John 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.