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Room to grow

Mobile device distributor Eurostar Global Electronics is laying the ground for a major expansion of its service offering with the opening of a new 43,000 square foot warehouse

“When you reach capacity in your existing premises and you’ve got a lot more you want to do, the only way you’re going to do that is if you grow, and you can’t grow if you don’t have the space.”

Peter Carnall, Managing Director

So says Peter Carnall, Managing Director of Eurostar Global Electronics, standing in the centre of the mobile and tablet distributor’s brand-new 43,000 square foot warehouse in Stoke-on-Trent – 50,000 sq ft if you include the mezzanine floor soon to be installed at one end.

Since taking out a 10-year lease on the facility a little over 12 months ago, Carnall has been thinking day and night about the internal layout of the space, the flow of product through the facility, the automation that will allow the company to pick and pack with accuracy and speed, air-locks and other security arrangements and all the other things it takes to run a modern distribution business.

Most of all, he has been thinking about all that extra capacity – 50,000 sq ft of space compared to 9,000 sq ft across two sites plus some third-party storage space that he has at his disposal today – and how he can use that to expand Eurostar Global’s service offering and kick-start an exciting new chapter in its history.

Eurostar Global has enjoyed impressive growth since it was established as a mobile and tablet distribution business in 2007, especially in a three-year period from 2017-2020 when turnover increased from £35 million to around £120 million. After that, revenue started to plateau, largely due to the physical limitations of the company’s premises.

“We could go out and get another 20 contracts, but we wouldn’t have been able to service them because our existing facility is at its storage capacity. We can’t physically bring in any more stock or send any more stock out and we are already over-spilling into third-party sites for storage, which becomes a bit difficult.

“We’re hoping that after moving into the new site we’ll once again see significant incremental growth because it will allow us not only to do more of what we currently do but also to be much more of a logistics service provider to the wider technology sector.”

Mobile device distribution

What Eurostar Global currently does is stock, supply and distribute smartphones and tablets from leading brands to a variety of channels, including distribution partners, 500-plus airtime management resellers across the UK, larger retailers and the insurance sector. It also sells to overseas customers via a European hub in the Netherlands.

It is a direct vendor partner of OnePlus, TCL, Alcatel, Sony, CAT, OPPO and Emporia and can source and supply other leading brands, including Samsung and Apple, from the open market in Europe more cheaply than through authorised UK channels.

“If a reseller buys mobile devices, they need to talk to us because that’s what we do. We are probably the reseller’s number one partner in the UK. There’s no two ways about it. We supply them with credit terms and we supply them with a suite of bespoke services to support their business,” says Carnall.

This includes software-related services, as well as hardware-based ones, such as pre-configuring devices under a mobile device management system.

A key part of Eurostar Global’s offer to existing customers is reverse logistics where it takes back used devices from resellers and retailers, wipes them of data, resets them, reconditions them, grades them and then re-distributes them for re-sale or re-use in secondary device channels, such as insurance, where they can be used as replacement devices should an insured product be damaged.

“The other thing we use these devices is for what I call advanced replacements. If a customer has signed up to our advanced replacement scheme and their device stops working, we will quite often utilise returned and graded devices that are in pristine condition as an advanced replacement device. Effectively, we recycle our own products within our own supply chain.”

Third-party logistics

The extra capacity provided by EuroStar Global’s larger premises will enable it to take on additional business in these core areas.

It will also enable it to leverage its expertise in warehousing and fulfilment and start offering third-party logistics (3PL) services, including reverse logistics, to a broader range of technology vendors for the first time.

“Within the group, there is a logistics business that’s bespoke to dealing with technology products that require special care, security and management, a clean environment and dedicated systems. Up until now, all we’ve done is service our own customer base with our own products as we haven’t had the space to be a third-party logistics provider for anybody else. This facility allows us to take on third-party logistics contracts for people in the same wireless technology space we operate in, where we can provide the same level of service for their products that we do for our mobiles and tablets.”

As Eurostar Global takes on more 3PL business, Carnall expects this to lead to a broadening of its client base on the distribution side of the business.

“Our primary product has always been, and always will be, distribution and value-added services for mobile and tablets. However, that will extend and expand. We’ve partnered with Sony recently, and we are looking at dealing with some of their audio-visual products. Then, as we start to take on board more third-party logistics products, it may be that we start to look to distribute some of those products into channel for those partners as well.”

