A sales rep who started his own importing business in the family garage has built sales by 4,233% in seven years - thanks to some hard business lessons, a loving family and a devilish desire to beat the big players.
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Entrepreneur: Colin Sullivan, Managing Director
Company: Amerge Sales Management
Business type: National Account Management and Importer
Founded: 2001 by Colin Sullivan
Employees: 12 full-time
Turnover: (2007 - 2008) $13M
Head office: Nunawading, VIC and Belmont, WA
Contact details: +61 3 8873 0500
The Amerge Story
Colin Sullivan caused an upset when his family business - Amerge Sales Management - won the award for girls licensed product of the year at the 2008 Australian Toy, Hobby and Nursery Fair in March.
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Key learning points:
- Shoe leather - There's no substitute for getting out from behind the desk and visiting trade shows, suppliers, designers, retailers and distributors. It's the only way to spot developing sales trends before they become mainstream.
- Unique selling proposition (USP) - What can you offer potential clients or suppliers that makes you different, special and just what they are looking for? It is rarely just the best price.
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He had entered the fair after a last-minute cancellation, pinning his hopes on the newly acquired Hannah Montana electric guitar, a three-quarter size musical instrument by the Disney by Washburn brand. Washburn has been making guitars since 1882 and is widely recognized as a market leader.
Sullivan's victory stunned the industry's big players. He heard one major competitor ask loudly "Who the hell are they?" The product drew "unbelievable" interest from retailers according to Sullivan. "We knew we had a hot product on our hands."
Sullivan started his national account-management and importation business in his garage in 2001. The father of five says: "It was tricky when the kids came home from school and began shooting hoops against the garage door, especially when a buyer was on the phone." The Amerge head office is now in a custom-built, two-storey building with two merchandise showrooms and a warehouse.
Before he started Amerge, Sullivan had worked in senior corporate sales roles for 20 years. With his good industry contacts, he began importing no-name brands including ceramic cookware, plastic food-storage containers and kitchen appliances. But there was a glitch - the business was foundering. He says: "We'd be placing shipment orders of 200,000 generic houseware products; the problem was that it nearly sent us broke."
The business was caught between deadly scissors of high-volume, low-value imports and very slim margins - "a recipe for disaster", Sullivan says, because of high storage, distribution and freight costs. "The products came under constant price pressure because retailers wanted to import the product themselves from China. It's very scary ... You're faced with the prospect of your business being pulled out from under your feet. Survival. That's what it gets down to."
The Challenge
To source brand merchandise that major retailers could only obtain through Sullivan's business.
The Solution
Sullivan says: "We had to become a ‘house of brands', which means competing against major companies. It's a lot of hard work - travelling every 2-3 months for 7-10 days at a time and scouring the massive halls of the international licensed product shows to find opportunities to represent major brands." Sullivan says he is lucky to have an understanding wife. "The family can see I'm building something so that makes it a bit easier."
At the bi-annual Hong Kong electronics show in 2005, Sullivan spotted potential in electronics and sourced product lines from Hello Kitty (including alarm clock radios, stereo CD boom boxes, toasters, nano cases) and Jensen household consumer electronics (including docking systems for iPods and CD clock radios). His stable of licensed products now includes Jensen car audio, Tweety (alarm clock radios), and Disney by Washburn products such as the hot Hannah Montana guitar range. "We're up against Sony and Panasonic, so we have to ensure that we have the right brands and retail strategy."
Sullivan won the distribution rights for Disney by Washburn through astute observation of US marketing trends and fancy footwork. He noticed that in a bid to increase sales volumes Washburn had established big do-it-yourself music departments at the mass merchants, with shelf-space for musical instruments rapidly expanding up to 16 feet.
Guitars and associated merchandise such as guitar strings, picks and amps were colour-coded, enabling consumers to select musical instruments and accessories without having to speak to a salesperson. "My wife had a bad experience at a specialty music store when trying to buy an electric guitar for our son. She had to speak to a salesperson who expected her to know everything about guitars. She felt like an idiot."
Sullivan saw an opportunity to transplant the US retail trend, which made life easier for consumers. "I just hopped on a plane went straight to Chicago and presented my business plan." This product represented a new category for large Australian retailers. "We didn't even know which buyer to talk to - that's how new it was."
But how did Sullivan get his new suppliers to trust a blow-in from Australia? "It was good, old-fashioned, look them in the eye, shake their hand and put your credentials on the table. Your reputation is like gold. If you've got a good one, it can keep snowballing. We do everything we can to protect that."
Offering a good service to suppliers with a point of difference is essential Sullivan says. For the Jensen car audio brand, Amerge takes on much of the marketing and brand promotion. "We become a part of their team. That's one of the benefits of working with us."
Sullivan travels often to keep abreast of packaging, colour and product trends, keeping him competitive with much bigger companies. "Technology is evolving so quickly you've got to be at least 12 months ahead of the retail trends."
The Result
Sullivan's success is in his figures with sales up by 4,233% in seven years. Amerge has built its turnover from $300,000 in 2001 to $9 million in 2007 and $13 million in 2008.
Sullivan says: "Being able to identify an opportunity quickly and beat your opponent to the punch; there's a bit of magic in that."