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.