Couple make millions delivering hard-to-get American products
Borderless shopping is still something of a pipe dream, but two New York-based Australians have proven that the market for US goods that countries like Australia and New Zealand cannot get here is a rich one when played correctly.
Phillis Chan and partner Ben Chaung, both lawyers from Melbourne, relocated to the US four years ago. By the time they arrived in New York after a stint in Chicago, Chan spotted an opportunity that seems obvious in hindsight – create a business that leveraged off the time lag between products being introduced in the US and their later release elsewhere in the world.
"So many of our friends were asking us to send things they couldn't get in Australia, that the idea for the business became pretty obvious," Chan says.
Big Apple Buddy was formed and is now turning over US$2.5m (NZ$3.5m) annually based on rest-of-the-world demand for US tech products, and is now moving into new areas such as cosmetics and outdoor gear.
Australia is at the forefront of Big Apple Buddy's markets – they may receive Apple and Android phones at the same time as the US and other big markets, but that's where it ends.
Chan rattles off a number of products that despite being launched in the US, haven't officially landed in Australia and New Zealand. These include virtual and augmented reality headsets. The market for these products are not just gamers, but includes companies that need to develop software by the time the products officially arrive. These include games makers, universities and real estate agencies – the latter wishing to use them for virtual reality property tours.
Then there are the "smart-voice" home products that are virtually unknown here – the most popular are the Amazon Echo (released in November 2014) and the recently released Google Home. These products turn on lights, lock and unlock doors and can change room temperature, television channels and music on voice command. Chan admits there's a prestige factor here. "Most offshore buyers want to be the first among their peers to have them," she says.
To buy the Google Home, a customer would pay the US retail price of $129 (NZ$181) (the Amazon Echo retails at around $US180 or NZ$252), plus 9 per cent New York sales tax. Delivery would be around $US30 and as Chan says, should arrive in 2-4 business days. An item purchased from Big Apple Buddy was received in five working days.
Big Apple Buddy charges US$50 (NZ$70) for the first item and US$15 (NZ$21) for each subsequent item. Chan says their overall prices are probably on a par with their main competitors, the standard US freight forwarders that provide a virtual US address for foreigners. These have been set up to cater for companies that do not accept non-US credit cards or do not ship to customers internationally.
It's worth remembering that some goods will attract GST and import duty.
Big Apple Buddy sells itself on customer service, not price. It is, as they say, "your shopping concierge for the latest tech". The relative weakness of the Australian dollar against its US counterpart has made little difference to buyers. "Our customers aren't that concerned with the price, they just want the latest US gadgetry," Chan says.
"I think they like us because a human being is taking their order. We respond to every email and half the time they end up telling us about their families and trips. We try to be a buddy rather than just a virtual mailbox."
Chan and Chaung say they will double turnover through more aggressive use of social media in 2017. Facebook and Twitter have been their main forms of promotion and they use Google Adwords to improve online prominence. They intend to add three more staff in 2017 and raise their marketing efforts. Adding staff will not have a big impact on the company's profitability, Chan says. "We've been making a profit for the past year and a half."
Australia is still Big Apple Buddy's biggest market at about 15 per cent of total turnover, but Britain, Singapore, Germany and the United Arab Emirates also figure large. "There is big demand for US tech in the Middle East. Like Australia, it often lags behind when it comes to the latest products," Chan says.
Much of the business relies on good brand intelligence and speed to market. The company has to always work ahead of local importers and sales agents.
A good example is in the cosmetics arena. Big Apple Buddy knows that Sephora, a purveyor of branded cosmetics and beauty products, has a presence in Australia, but not all its US products are here. "The product range in the US is far wider," says Chan. "That's where we make the difference."
- Sydney Morning Herald