid either running out, or having stock ageing in the warehouse. I've been involved in order fulfilment in past professional lives, both high volume/low value, and low volume/high value type environments, and it's never as easy as putting an address on a box and calling the courier. Comment (1)
> Doesn't sound like much, but you would want to maximise shipping (the courier company would probably get annoyed if you called them 25 times a day )
Companies, like AAE generally collect once, you would pack all orders, and then they would collect. > And don't forget inventory management - making sure that you always have enough stock in the pipeline to avoid either running out, or having stock ageing in the warehouse. That's managed by the systems responsible for generating the orders.. You could manage stock numbers by ensuring the numbers of stock on hand match those in your ordering system. And order forecasting isn't a fulfilment issue, that's up to the systems that generate / process orders to ensure the numbers add up. If there was a promotion running, then those responsible for the promotion should forecast the growth and order as appropriate. I fail to see complexities in fulfilment, human error is more likely - as with any process reliant on humans. Comments (2)
"It is going to be essential to get the 'magic box' delivery schedule move up from its current "October""
Are public specifications for this device available? Quite interested in what brand/model it will be. Comment (1)
Th brand isn;t important.
Te soecs are: HSPA sim slot ATA FXS and FXO wifi routing Sub $A125.00 landed cost. Comments (5)
Curious... a business VoIP box you mention. I've been looking at using the Soekris net5501 + a digium card + Asterisk + FreePBX for a "VoIP box". Quite expensive for the end customer at around $1500 though... although its possible this device could be "dual purposed" and have an E169 attached to it to act as a router.
I look forward to any possible solution for business VoIP Exetel will offer! Comments (4)
Forecasting may not be too big an issue at the beginning - isn't it more likely Exetel will need to buy minimum amounts to satisfy a supplier's needs that are beyond what is going to definitely sell initially?
Comment (1)
Have you had a look at Yawarra?
http://www.yawarra.com.au/catalogue.php They sell a suitable Net5501 for under $800. The expensive part are the Digium cards, add a TDM 410 ($290) with a couple of FXS/FXO ports ($65 - $290) and maybe a hardware echo cancellation ($390) from MBit (http://www.mbit.com.au/). Comments (2)
Thank you for that reference - we have looked at a lot of that type of box but we really need something that doesn't look so 'Heath Robinson'.
My reluctant view about going with Cisco (obviously a product made by another company taken over by Cisco) is that its neatly packaged and has a known brand label on it (even though it isn't quite accurate). The cost is very high compared with the home grown kluges but it is within the acceptable range for businesses with 15 plus employees. For businesses smaller than that we will offer a 'hosted' service from our PoPs using our equipment which is what we use for both Australia and Sri Lanka. Comments (5)
John ,
Is there any merit in the idea of purchasing / warehousing the hardware in Sri Lanka and then supplying direct to Exetel AU customers from Sri Lanka? cheers bill. Comment (1)
Yes, Yawarra is where I obtain Soekris. $800 + $300 + $65 + some kind of margin = ~$1500 - correct? I don't work for free - thats about a 20% margin.
Comments (4)
I wouldn't rule out switches for even the small business. An intercom is one such task where a local switch is ideal. No point sending data out the Internet, when the call is within the same building.
OpenVox is a chinese company that remakes Digium hardware. Most their hardware is entirely compatible with Digium counterparts. Typically half the price, or less - too. I was considering that most small businesses already have "a server", and Linux is steadily growing as the Operating System of choice for that server. If Exetel could offer OpenVox hardware at a good price, I can see myself buying a number of cards. Comments (4)
I assumed you were the end customer
We sure need a reasonable margin if selling it to the end customer. If you're reselling, have a talk to Paul McGowan at Yawarra. He has been extremely helpful to me in getting reseller pricing (even for very low numbers). Contact me by email if you'd like contact details / more info. Comments (2)
ooh, thanks for this tip. I'll be in touch with Paul
Comments (4)
I am very excited to see some amazing products to continue to come from Exetel.
I have installed three HSPA services with VoIP in the Central Coast, using Exetel and a E169 on a Billion 7404VGPX. I have had some hit and misses with these for call quality. I would be keen to assist in any testing that you may be planning with your new hardware. Can you discuss when you are planning to release your hosted PBX solution? Comment (1)
Re: warehousing ...
Australia Post can provide that, and have them delivered via eParcel (rather than courier). The delivery savings could offset the storage thus retaining an Australia-wide $20 delivery charge via a trackable delivery method. You would also be able to integrate your back-end software with them thus having a paperless trail. http://www.edeliver.com.au/ And no, I don't work for them, and maybe their prices are too high. But at least you could have a short-term contract to "try" their services before committing to your own warehouse, or a long-term contract with someone else. And the delivery charges would be a plus too, plus the fact that they delivery Australia-wide (without excessive charges especially for the remote customers you're targetting) and if someone isn't home, it will be left at the local post office (no redelivery fees and no hassles for the customer needing to arrange re-delivery during business hours). Comment (1)
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