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#1 Fastest-Growing Supplier: U.S. Flash & Technologies
By Betsy Cummings
June 2011

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Gabe Gerhardt has been asking a very simple question of his distributor customers recently. “Hey, how can we make it easier for you?”

Gerhardt, CEO of U.S. Flash & Technologies LLC (asi/93131), based in Santa Ana, CA, has sat face to face with more than 50 distributors and posed that question to each of them. From the small local shops all the way up to Top 40 distributors, Gerhardt was looking for some guidance on how his company could make its customer experience better.

And they answered: singular pricing, customer-specific pricing sheets and weekly promotional e-mails with product updates, among other things. From the frank conversations, Gerhardt and James Fox, the company’s president, learned that they could do more to rise above the field of 250-plus suppliers also selling flash drives. “When we first started the company [in June 2008] we were in the discovery process to find out our niche in this industry,” Fox says. “So, we decided to go directly to distributors and ask, ‘What is it that you want and expect from flash drive companies?’”

That effort proved to be their most astute business strategy. By the end of 2008, after being in business for six months, their sales were already more than $360,000. But then in the first quarter of 2009, the two executives began sitting down with distributors to assess their needs. What Gerhardt and Fox heard was both encouraging and eye-opening.

The good news: there were lots of positive comments about the quality, style and variety of their flash drive products. They had a good product line and distributors were interested. The bad news: Selling the flash drives was an exercise in frustration, since almost every drive had a different price point, making quotes and bids a tedious process for U.S. Flash’s clients.

New Opportunities

Almost instantly the company created categories of pricing to simplify the quoting process for distributors. In some cases, that meant reducing margins on products, all of which have a $.05 to $.20 variance on a product line that includes everything from a $2 Web key to a 32 gigabyte, $40 flash drive. Even so, margins that might on occasion dip to as low as 15%, Gerhardt says, are doable, because the simplified pricing has attracted more distributors and a higher volume of orders.

The approach has certainly helped the supplier’s reputation with distributors: U.S. Flash & Technologies was a finalist this year in the Counselor Distributor Choice Awards USB category. “Sometimes we make lower margins but we’re willing to do that to make things easier on our distributors,” Fox says. “Our repeat business and retention is phenomenal.”

Certainly U.S. Flash’s sales reflect that popularity among distributors. After talking directly with distributors in early 2009, sales skyrocketed that year to $2.3 million. Last year the company did just over $4 million, a 1,000% increase over the supplier’s revenues in 2008 – making it the number-one fastest-growing supplier in the industry. And they’re far from done. U.S. Flash hopes to double sales again this year but will be pleased if they top $6 million, Gerhardt says.

To handle the massive wave of new business, the company purchased a $25,000 CRM system for its five sales reps, and went live with the new system on May 1. They need that, Gerhardt and Fox say, since their weekly pricing sheets drive a significant amount of orders. Every Monday they send out an e-mail blast to 15,000 distributors – a growing list – that includes specials and pricing adjustments on the company’s thousands of products. The e-mails, says Fox, started after distributors made it clear that they were spending too much time searching for multiple products from many suppliers, and expressed a desire to see a detailed list of product options and prices from one vendor.

That, plus aggressive customer service, has helped to solidify the distributor loyalty that has sparked the company’s quick growth, Fox says. “I’ll do anything they ask me to,” he says. “If they say, ‘I need a drive that looks like a cannon,” I’ll find the drive that looks like a cannon.”

That helps keep them top of mind with distributors, certainly, but what really seals the deal is that U.S. Flash sends the e-mails without any corporate logos so that distributors can cut and paste the prices into templates or RFPs created for specific end-users, with a distributor’s logo on it instead of U.S. Flash’s.

That kind of collaboration between U.S. Flash and its client base makes selling easier for distributors and builds loyalty. In addition, Fox says, the company offers free services, such as free PMS matching and color imprints.

“Our product is so versatile it fits into any business,” Gerhardt says. “It fits into everybody’s marketing campaign: People carry flash drives on their keychains. The brand ability is awesome, plus the functionality.” But even the best products rarely sell unless there’s a unique sales and marketing strategy backing them up.

In starting the business, Fox says, “I thought about who I did business with” in the past and which companies were the most appealing vendors. “The people who have the stuff I want and who make it easy to sell and make the price reasonable, that’s the guy I want to do business with.”

Betsy Cummings is a senior writer for Counselor.

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