A Small Consumer Electronics Start-Up Company
The client was a small consumer electronics start-up company. They have subsequently grown significantly and now turnover c. USD $80m p.a., with Horizon International supporting their growth and new market entry throughout.
Their initial production run in Southern China was the result of a highly successful crowdfunding campaign through Kickstarter. Their initial Kickstarter target was to raise $100,000, however their final achieved funding hit $1.5million – 15 times their original projection.
Therefore, they had to produce 15 times as many units and deliver these directly to 15,000 consumers around the globe.
As a start-up company, their resources didn’t extend to employing a supply chain expert and therefore they sought advice on how to manage this major project. Initially they approached a well known global courier service, who provided them with an account application form and a rate card. However, they were given no support or advice in terms of market entry, customs classification, compliance, best routes to market, end-customer experience and of course, cost options.
The original plan that the client had, following their brief discussions with the global courier company, was to ship each individual order by express courier directly from Hong Kong to end customer. The client’s concern was that they wanted the end customers to experience a frictionless delivery, with no customs involvement or payments of duty/tax etc. They were also keen to ensure that the correct duty classifications were applied to avoid customs issues. Again, they were given no support in this area.
As production neared completion, the client (who at this stage consisted of the two founders) found themselves focussing solely on trying to find a solution to their global despatch challenge, rather than their core area of expertise – their product.
The crowdfunding space is extremely incestuous and any negative comments from disgruntled customers are magnified quickly across social media – so the client was understandably very anxious that the despatch of their first product went smoothly.
Through Horizon’s long history working in in the consumer tech sector for many major global brands, we have built a strong reputation and are well regarded by most electronics contract manufacturers in the Far East. The client’s production facility were one such contract manufacturer and kindly referred us to the client.
Horizon International met with the client and discussed the challenge.
Our supply chain experts never apply a “one size fits all” approach to any challenge. Whilst Horizon has developed a range of “tried and tested” solutions, we recognise that each client, each product and each challenge is unique and we cannot simply apply the same solution in each instance. In this case, rather than simply follow the original plan suggested by the global courier company – of direct shipping each individual order from Hong Kong, we considered other options.
After performing a thorough analysis, we presented the client with alternative solutions to consider. Each solution was clearly presented and accompanied with a cost per order, a risk analysis, service outline, taking into consideration the end-customer experience.
It was determined which of the solutions presented by Horizon was the “best fit” for the client in terms of both cost, risk and end-customer experience. This solution involved moving all UK/EU orders in bulk to the UK by oceanfreight – and similarly, all North American orders to Los Angeles by oceanfreight. On arrival at UK and US port, all orders were customs cleared in bulk – attracting single customs brokerage fees. All duties/taxes were paid by the client on arrival – meaning that individual orders could now be despatched directly to end-customers using local delivery options, without any further customs involvement. Individual orders were picked/packed, labelled and despatched through Horizon’s London and Los Angeles fulfilment centres. Deliveries were made using fully tracked courier services, with “signature on glass”.
All order and inventory data was managed through Horizon’s enterprise supply chain system hiCloud Store – giving the client complete visibility of order status through to receipt and signature by their end-customers.
The entire project was managed seamlessly from the point that completed product was collected from factory door – all the way through to individual delivery to final end-customer’s hands.
15,000 individual orders were delivered in total.
The cost per order was almost 70% lower than they had planned through the global courier option. This was achieved primarily through line-hauling bulk inventory from Hong Kong to local market – resulting in a cost per unit of “pennies”.
All customs formalities were planned, managed and executed with little/no input from the client – and absolutely no involvement from their end customers.
All end clients received email notifications with order tracking details, all triggered directly from hiCloud.
This Kickstarter launch is still referred to by crowdfunding experts as one of the most successful campaigns to ever take place.
Since this launch in 2013, Horizon have continued to support the client and have assisted them in establishing their own footprint in both the US, UK and Hong Kong – as well as handling their transition from being solely a B2C eCommerce seller into a solid B2B supplier, selling through multiple retail channels in 4 continents. Horizon’s solutions and supply chain consultancy has proven to be able to keep pace with the client’s rapid growth and we remain an integral partner to them.