Going places: Eurostar Global is on the right track says MD

After years of building a solid foundation, the hardware distributor now has a lot to shout about

“There are businesses out there that are similar to us but nobody that [is] quite like us,” beams Eurostar Global Electronics managing director Peter Carnall.

Confidence is clearly flowing through the veins of the Staffordshire-based independent hardware distributor at the moment, which was founded by Carnall and sales director Brett Watmough in 2007.

Belief that the company can really go places not just in the UK, but also a worldwide scale are beginning to be recognised, to the point where they are aiming to double turnover to £150 million within the next three years.

Eurostar admits to operating with a cautious strategy until 12 months ago when it decided to increase efforts to build a profile in the marketplace. This expansion was partly fuelled by the acquisition of additional office space for new operational headquarters within its existing site in March 2016.

The two floor building measures 4,500 square feet, providing space for up to 70 staff, with its fibre networked directly into the firm’s existing IT infrastructure which already has capacity to see the business exceed 150 staff.

It became the third building to be added to the Eurostar Global property portfolio within the Lymedale Business Park site, extending its site presence to more than 13,500 square feet.

The business also saw turnover rise to £37 million from £27 million, with an additional 14 full time staff recruited to bring total headcount to 37.

Over the past 12 months, turnover has almost doubled to £70 million and staff numbers to more than 50, but Carnall isn’t stopping there, and has high ambitions as part of a three-year business plan.

“The processing facility that we have on site, along with the growth plans that we have in place, are £100 million turnover by the end of next year, £125 million in 2018/2019 and £150 million the following year,” he beams.

“We have nearly doubled over the past 12 months and we would like to achieve the same again over the next three years.

“That will see us at a point where we will have to have plans built and put in place for further relocation into a single site facility with more capability for stock storage.”

Origins

These are big ambitions for Eurostar Global, but its road to success and more recognition over the past decade certainly hasn’t been without its bumps and bruises.

Eurostar’s two directors have more than 30 years of experience combined. Carnall founded Eurostar Telecom UK in 2004 followed by Technical company Eurostar Technologies in 2005 with Logistics Director Dave Roberts. New partnerships with sales director Brett Watmough eventually saw the formation of Eurostar Global Electronics in 2007.

This business bought and sold small volumes of handsets from authorised distribution channels in the UK, placing those products with specialist outlets.

They would also be configured for specific software to work with. For example, certain road vehicles would only work with the metrics of certain handsets.

Carnall then partnered with now warehouse director Dave Roberts to form firmware reprogramming company Eurostar Technologies.

For example, if customers such as Caudwell Group recognised their kitting centre was at capacity and they had product they needed conversions done on, from one specification to the other (e.g. Nokia 5140i replaced from the Scandinavian to Central Europe specification), Eurostar Technologies could do that.

If that kitting centre was at capacity, they would enter the business armed with laptops and the relevant equipment and do that for them on-site.

Carnall came into contact with Watmough – one of his customers for reprogramming work – receipting jobs for Easylinks Trading, buying product and acting as a supplier, procuring network operator goods/handsets and selling them while providing configuring solutions.

Watmough began his industry career at Caudwell Accessories in 1995 and then moved on to focus on handset sale as sales manager of Easylinks Trading in 2000, where he managed the purchasing and export sales of mobile handsets.

Using capital that Carnall had acquired over the years and combined with his experience in product reprogramming and Watmough’s experience in international markets, Eurostar was established in 2007.

Just 18 months later they sat down with Roberts, who formed one third of the management trio, to change the shareholding structure to put all operations into one place, dissolving other companies they felt were unnecessary and moving forward with one entity – Eurostar Global.

Difficult beginnings

However, they were starting a company just as the recession kicked in during the first half of 2008, widely recognised as one of the deepest of its kind in the UK in recent history.

Manufacturing output declined seven per cent by the end of that year and affected a number of industry sectors, including banks and investment firms, which would later affect Eurostar’s early progress. Unemployment in the UK rose to 8.3 per cent (2.68 million) in August 2011 – the highest since 1994.

Financial input was therefore limited, so Eurostar Global began by “selling obsolete stock that nobody else wanted to sell”, with reseller partnerships throughout the world, particularly in Europe and the Americas.

Life as a new business was therefore difficult. It had a 700 square foot warehouse that was located five miles from its office that created further difficulties for someone with limited financial strength, such as managing security, risk and storage of products.

