Manufacturing & selling in Europe

[205alive]

I hope to be in the following position at some point and it could be incredibly useful to have the right sort of holes picked in the following (very loose) strategy.

In addition, could anyone possibly provide ballpark figures of the sort or types of overheads one might incur when manufacturing and selling overseas?

I'd like to have a product made and sold in Europe. It's a low cost item which relates to the 'acoustic treatment' industry, which in turn relates to the recording and sound studio markets (ie, editing and folio production facilities, mastering facility, outside broadcast, location recording, noise attenuation in industry. general purpose screening and partitions).

The tooling is low cost and easily renewable; the product has no prior art and is a novel use of an existing technology. The strategy I have in mind (the only one, due to lack of prior knowledge) is as follows:

• Identify the right manufacturer, go out, have meeting, sign manufacturing agreements, volumes, costs etc.
• Determine distributor, have meetings and put agreements in place
• Bring third party in to handle multi lingual marketing (ie, press ads and brochures in right languages, multi lingual representation at EU trade shows)
• Online presence - multi lingual website with ecommerce functions
• Install demo products at various audio stores throughout EU

The customer order process I thought might be something like this:

• Customer visits website and places order, makes payment
• Order duplicated and sent to distributor, payment also sent to distributor
• Order despatched

or

• Customer visits store
• Store staff logs in to website with unique login
• Places order
• Takes payment though till
• Duplicate order goes to distributor
• I invoice the store for payment

I suppose what I'm trying to do is find out if remote administration of the processes is possible and what the types of outgoings might be.

Has anyone got any opinions based on experience which they would be happy to share? I'm at the stage now of meeting with investors and it would be great to have an acceptable strategy planned, rather than presenting a 'here's one I made up earlier' approach.

Thanks for reading!

[205alive]

spikeyhead said:

What's to stop me copying your idea and using my skills to undercut you?

GadgeS3C said:

It sounds like your idea could potentially be patentable - well worth exploring if that is a possibility. I believe there are some patent lawyers on PH.

Yep, been down that avenue and it is patentable, already had searches carried out and had it confirmed by a patent attorney. An EU patent will be applied for via the European Patent Convention process.

[205alive]

DSLiverpool said:

Short answer - get it made and shipped to a fulfilment company, then you have the easy task of a central sales office (person) taking payment / expediting web orders.

Okay, thanks - I suppose what I'm trying to do is find out which method might have the lowest impact on profit margins per order. If you don't mind me asking, are you in this situation yourself, have you considered it?

[205alive]

coyft said:

I'm a bit confused, you have outlined two different routes to markets, but asked the question...

"I suppose what I'm trying to do is find out if remote administration of the processes is possible and what the types of outgoings might be."

I would have thought that the first question to answer is which of the two methods is a better route to market, once you've determined that you can think about the process and costs of fulfillment.

What if the costs of fulfilment then make that determined route unworkable? - rhetorical question, I'm only presenting it to show my current state of confusion and lack of prior knowledge - makes me feel like I'm in a persistent state of Catch 22.

Perhaps I should have asked, should I:
Manufacture in the EU and deliver to an EU distributor?
Manufacture overseas and deliver to an EU fulfilment house?
Manufacture in the UK and ship to an overseas fulfilment house?

But in response to davepoth's post, I have to say I do like the sound of manufacturing over here and having fulfilment services over here too.

[205alive]

spikeyhead said:

Unless you're making large volumes, or something with a very high labour content then it will be much easier, and including all the hidden costs cheaper, making it locally ... Far easier to deal with if you can drive down the road and see what's happening...

It's a simple product with low tooling costs and a simple manufacturing process. However, the volumes are quite high (from my 'consumer' perspective at least). If all goes according to the business plan I'll be ordering over 140,000 units over five years for the UK market and 510k for the mainland.

The temptation to take advantage of a much lower unit cost is strong - however, I can't ever see having it made anywhere outside of the EU - other than perhaps Turkey, as they seem to be very strong in that particular industry. Still, like you say, quality control implementation would definitely be an issue.

[205alive]

coyft said:

... If you were talking to me as an investor, I wouldn't be too worried where it was made and how it was going to get delivered, there always fairly straightforward problems that can be solved and fine tuned along the way.

To answer your query "I would be much more interested in knowing:"

where the market is - identified

size of the market - identified reasonably accurately using published figures

who are the customers - identified

how are you going to reach them - identified

and how much is going to cost to acquire them - not sure what this means, perhaps: actual print costs, advertising space, hosting, other marketing overheads - at a guess?

The reason behind my OP is that an investor would like to see a five year cashflow forecast. Year 1-5 of UK figures are in place, but the intention is to apply for an EU wide patent from the outset, giving the opportunity of selling overseas in Year2 - but, not knowing what fulfilment costs are involved means I can't incorporate that into my figures.

[205alive]

Gadge, thanks for your input and valuable points - I might take you up on the offer, cheers.