Monoprice Touts 141% Revenue Growth, 10,000 Installer Customers
Monoprice CEO Ajay Kumar says its new “No Logo Program” allows integrators to add margin to 100+ products that cannot be price-shopped by consumers.
The Rancho Cucamonga, Calif.-based company, which specializes in offering a variety of electronic cables, home theater equipment, networking and IT gear, mobile accessories and other computer components, is growing at a remarkable rate, thanks in part to the custom installation community, according to CEO Ajay Kumar. In all, Monoprice has 5,000 product SKUs available.
The company posted 2012 revenues of $121 million, a 26.4 percent increase over the previous year. Its website traffic has grown 81 percent and revenue has surged 141 percent over the past three years.
“We are in the right place at the right time with our business model,” says Monoprice CEO Ajay Kumar, who joined the company in July 2011. “We offer the same cable or accessory as national retail brands, but for much less cost. However, we are not cutting corners as we employ high-quality manufacturing partners who work with our specs. Our markup is much lower and we pass those savings to our customers. Monoprice brings them a value proposition they can’t find anywhere else. That’s what makes our business work.”
For integrators, that means they can purchase products “with quality just as good as name brands” for 30 percent to 70 percent below retail, according to Kumar. It seems to be resonating. Kumar told CE Pro the website has “roughly 10,000 installers purchasing on the site.
New ‘No Logo’ Program; 400% Markup?
“The word of mouth is growing,” says Kumar, noting that a significant number of dealers that visited his booth at the last CEDIA Expo “knew who we were.” He adds, “Not one integrator complained about product quality. In fact, the only complaint I heard was from an integrator who told me that our prices are too low. One guy told me that he marks up our products by 400 percent.”
But what about “showrooming” by clients? If the equipment is available online so cheaply to consumers, how can integrators earn any product margin and make any money?
Monoprice has solved that too. Last summer the company unveiled its “No Logo Program” in which products are offered on the site with no brand names, making them less “shoppable” for pricing by consumers. To date, the company has more than 100 products in the “No Logo Program.”
“An integrator can buy a six-foot HDMI cable from us for [inexpensive price]. He can sell it for $20 and the client is still going to be okay with that price point [because it’s still low],” notes Kumar. “Buying from us give integrators the best chance to still mark up products.”
There are no special discounts for integrators on the website, other than for buying in bulk. If integrators are charging appropriately for their labor, combined with the product margin available via the “No Logo Program,” profits are still there to be made, argues Kumar.
“Overall, the market is getting very price conscious,” he says. “It’s difficult to have a high labor rate and a high product markup. Consumers are savvy.”
Fast Customer Service, Tech Support
Those price points are combined with customer services that include no restocking fees, one-year warranties on electronics, lifetime warranties on cables, same-day shipping (if placed before 2 p.m.), a 30-day free return policy, and a live chat button for tech support that is answered in 15 seconds on average. The website also indicates the number of units in stock.
“We have excellent customer service and support,” says Kumar. “It is an essential part of our business model.”
So how can Monoprice do this? The company contract manufactures the products in Asia eliminating several layers in the sales channel, including distribution and not having the overhead of a brick-and-mortar business. (It also sources some products in the U.S.) The company then sells these products directly to customers for much less mark-up than nationally branded competitors.
Home Automation, Tools on the Horizon
Kumar says Monoprice looks for product categories that are fragmented in which there are not two or three large dominant players taking up a large percentage of marketshare. Consumers are more willing to try products from new players in fragmented markets.
Currently for integrators, Monoprice offers cables, speakers, mounts, subwoofers and networking equipment of “similar quality for half the price,” says Kumar. He pinpoints tools (both hand tools and measurement tools) and home automation as future targeted categories. You won’t find commodities like flat panel TVs or computer hard drives on the site.
The company employs product managers for every category it sells to source the product from Asian factories and ensure the right features and functions.
To enhance its continuing growth, Monoprice has recently made a number of improvements to its business, including:
- Adding a seasoned management for marketing, purchasing and financing
- Upgrading its 173,000 square-foot centralized office and warehouse facility in Rancho Cucamonga with a warehouse robotic conveyor belt system
- Expanding its work force to more than 250 employees, creating several full-time jobs for the local economy