It got to the point that Roberts actually visited DIY and home improvement retailer B&Q himself, bought some wood and built Eurostar’s first work benches. They also bought PC components and built them themselves just to save money.

Carnall recalls: “We had a set of disjointed operational facilities and were operating from serviced offices on a short-term lease basis, which were located within a government funded building in Stoke-on-Trent.

“Much of our growth at the time was through organic means and getting on with the job, coming across a problem and overcoming it. We would also find a working solution for it and move forward.

“Those are the lengths we went to in the early days because cash was limited. As Eurostar Global was born, we started to buy and sell product, and that progressed to become both a stock, storage and reprogramming facility.

Watmough adds: “We focused on the global marketplace heavily, looking at where a product was in terms of supply and demand, selling it to the right place.

“It was a case of knowing that the make of a product had a history of selling in certain territories. We used that intelligence to ensure we were making money instead of taking a lazy approach and selling something to the most obvious candidate.”

These tough conditions in the early days of the business led Eurostar to veer away from taking too many risks and following a rather cautious approach.

In the general global mobile phone market, the landscape was changing dramatically and, in fact, was working in the favour of a start-up looking to make a real impact.

Changing landscape

Apple released its first iPhone in June 2007. It would go on to almost wipe out competition from then industry behemoths Nokia and BlackBerry, eventually leaving all other manufacturers, except Samsung, in its wake.

Elsewhere, private equity firm Doughty Hanson created 20:20 Mobile Group after buying the handset distribution and logistics business from the Caudwell Group in 2006 for £347 million.

While the changing landscape was offering companies like Eurostar the opportunity to make an impact, it was still a difficult market to operate within.

Carnall explains this is one of the reasons Eurostar has chosen to keep a low profile.

“Everything we did was a calculated decision based on making sure that in the event that something did go wrong, it wouldn’t diversely affect us to the point that we couldn’t continue,” says Carnall.

“We were an incumbent in an industry sector that was historically difficult to operate in with changing products in an economic downturn right at the point where a bank wouldn’t lend you a pound.

“We had every single obstacle that you could possibly want to face in the most difficult industry sector to overcome. If you’re static in the way you approach things, then you’ll sink with the ship because you have to diversify with your business models to keep up with the changing markets.

“One of the things that was difficult for us was our access to substantial finance. We had very limited working capital and initially when that is tied up in product purchases, we didn’t have a credit status that meant we could go out there, obtain product and get credit facilities from vendors.

“The things we were buying were immediate cash purchases so the USP we offered clients was that we could take products from companies, wouldn’t make a huge noise about it or disrupt any of their contractual partnerships they had with vendors that would see those products re-entering into a space that would be anti-competitive for them.”

Despite the various hurdles during the early years, Carnall and Watmough remained confident they could manage Eurostar in a way that would see it grow and prosper.

Eurostar had always worked on the strategy of buying end of life product, finding the most suitable and profitable home for it – in the UK or abroad – and using market intelligence to achieve these in the best way possible.

Once Eurostar Global had been trading for 12 months, Carnall and Watmough began to explore ways of growing the business, despite the difficulties in receiving financial help.

The facility it was operating from was already becoming congested so Carnall engaged in a “grant funding period” with Advantage West Midlands, one of nine regional development agencies (RDAs) in England, created by the UK government to drive sustainable economic development.

That ended with the resources to relocate the warehousing facility to the distribution on its current home of Lymedale Business Park in Newcastle-under-Lyme.

However, yet another stumbling block was to arise that put a major dent in Eurostar’s plans.

“We procured the warehouse, the site we currently operate on was phase one and phase two was going to be built on the opposite side of it. As part of phase two with the developer, we agreed to procure a bespoke office block that we were going to build next to the warehouse.

“Before they constructed that, clothing retailer New Look, which owns a major distribution centre locally, sought to acquire the land from the Council in order to expand their warehousing distribution centre.

“The council took the land away and awarded it to them. We were left in a position where we had bought a distribution facility on the site but didn’t have office facilities.

“We looked at converting some of the internal space into offices within the warehouse and decided to take the leap to fund an additional building – there was a hybrid unit opposite the warehousing facility that was available to lease as we couldn’t afford to buy it outright at the time.

“We moved into that building and added networking infrastructure with fibre connections between the two buildings so we had internal comms. We were then a two site facility and it was that infrastructure that allowed us to invest into the business.

