Talk about a digital divide.
Worldwide demand for the latest in digital photography has become so great that John Lalwani and Ruby Mansukhani found a way to make money selling Asian-made cameras to Asian retailers even with a warehousing stop in Los Angeles.
Lalwani and Mansukhani, husband-and-wife partners in Glendale-based Red Peacock International Inc., have seen sales rise as they focus on products that both meet international standards and can be moved quickly from manufacturer to middleman to retailer.
A former exporter based in Hong Kong, Lalwani learned quickly that all consumer electronics were not so easily sold on a global scale.
“The TVs, VCRs, PCs and stereos I sold when I was an exporter in Hong Kong wouldn’t do,” he explained. “They use voltage systems that vary by territory. When our customers began clamoring for digital cameras no plugs, no systems, better margins than Walkmans,” he smiled, “I knew we found our niche.”
Digital cameras make up 80 percent of the company’s product line (the remainder is split evenly between global positioning systems and two-way radios). Transactions are handled quickly in anticipation of monthly price reductions from its major vendors: Canon, Fuji, Minolta and Pentax.
“Margins in this industry are 2 percent to 3 percent,” Mansukhani said. “Models are replaced almost weekly, creating price drops that can lower our inventory by 50 to 75 percent.” With Red Peacock maintaining roughly $1.5 million to $1.8 million in stock at warehouses in Glendale and Miami Beach, Fla. Mansukhani said, “The goal is to have the goods sold before the palettes arrive at the warehouse.”
Outdated inventory is not the only concern. Fourth quarter holiday sales accounted for 45 percent of company revenues last year, so Red Peacock must accurately forecast November and December demand or risk being short of product.
“A $500 digital camera is a luxury gift item so sales increase before Christmas,” Lalwani said. “If Minolta can’t sell us the 500 pieces we’ve promised to an importer in Spain because a store like Best Buy ups their allocations, it can damage our customer relations.”
Courtship to business
Lalwani and Mansukhani met two decades ago through mutual friends in the Philippines. Mansukhani had taken over her father’s business importing brassware for their two Manila retail stores. Lalwani, an East Indian, was running an export business selling unbranded Chinese electronics throughout Europe and the Far East.
“I knew Ruby was the one when I first met her,” Lalwani recalled. “But it took a 10-year courtship before she would get married.”
Lalwani moved to Los Angeles in the early 1980s, where he worked for MCI selling long-distance phone service to corporations. Mansukhani came here in 1994 and sold ad space for a local Philippine newspaper.
Once the courtship was successful, Lalwani tried to convince Mansukhani that they should go into business together.
“I had $20,000 saved up,” he said. “I said to Ruby we can buy a house that appreciates 5 to 7 percent per year, or I can dump my corporate life and we can start our own business. We paid a friend $2,000 to design a Web site, and started the business in our bedroom. We had no children and zero debt. We were willing to risk it all for at least two years.”
Red Peacock (a term of endearment Lalwani coined for Mansukhani) struggled out of the gate.
Though Lalwani was able to reconnect with Hong Kong importers at industry trade shows, vendors were reluctant to allocate product. The break came in 1998 when a sales rep from Olympus gave them a $2,000 line of credit. “That established confidence with the other major vendors and set us on our way,” Mansukhani said.
Lalwani buys from the manufacturer and resells to retailers, importers and large wholesalers throughout the world. Most sales are spread among buyers in Asia, Europe and South America, with only 5 percent coming from the United States.
Vance Baugham, director of business services for the San Gabriel Valley Economic Partnership, said the market Red Peacock picked was ripe for smaller operations.
“Consumer electronics, particularly products like digital cameras, can be sold anywhere in the world, regardless of where they are manufactured,” he said. “They allow even small independent companies to be globally competitive.”
Baugham said that driving this surge is an economy in Asia that’s created a boom for imports and kept prices low for U.S. resellers. “The precipitous slide in the dollar has helped create demand for those same goods to be resold in other global markets,” he said.
While Red Peacock tailors its business to international markets, Lalwani has goods shipped to the United States en route to their final destination because products are available here faster than in other countries. All goods must be for paid in advance via wire transfer. That cuts down on costly overseas collections.
Although only a fraction of Red Peacock’s orders are domestic, Lalwani said being based in L.A. County had its advantages. “L.A. is the first stop for goods coming from Asia,” he said. “I can get 200 pieces right off the boat, while New York has to wait four more days.”
