CASE STUDY: Evertek Computer Corp.

THE COMPANY

Established in 1990, San Diego-based Evertek Computer Corp. specializes in overstocked, discontinued, and factory refurbished computers, peripherals, and consumer electronics. The demand for “obsolete” products is large and growing because buyers around the world don’t need the latest and most expensive equipment. They want cheap. Match these folks with people who want to make a few bucks off their used personal computers, printers, and monitors, and you have a business with serious growth potential.

THE CHALLENGE

Evertek international sales manager John Ortley wanted to grow the global side of the business. Given the company’s small sales staff, Ortley thought Evertek should emphasize e-commerce Web sites and portals. To scale up fast and keep ahead of the competition, Ortley elected to focus on countries with lower gross national products.

THE SOLUTION

Although Evertek has an established sales channel, a multilingual sales staff, an e-commerce Web site, and representation on several portal sites, Ortley still sought to increase Evertek’s market penetration and enlisted the assistance of the U.S. Commercial Service.

The Export Assistance Center in San Diego helped Ortley pick the best overseas trade shows to attend to promote Evertek’s products. One such show, CeBIT in Germany, generated $1 million in orders—well worth the plane fare and hotel room. “Any company in the U.S. with sales of $5 million per year should be exporting,” says Ortley. “And they should be using the U.S. Commercial Service to help them do it.”

In just a few years, Ortley was able to add four new salespeople. International sales zoomed to $34 million last year, an increase of 84 percent from the previous year. He thinks future annual sales of $100 million are attainable, especially since he now sells to customers in 105 countries, including Iraq, Ukraine, and several countries in Africa and Eastern Europe. Approximately 30 percent of Evertek’s international customers are in South America, with 20 percent in Europe and 20 percent in the Middle East and North Africa.

International sales are good for Evertek not only because of the volume and balancing business cycles, but also because gross margins are higher and merchandise returns have been “next

to nil.” Ortley says the return rate for domestic sales is between 3 and 5 percent.

Payment also has not been an issue for Evertek. The firm uses a combination of wire transfers, credit cards, and letters of credit. “For certain high-risk countries, we only ship upon receipt of a wire transfer to our bank,” says Ortley.

LESSONS LEARNED

The chief lesson Ortley learned is that a small sales department can use the Internet to find and sell to customers all over the world. Because multiple channels are a key to growth, Ortley has a presence on e-commerce portals such Alibaba.com and Singapore-based Exporters.sg. About half of Evertek’s international sales are generated through the Internet and half through trade shows and other methods more suited to “an older-style sales company,” explains Ortley. He adds that even e-commerce sales are seldom entirely devoid of human contact because of the need to deal with documentation issues and the desire of many foreign customers to have a personal relationship with the company they are buying from.

Ortley spends hours on the phone, adjusting his calls for different time zones. Speaking directly with the client is still an essential part of the business process, he believes, because it forges closer ties. “I sit there making calls with the CIA’s World Factbook on my computer screen. It’s important to know something about the country you’re doing business in. The buyers really appreciate it if you can talk to them about issues of importance to them.”

Ortley also uses an array of free and low-cost help to build his international business. Trade leads from the Commercial Service are one good source of reliable buyers. Advertising in Commercial News USA, the Commercial Service’s magazine, is another. U.S. embassies across the globe distribute the magazine, which features editions in English, Spanish, and Chinese.

Ortley’s enthusiasm for doing business abroad has helped Evertek realize that a big part of its business is going to be international: “For me it started with being curious about the world. I enjoy learning about other cultures and respecting people who have a different background than mine.” Ortley says the company’s owners were always open to doing business globally, but he has been able to deliver results that have positioned the company as a major exporter.

Ortley advises companies to consider the potential rewards of exporting and of working with the Commercial Service. “We are in part an e-commerce business and we’re thriving. The world is shrinking, and it’s getting easier and less expensive to do business on a global basis.”

ACTION

Here are some tips for taking your e-commerce business global:

  • Answer purchasing inquiries from overseas, even if unsolicited. The Commercial Service advises that you respond to such inquiries if only to request additional information about the potential buyer. If you are concerned about the legitimacy of the buyer, the Commercial Service can do a background check or provide other useful information that can help your company make its decision.
  • Advertise in Commercial News USA. This bimonthly catalog-style magazine helps American companies promote products and services to buyers in more than 145 countries. The magazine, which is free, is mailed directly to qualified recipients and distributed by Commercial Service personnel at U.S. embassies and consulates worldwide. Each issue reaches an estimated 400,000 readers.
  • Get online. Companies that have decided to sell their products online must assess whether they have the most efficient information technology (IT) solutions to execute their online exporting programs. The U.S. Department of Commerce has created a tool to assist companies with IT assessment. It is available free on the Internet. The eScan Security Assessment, at www.mepcenters.nist.gov/escan/, assesses the electronic-security infrastructure of a small or medium-sized business and provides an action plan for improvement. You can also visit the E-Export Toolbox Web site at www.export.gov/sellingonline for information about the resources the Department of Commerce and other U.S. government agencies offer to U.S. businesses interested in using the Internet to increase exports.