Watmough admits that Eurostar was looking well ahead to what might happen with the business and the industry as a whole, with the mindset: ‘If we build it, they will come’.

“We have done that from an early stage – reinvesting money to build the business and that is so important today,” he says.

“At some of those points we were actually investing in infrastructure that was more than we needed but we were already planning for the growth ahead.”

Challenges

Challenges continued to exist between 2010 to 2013. Carnall only touches on these, in that the focus of the business shifted at that time through, “third party businesses attracting our attention”, as well as “personal factors” for him that he admitted led to a decrease of attention in the business.

“We had a difficult period across those years but there was a turning point for us where we recognised there was a massive shift between the type of products that we were purchasing and the volumes we were purchasing.

“In order to grow and move further forward from the position we were at, we were going to have to move away from just purchasing end of life product inventory, ex-operator goods or being a specialist that dealt with the bits that nobody else could be bothered with.

“We came along, mopped that all up and used intelligence to deal with it. There was a period where we decided that if we were going to take Eurostar forward and become a larger distributor, we had to move away from this notion of being too one dimensional.”

Watmough adds: “If something changes significantly, you could be exposed but if you have the skills and abilities to do things in several different places in the market, that gives you strength.

“That is certainly what we built up and is why we are still here today and flourishing because we understand different market sectors across the world.

“We have brought all of that together and means we are in a position whereby we can react quickly, see opportunities and often see problems before they even arise, mitigating those because we are now operating across several different market places.”

Turning point

After eight years of business growth and the financial, operational and logistical challenges that came with it, a significant turning point occurred in 2015 that would see Eurostar accelerate significantly and expand its standing in the market.

The economy was still feeling the effects of the economic downturn, with Carnall admitting those looking to invest into the company always saw it as “high risk”.

However, a third-party investor and someone that had been a close friend of Carnall for many years took that risk, taking a 15 per cent cash for equity stake in Eurostar.

This allowed the company to safely invest in operational and staff infrastructure, and take on key personnel from a managerial standpoint, as well as spending to improve operational and systems efficiencies.

“For eight years, we were a self-funded and self-organically grown business and to do that is a long slog,” he says. “When we went looking for finance, companies always considered us to be high risk but now we have been established for 10 years and grown an awful lot, we’re a different prospect.

“From there, it has been about systems, functionality, efficiency and attracting the right people into the business to help get us from the level that we were in 2016 to where we are now. Certainly, if you look at what we have achieved in the past 12 months, it stands to reason we have done a good job with that.”

Carnall adds the other major turning point for the business, resulting from the new financial input, was investing in its own bespoke Enterprise Resource Planning system.

He and Watmough were aware of big names in the marketplace, such as Sage, but both were keen to own the infrastructure – be that physical or software – so they could change it and make it fit for purpose at any time.

Eurostar now owns its own source code to its own enterprise resource planning system that covers customer relationship, stock control, sales and order processing.

“In terms of the cogs that turn in the company, you have to have the correct staff and systems,” says Carnall. “One of the key things we did [was] we decided that if we were ever going to have control of our own destiny, we needed to have systems in the business that were fit for purpose.

“We looked around the market for those. They are all systems that are extremely good at what they do but you will never own them. With any third party system, you will always have license fees, manipulation costs to change them, as well as the need to have experts within the business to make them fit for purpose. It is a very expensive process.

“What we have [done] is developed enough to cope with what the established known branded systems can cope with. That system has allowed us to refine all of the processes inside the company, automate everything that we do – from the point of purchase right through the supply chain to delivery.”

Building a platform

Watmough admits the challenges Eurostar incurred during its first eight years in business, predominately the lack of outside financial investment that prevented it from shouting to the market about what it could do, hindered its growth.

It was a period that was about building a solid platform for the business – now in place – to enable it to build a sustainable and profitable future for years to come.

“We certainly couldn’t compete anywhere near the level of the major recognised distribution players in the UK, and that hindered our growth,” says Watmough. “There is no point making a big noise about something unless you can deliver.

“Running around and creating a profile wasn’t the priority but making sure we were making some money, putting the stepping stones in place, was the priority.

“The business has been built up quietly and that is down to where our main focus was early on in that we were there to help other businesses and deal with some product inventory for some of the big distributors.

“We were never going to shout about the fact that a manufacturer might not have had enough of a certain product or that nobody wanted it.”

