How an entrepreneurial company successfully expanded around the world, thanks to multiple distribution hubs around the world.
When Michael Newman and Pavan Singh decided to start their own company, they had little in the way of business expertise and virtually no assets. Typically, entrepreneurs launch new ventures after working for growth-minded companies where they’ve built a network of contacts—and may be armed with start-up cash as well.
Newman had been studying and working as a squash pro; Singh had just graduated with a political science degree. “We were 25-year-old kids in a dorm room with $2,000,” jokes Newman, who adds that, in addition to the money, he had a “burning desire” to change his life.
That’s when the light bulb clicked on—almost literally.
Newman wanted to investigate the possibility of distributing some kind of A/V equipment. While researching the market, he came across a study on projector lamps, a type of light bulb made specifically for digital projectors. The study showed a rapidly growing sector driven by a rising demand for digital A/V gear, often for home theatres. They intensively cross-referenced projector brands and the availability of various lamps, and determined that selling the lamps wholesale online was a golden opportunity.
In the eight years since they launched My Projector Lamps, the Calgary-based company (known legally as Boon Trading) has quickly grown into a decentralized, e-commerce-driven business that promises customers deliveries within 24 hours of purchase from a network of wholly-owned distribution hubs around the world.
The company operates a central distribution centre in Hong Kong, from which it sources inventory from Asian manufacturers. From there, My Projector Lamps moves its product to distribution hubs in Europe, North America, Australia, India and Latin America. The end users include universities, governments, home-theatre installers and mega-churches, as well as equipment re-sellers and repair stores.
Not an overnight success
The business model clearly works. The debt-free company (No. 343 on the PROFIT 500) generated between $5 and $10 million in sales in 2012, 86% of which is generated from overseas accounts.
Success, however, did not happen overnight. Building and then operating such a far-flung network of distribution centres took five years of hard slogging, driven by the founders’ willingness to spend extended periods of time living overseas while they established those divisions.
An additional partner, Russell Snyder, lived in Australia for almost a year in order to get a warehouse in Sydney up and running. From there, the he and Newman moved to Brazil. Snyder went on to Miami, commuting between Florida and Mexico while building hubs in both places. Pavan Singh spent a year in India.
The decision to actively pursue an international sales strategy began in 2009, when Newman, Singh and Snyder, decided to establish their first off-shore distribution facility in Amsterdam, where there are “very favourable” corporate tax rates and which also allowed for ready access to customers in the U.K. and Europe. For months at a time, the partners lived in Amsterdam as well as other cities that became distribution hubs, taking care of all the workaday elements in getting established: finding locations, getting the legal structure in place, hiring staff. “It was just a lot of hard work,” Newman says.
Newman built the Tokyo-based distribution centre, which proved to be a daunting experience. He describes Japan, with its huge electronic sector, as “an obvious market.” Despite massive competition in many product lines, the Japanese market offered few places to source projector lamps. Newman recounts that he had to invest more than $100,000 establishing the division. It also took him almost six months to hire his first employee because Japanese workers tend to be “very cautious” about taking jobs at an upstart foreign firm.
Five years after a lengthy and tiring effort to construct a fleet-footed international distribution network, Newman says the company has stopped adding hubs and is now hiring additional staff and training regional managers. The next step: expanding the company’s product lines, and producing a new catalogue by next June. As Newman puts it, My Projector Lamps is in the “R&D” phase.
Put another way, they’re looking for the next light bulb moment.
Originally published by PROFITguide.com. Advice and tactics from Canada’s fastest-growing exporters and the editors of PROFIT Magazine.