Shalli Kumar, president and chief executive officer at AVG Automation, Bettendorf, Iowa, has nothing but praise for the business model of AutomationDirect.com, a Cumming, Ga.-based direct sales company that offers automation products via catalog and an e-commerce Web site. For the past several years, in fact, AVG has been providing its EZTouch and EZText operator panels—used with programmable logic controllers (PLCs)—for sale exclusively through the AutomationDirect channel.
Now, Kumar’s company is out to emulate the success of the AutomationDirect model with the launch of a new direct sales division of its own, known as EZAutomation. “We are launching this division with 400 products and a 340-page catalog,” Kumar says.
AVG will continue to offer the EZTouch panels for sale exclusively through AutomationDirect. But enhanced versions known as EZPanel Enhanced and EZText Enhanced will now be sold directly through the EZAutomation catalog and Web site, together with eight additional new product lines. Catalogs are currently being mailed, and the EZAutomation e-commerce Web site is targeted for launch on Jan. 24.
Dell at Best Buy
AVG is also setting up a nationwide network of value-added resellers (VARs) to provide additional sales and support for EZAutomation products. The VARs will be thoroughly trained and certified by AVG, Kumar says. Seven VARs have so far been hired, he notes, and the number could eventually reach about 20. “We are going with a business model of direct sell, but with a slight twist to it,” Kumar says of the VAR strategy. While AutomationDirect’s business model is similar to the direct sales model used by personal computer maker Dell Inc., Kumar comments, “our business model is like Dell at Best Buy (a major consumer electronics retail chain).”
The EZAutomation launch isn’t the first time that AVG Automation has tried its hand at direct sales. In the late 1990s, AVG set up its own direct sales operation called OI Direct, says Kumar. “We attempted to do that for about six months, and we kept running into AutomationDirect, and we discovered that its business model was fantastic,” Kumar relates. “So instead of continuing with OI Direct, we decided to dissolve that and do it exclusively through AutomationDirect.”
The result, says Kumar, was a notable success. In just four years, beginning in January 2001, AVG’s EZTouch operator panel sold through AutomationDirect has become the number two brand in the country, according to Kumar.
Kumar is hoping to match that success with additional products sold through EZAutomation, including a new line of low-cost industrial marquees that AVG has developed. AVG’s EZMarquee line, thanks to a new, highly integrated design, will sell for significantly less than competitive marquees used with PLCs, Kumar says. Compared to about $1,500 to $2,000 for a typical 20-character, one-line marquee, a comparable EZMarquee model will sell for less than $500, he says. And a 10-character, single-line EZMarquee will be offered through EZAutomation starting at $349. With these products, “we have changed the entire dynamic in a how a user would look at a marquee,” Kumar contends.
Besides the EZMarquee, EZPanel Enhanced and EZText Enhanced products, additional new product lines to be sold through EZAutomation include operator panels with built-in PLCs, flat panel monitors and input/output devices. All benefit from increased integration technology to achieve significant size and cost reductions, says Kumar.
What it takes
AVG has spent about $5 million in developing the new EZAutomation division and setting up the necessary direct sales infrastructure, according to Kumar. Given AVG’s experience in working with AutomationDirect for the past five years, he says, “we know what it takes to be successful at this.” High on the list for success is “a really well-done catalog,” Kumar notes, as well as “strong product documentation in terms of manuals, and what’s on the Web, how to do it yourself.”
EZAutomation will also offer “enhanced services,” Kumar says, including same-day shipping of orders placed by 7:15 p.m. Central Standard Time (CST). This will enable West Coast customers to place orders for same-day shipment through the end of their business day. EZAutomation’s customer service department will be open from 6 a.m. to 8 p.m. CST, while technical support will operate from 6 a.m. to midnight, CST. An emergency technical support number will also be provided for weekend use, Kumar adds.