The mobile Roadhound

For the past 20 years, Ben Sharma, managing director at Roadhound, has seen the mobile phone distribution business go from a niche marketplace to become a distributor of a mass produced item – the mobile phone.

He started the business back in the late 1980s when phones came in the brick style and were worth around $5000. Phones from reputable companies like Motorola were called the ‘Motorola bag phone’, because it literally had to be carried around in a bag and weighed around three kilograms, and were being used by tradesmen and businessmen.

Car retail

Sharma actually started out in the retail car audio and general car accessories business in the late 1970s. His shop – Galaxy Sounds – was based in Maitland, New South Wales, just west of Newcastle.

The previous owner was not making any money and was happy to sell the business to Sharma for about $2500.

“At the time I had no interest in continuing my studies at the University of Newcastle for a Bachelor of Science degree. I just did it to keep my family happy – especially my mum,” he recalls.

“My passion was to get out in the workplace and earn a dollar. Besides, university was an
expensive experience – every time you made a mistake you hurt the back pocket dearly.”

Sharma’s first experience in selling communications was the CB Radio – at the time there was a wave of take-up from people in isolated areas.

When he saw his first mobile phone, he decided to give up the car radio and general audio retail business and headed into the wholesale of mobile phones.

“I think the sheer technology of the piece of equipment’s processing power can be compared to old computers. It could send data with an instant result for the recipient – at the time I was just like WOW,” he says.

Distribution business

However, in the distribution game, life is difficult. Sharma had to convince manufacturers he was the right guy to do the job for them. Being based in Newcastle during that era was a huge disadvantage for him.

“Manufacturers saw it as a negative – if you were any good you had to be based in the big smoke. However, I felt being based in the area had the advantage because of the staff I employed. Their mind-set was they had a little bit of ownership of the job – they did care about giving the business the dividends,” he said.

When Sharma started out he got his break from one or two distributors that accepted Roadhound being based in a ‘provincial town’. Mitsubishi, which manufactured its products out of Rydalmere, Motorola and then Nokia, made Roadhound successful.

Back then he had to overcome the prejudice – Sharma had to deal with the fact that it was not financially stable enough to become a really good distributor; and with Motorola, its biggest prejudice was the perception that distributors in the city offered better service.

“I think passion, perseverance, ethics and scruples can help you go a long way in business.” He is a firm believer that the ‘end doesn’t always justify the means’ when you’re in the distribution game.

“Unfortunately a lot of companies have lost that belief and I don’t subscribe to their way of doing things. That is why we have a stronger relationship with the likes of Nokia, Motorola and Samsung,” says Sharma.

Being truthful

Sharma has seen the benefits of his beliefs, with vendors trusting what he says he can deliver, because in distribution “a partner depends on you and you depend on them”.

What keeps Roadhound going, says Sharma is the trust between it and the manufacturers. Roadhound is a regional distributor that usually gets to the bulk of the market. It has relationships with the little dealers, right up to organisations with a 100 to 200 stores.

To make Roadhound financial all the time, all the profits remained in the company to make it financially stronger year after year. At the end of the day Sharma subscribed to the litmus test, which was the ability to “deliver on promises”.

“I had to prove to the Nokias of the world ‘Yes, we could do it’ and basically not to take on more thanyou can chew – to take on what you can handle rather than take on a lot and do an average job,” says Sharma.

Mobile losses

Despite seeing losses due to the mobile phones becoming mass merchant consumables, Sharma never went out to become a distributor of every brand.
He carefully sort out the brands he wanted and took on brands one at a time. After a fair period of time a good job of distribution is what value you can add to the product and brand, he believes, and for Sharma this still true rings true to this day.

Attractive phones

Sharma in his time has seen it all in distribution. For him, there has been a lot of consolidation in distribution. His biggest competitor, Tele Pacific, was once owned by Tech Pacific – now Ingram Micro.

“Now they don’t sell mobiles at all. I don’t know if that is by choice or it just happened that way. I think the problem with mobile phone distribution is the operating cost: you have to stay trim and lean because you can’t afford the manpower you would’ve had in the early days.”

With competing distributors fading away, Sharma’s biggest threat these days is the consolidation of smaller retail shops, which are being swallowed up by “the one-chain store operation”.

He believes it is going to become harder to survive because the large phone retail chains have more buying power, although as far as mobile phones are concerned the difference between big and small is a few dollars as margin gets squeezed.

However, from time to time manufacturers need to do deals and the big retailers always walk away with the a chunk of that deal.

“I suppose the thing that really happened was phones have gotten sophisticated. They are now smaller, with more features and moved from monochrome to full-blown colour screens. The talk time is very long.”

When mobole phones first appeared they were huge and you needed “muscles to carry those things around”. The people who initially bought the phones were the business people and trades people (like plumbers, electricians and lawyers); they needed to stay in touch. “Call charges were very expensive and no teenagers could afford to pay the price.”

As phones became more financially and physically attractive, younger people wanted them and telcos started to target their offerings to the very young market, says Sharma.

“Computers raised the advancement and raised people’s expectations about what can happen with technology. Phones were no different and the level of expectation got higher and higher every year.

The time of his life

Despite ongoing problems within the telco industry between Telstra and everyone else, the current climate has been good for Roadhound.

Sharma says around six-and-a-half to seven million brand new phones have been sold in Australia this year and that has been the case for the past two to three years.

“I think what is happening in the mobile phone industry is very different from the Internet boom and bust of the late 1990s.

“Mobile phones are something you can feel, touch and use for contact. Mobile phones give a lot of people freedom to stay in touch and I don’t think there is an equivalent to the product,” he says.

That is why it will be something that will not fade away as people are choosing a mobile and not worrying about the landline.

What next?

Sharma has been plugging away at the business so long that he has not had time to relax.

“I’m thinking about retiring – I’m only thinking about it at this stage. I have able and competent staff. However, I don’t play golf, so I have to find another interest other than work because it has been my life,” he says.

Nevertheless, for the time being he has to deal with the situation that has arisen from Telstra and Brightstar’s distribution agreement, which effectively locks out other mobile phone distributors.

“It has had an impact on the business; it’s not a unique situation. The impact from the decision will affect Roadhound, we just have to do our best to minimise the impact.

“We will probably look at diversifying. In the past we haven’t placed big importance into mobile phone accessories.

“However, in the past 18 months, we made the effort to sell accessory brands from vendors like Platronics,” he says.