In fact, Carnall feels Eurostar Global’s smaller size and relatively low profile in this rapidly changing marketplace has helped it achieve success.

He claims the company has several unique selling points (USPs) that enable it to achieve this. The first is that away from the high-level distribution scrap for competition, it is an independent company, meaning it can react quicker and provide the same level of, if not more, support to existing and potential new customers.

The second is its vast experience at a managerial level within the global handset market, looking at the bigger picture throughout the world instead of just concentrating on UK market conditions.

This means it can get product to customers within days because they have forecast this might happen and know it will be fit for purpose for someone, somewhere.

“Eurostar’s USP is that we are independent, very reactive, not tied down by red tape, a decision-making business that can provide all of the same facilities, if not more than the existing distributors into all of the channels that they sell into and do it well, delivering the right product, to the right channel at the right price,” says Carnall.

“Our understanding of the international market and the prices that exist within them means we have always got a global viewpoint of product rather than just a domestic viewpoint, so we are always looking at the bigger picture.

Watmough adds: “That global view allows us to look at product, not as a risk, but as an asset because we actually really understand what it is worth – not what the UK might think it is worth or what they have been told by manufacturers that it is worth.

“The larger distributors will have product forecasts but there is a chunk of business that is a way more immediate and to satisfy that, you need to have immediate provisional stock

“As we have a global viewpoint, we can take immediate stock or at least make it happen in a few days because we will know someone somewhere that has got them, whereas the traditional distribution method means it is something you forecast and have advance POs on them as it can be six to eight weeks before you have them, and that doesn’t work.”

It is this mindset that is driving Eurostar to achieve its aims of doubling turnover to £150 million within three years, while also adding processes, products and customer relationships.

During the past 12 months, it has received the investment it needs to expand and raise its own profile out to market.

Eurostar Global’s new headquarters on the Lymedale Business Park site was officially opened by the Mayor of Newcastle-under-Lyme, Councillor Ian Wilkes, last October. This new building provides Eurostar with the ability to house 100 staff.

Over recent weeks, Pam Macmillan had joined the business as its head of UK B2B after having spent over 17 years at Halstone Mobile and Technology, most recently as its sales director.

Mark Ireland was also recruited by Eurostar Global as its senior operations manager. He has more than 13 years of experience in senior various logistics and supply chain management roles.

“We have a clear plan that incorporates the need to have certain members of staff managing certain disciplines,” says Carnall. That means that as there are more transactions in every business area, the operational support required within those is growing.

“We have never gone out there and sought the recognition of what we have achieved but this year that is changing. We have entered the Staffordshire Chamber of Commerce Awards, launching a staff newsletter and supporting two charities.

  “There have been so many advancements over the past 12 months that involve everyone that works here and given us an external profile and voice, which are attracting a lot of attention.”

Global growth

Carnall is pleased and confident the business is now in a position to receive the recognition it deserves. He already claims it is starting to open up new operational and revenue opportunities for the company.

“Companies are starting to recognise what we can offer them. It has taken a number of years because we never profiled ourselves within the UK marketplace.

“Over the past 12 months, as we start to penetrate the UK market more and open up channels, particularly within B2B and the retail space, the volume of business we undertake at the moment in the UK compared to the opportunities in front of us, along with the opportunities for increased partnerships, we will have the capacity to bring in additional product.”

Meeting its ambitions within the next three years has already begun in earnest, with contractual positions with a number of vendors been looked at.

Eurostar has also been approached by a number of other vendors over the past 12 months looking to work with it – from OEM, to tier two manufacturers to those offering products in specialist market sectors.

If this growth and global market recognition continues, Carnall is confident that customers far and wide will consider working with Eurostar alongside the larger distributors.

“We have to ensure that our existence and placement in the market will see us a preferred and recognised alternative to many of the large distributors in the UK.

“If we can offer partners the same or better services than they can get from a company that is bigger than us, then we don’t see why that placement in the market shouldn’t exist for us. We’re certainly seeing a greater interest in the company from partners that we are working with.”

Key to Eurostar’s ability to deliver for its customers also lies within its supply chain compliance.

All products purchased are warranty valid in the UK and always delivered with fully certified, original accessories and all products are new.

“We have stringent Quality Assurance and British Standard conformity checks when procuring products which adds that crucial layer of security to its customers. We are not a box shifting business, but a professional multi-discipline distributor with a vast understanding of the products it supplies into the market.”