DefySupply featured in Portfolio

Dec. 17, 2011 - PRLog -- The face of an "American" company is changing everyday, and there's no better example of this than DefySupply.com

A USA based company, with an office in China and a manufacturing base in China as well....is now trying to sell to the Chinese consumer.  

The article goes on to say:

With a population of more than 1.3 billion people, a rapidly growing urban middle class, and an economy poised to dominate the world, China is an attractive consumer marketplace for American companies. DefySupply wants some of that action.

“There are very few online retail companies selling directly to consumers there,” says Brent Gensler, DefySupply’s 27-year-old CEO. “The Chinese market is a world of potential.”

DefySupply launched in 2008. The company ships furniture and other like products directly from Chinese manufacturers to U.S.-based consumers, saving customers thousands in wholesale costs. The firm employs 15 in the Chinese province of Guangdong, who work with manufacturers and organize product shipping. Gensler and his associate, Gareth Mandel, spend several months each year in China overseeing operations and negotiating partnerships.

DefySupply achieved success in the U.S., bringing in $3.5 million in revenues for 2010. Now, the company hopes to expand by selling directly to consumers in China—but Gensler knows it may not be an easy sell.

An average sale at DefySupply is $1,000, yet many Chinese workers make no more than $3,500 in wages in an entire year. “It’s a little difficult to get people to pay a third of a year’s salary on a sofa,” he admits. As a result, DefySupply is marketing its products to the rising middle and elite classes. Because the products are manufactured in China, the company doesn’t need to incorporate freight costs into the equation. Its prices there will be about 30 percent lower than those charged to U.S. consumers.

Culture, rather than cost, could be a bigger obstacle to DefySupply’s growth in China. E-commerce is still a new phenomenon there: “It feels like the U.S. in 2002, when everyone went to eBay for everything,” says Mandel. “People had that natural fear about whether the products they were ordering were genuine.” Older generations in particular “want to go to the store to touch a product and see what they’re purchasing,” he says.

Adding to the frustration is the fact that many Chinese consumers don’t have credit cards and are distrustful of online-payment systems. But the company believes that a new merchant payment processor called AliPay, in which the customer isn’t charged until the product has actually arrived, could pave the way for widespread adoption of e-commerce. “As people buy more online, they’ll begin to understand that they have consumer protections,” says Mandel.

George T. Haley, University of New Haven professor and author of The Chinese Tao of Business: The Logic of Successful Business Strategy, believes that DefySupply may also find a culture clash when it comes to customer service. “The Chinese have become extremely demanding consumers, and service is something that they absolutely demand to a much greater standard than American consumers,” he says. He believes it will be essential for the company to maintain inventory so that it can guarantee delivery times, or risk customer backlash.

Likewise, he says, “the Chinese consumer is extremely brand-conscious.” He thinks that the company will need either to align itself with well-known and desirable suppliers, or it will need to focus on associating its own brand name with luxury. “They’re promoting low cost as a selling point, which won’t work there,” says Haley.

Despite the hurdles that DefySupply is likely to face, company officials are optimistic about opportunities in China. “We have a strong advantage because we have systems in place already,” says Mandel. “We have the supply side taken care of. Now we just need to find the best way to reach consumers.”

The DefySupply team has been concentrating on developing a China sales strategy for more than six months. The firm is building a Chinese-language website and researching what kinds of products to spotlight for consumers there. “They don’t want huge La-Z-Boy recliners,” says Gensler. “People have a lot less space, so they want smaller sofas.”

The next stage will involve working out logistical issues like shipping and pricing. Once DefySupply has finalized its mission, it plans to use Google AdWords to raise awareness of the new Chinese site. “In the first few months, we’ll be pretty quiet with how we promote the site, but once we really understand the system and can predict delivery times accurately, we’ll ramp things up,” says Gensler.

And after the company has perfected its Chinese marketing strategies, Gensler’s set on expanding the company yet again—this time, into the European market. “We can sell to basically anyone in the world,” says Gensler, “so why wouldn’t we?”



Read more: http://www.portfolio.com/companies-executives/2011/07/14/...