For the time being, Carnall plans to be selective about the products Eurostar Global takes on-board, citing battery technology as an area of interest, specifically powerbanks that act as a replacement for generators in environments from yachts to NHS operating theatres, as well as wireless IoT devices and accessories within the mobile ecosystem, like augmented reality and virtual reality products.

He also sees potential in using Eurostar Global’s Amsterdam operation to facilitate the distribution of products between UK manufacturers and European customer channels (and vice versa) to remove some of the friction that has developed since Brexit.

“Our infrastructure and our European hub gives us a great opportunity to facilitate some of that distribution business between companies that don’t currently have the structure to do it. How can we help people who produce goods here that no longer have the infrastructure to deliver those goods to their European consumers? Maybe we can take delivery of their products in the UK, ship them to our European hub and from there distribute them to their European consumers.”

New business model

Carnall adds that with a completely different revenue and margin model to Eurostar Global’s existing business, 3PL services will help balance the group’s mix of revenue and profitability.

“The value of products that we sell as a business gives us a very high revenue and we work on a lower margin return. As a 3PL service provider, offering expertise, security and proficiency in technology distribution and logistics to third parties, we’ll be looking at a much lower revenue, because we’ll only be invoicing for the service aspects of what we do, but a much higher margin.

“We don’t have a specific target in mind for what we expect to achieve in revenue, but I like to think we’ll be able to deliver £5 million worth of revenue in technology distribution by year three. When you consider that Eurostar Global generates £125 million in revenue from sales of its products, it’s a very different type of business.”

Phased transition

Eurostar Global is moving into the new facility in three phases, largely for cost management reasons – the whole project is entirely self- financed with no external or venture capitalist funding – and to ensure a smooth transition.

Phase One, which covers operations and logistics, from a stock, storage and distribution perspective, should be completed by the end of this year and operational by the New Year. This will be followed by Phase Two, involving the fit-out of the reception area, sales and administrative offices, staff canteen, showers and locker rooms, and Phase Three, covering what Carnall terms ‘the luxuries’ (e.g. an on-site gym) that will help create an attractive working environment for existing employees and the new recruits that Eurostar Global will be taking on over the next 12 to 18 months.

“We employ 67 full time employees at the moment and by the end of next year, that number will probably be closer to 100. It just depends on how quickly we get into this building and how quickly the contracts expand as a result of that.

“We want to use it as a distribution centre first and take it from there. We’ve implemented technology that allows us to use the offices we have now and those in the new distribution centre. Everything works out of the cloud so we have the versatility to work across multiple locations without there being an issue with technology.”

Once the transition is complete, Eurostar Global plans to rent its two existing, owned locations.

New services

In the meantime, the company will continue to enhance its offering to channel partners with new services. Within the next 12 months, Carnall is planning to launch a buy back, trade in (BBTI) scheme under which it will supply a partner with a device for a contracted period, typically 12-18 months, with a guaranteed buyback price.

By subtracting this figure, which could be as high as 40-60% of the device’s value, from the purchase price upfront, Eurostar Global will enable partners to reduce their customers’ initial outlay on new devices, while helping them comply with ESG goals by taking back used devices for re-use in secondary device channels and the circular economy.

Carnall is confident that this will prove popular with device resellers and their B2B customers.

“If you can spend £5,000 instead of £10,000 on handsets for employees and get the same product for the same length of time, why wouldn’t you do it? Why would you want to give yourself the headache of expending the full value of cash, having to deal with all the recoverables, getting people to bring their devices in, dealing with the data protection and GDPR requirements for those devices and then dealing with the resale of those devices when you’ve got a partner who will release all that value and service proposition for you instantaneously.”

With so much extra capacity to play with, Carnall says that the company’s partners and customers (new and old) can look forward to many more innovations and service improvements in the years to come.

“We’ve got an awful lot of ideas in the business and the level of experience and knowledge we’ve got – the management team alone has over 300 years of mobile experience – means we already deliver a really good service. Having a bigger space and the capacity to do more allows us to deliver what we’re good at to more people, and with advancements in technology there’s always something new you can do that you couldn’t do last week. I’m quite confident that we’ll be doing an awful lot more for our partners in the future.”

To find out more about working with Eurostar Global, please call 01785 565555 or visit www.eurostarglobal.co.uk.

eurostar C43-Plot-5

 

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