his on-line chandlery is so successful it is even selling to customers in landlocked countries in Africa, recently sending four anemometers to an aid organization in Juba. In total, phuketsail.com has shipped to 24 countries.
What's even more amazing is that Julian Hill, the CEO of Phuketsail.com, got into the sailing business by accident. He used to be a corporate director for Dell Computers, and he ran Dell Computers Asia-Pacific, based in Penang. Michael Dell brought him into the company personally because Julian had made a name for himself as a disc drive whiz and back then Dell was spending a US$1 billion a year on computer storage products.
Born in the UK (London) Julian worked in the Merchant Navy as an engineer on liquefied gas carriers, but deciding he didn't want to be out at sea for the rest of his life, saved up and went back to Portsmouth University to get a degree in computer engineering. Armed with that, he worked for IBM in the UK for a while, then hopped on a plane and headed for Silicon Valley. While in California, he earned an MBA from UCLA, and a law degree from Southwestern Law School in Los Angeles, all the while learning the disc drive business inside and out.
With Dell, Julian oversaw work in 54 countries but seemed to spend half his life on a plane. He felt he had to get out for mental health reasons and his stock options were so good that he realized he didn't need to keep working. The problem was the shift to retirement was so dramatic, he needed something to do. He proceeded to move to Phuket and bought a Tayana 37 named Default Judgement, whose owner had won the boat in a judgement, sailed it from California, suing and angering everyone he could along the way.
Julian quickly changed the name of the boat to Sanook, as everywhere he went in Default Judgement people ran for cover because the past owner had been such a miserable sod. Julian's retirement was brief – after three weeks, he became bored. So he started doing some charters out of Yacht Haven Marina.
He also needed someone to teach him how to sail properly. So he hired an English captain named Marcus Bellati (now skippering a superyacht in Palma) to come on board for six weeks and show him what was what.
He then bought another larger boat, a 47' Catamaran, named Two to Tango. Air-conditioned, with four double cabins, it was a perfect charter boat. At about that time, the Thai Marine Department started cracking down on dodgy Thai boat registration (folks were paying under the table and not paying the proper import duty). Authorities were impounding boats left, right and centre and the Ratanachai Shipyard was full up. People couldn't retrieve their boats until they provided proof they had paid the proper duty.
Luckily, Le Royal Meridien Phuket Yacht Club in Nai Harn, who previously owned Two to Tango had paid the proper duty; they had kept the boat at Yacht Haven, but were never able to get a proper charter business going with their guests.
As Julian escaped the wrath of the law, his charter business boomed and people thinking he had some magic formula started asking him to manage their boats. And as he did his own marketing through his website, and made his own bookings, in addition to going through agents, his business quickly became more lucrative than his competitors. So very quickly he ended with a small fleet of boats, but how would he keep them running? He was constantly running down to Phuket Town with bags of money to buy marine products from Chinese hardware stores. Even though he would visit these shops several times a week, none would give him a line of credit, accept checks or take a credit card. And this drove him nuts, there hard to be a better way.
The only half-decent chandlery back then was P & J Chandlery in Boat Lagoon, which only opened whenever the owner felt like going to work. So Nick Wyatt at Yacht Haven offered Julian a grotty old store front for Bt2,000 a month. He didn't really know anything about running a chandlery, so he just ordered all the parts he was buying from shops in Phuket and West Marine. The chandlery was originally set up as a side business to support Julian's charters. If it didn't take off, he had nothing to lose as he would the use the supplies for his charter fleet anyway. He also was able to get an alcohol license so people could come in and buy beer for their boat, which was difficult to do in the Yacht Haven because it's surrounded by a Muslim community. People soon started saying it would be great if he had a business closer to town, and Julian realized that people tend to spend more money on their boat when they were doing a haul out, but the only marina with a dry dock back then was at Boat Lagoon. So he went to the owner of P & J, and offered to take over her shop, buying her inventory at cost. She accepted, but over time he ran into problems with the Boat Lagoon management, e.g. it took forever to get highspeed Internet installed.
With a shop in Yacht Haven and Boat Lagoon, RPM approached him about putting another shop in their marina as well. Logistically, he felt it would just be too much of a hassle to supply and run multiple shops and he needed more space than he had in the small chandleries he already owned. To be more competitive, have good prices and a good product range, he needed to significantly grow the business. So he decided to close the charter business as he lots of competition from people like Sunsail and focus on the chandlery business. He then went out and bought three buildings on the main road near the entrance to Boat Lagoon.
Phuketsail now has approximately 5,000 different products and each of these products has four different prices and 2 different currencies, so it is maintaining 40,000 different prices and everything must match, e.g. the stock listed on the website must match the stock at your point-of-sale. This can't be maintained manually, so Julian uses special professional software (Quickbooks Point of Sale and PDG Ecommerce engine), which records all transactions at point of sale and this synchronizes with the website every half an hour.
Julian recently closed his retail shop in Phuket, and decided to sell everything online from the company's office in North Bangkok. Part of this was simple time management; he had moved his family to Bangkok three years ago and was sick of constantly jumping on a plane to oversee the retail business in Phuket. In addition, the move to Bangkok lowered the logistics costs of supplying to customers outside Phuket, since all the products are imported through Bangkok anyway.
But a funny thing happened with the closing of the retail business, the company's sales actually increased, because many of his Phuket customers were other chandleries who saw channel conflict with Phuketsail when it was selling to customers through its retail store. Interestingly, over 50 percent of Julian's business today comes from chandleries.
"Branded products at a reasonable cost," is Julian's motto, he was sick and tired of Thai companies marking up marine products ridiculously high. He goes to the source, strips away all unnecessary costs, places larger orders, shares containers, pays suppliers in advance, uses duty-free free trade agreements, and lowers shipping costs thereby lowering Custom clearing costs, anything he can do without lowering the quality of his products.
Suppliers complaining about high import duty and shipping costs are a bit of a lark to Julian."Get the book from customs, make sure you've got the right tariff codes; I pay a one percent duty on a pump as long as I classify it correctly. It can be confusing though; normal rope is 10%, but rope in a bag that says 'rescueline' triples the tariff by three, because it's being used to save lives." Julian says his weighted average import duty is 12%.
Julian says read the packaging, most brand names are not made by the brand names themselves, but by factories, many of which are based in China. Using the ASEAN free trade agreement Julian can even get around paying the 30% duty on lifejackets by bringing them in from China. Do your homework!!
Julian believes in posting a good description of his products on his company's website, so that customers can see these descriptions and answer most of their questions themselves. When he started his business, it was 100% retail, now none of it is.
Describing his life today, Julian says, "Phuketsail.com is a private company, which lives and dies by my decisions, there's no one telling me I can't do something, which gives me complete freedom to do whatever I want and I love it. If I make a mistake I pay for it, if I get it right, I reap the rewards from it. I love boats, I love computers and I love marketing, this business marries all three."
Thai-based companies are Phuketsail.com's best customers; Malaysian firms are number two, and Singaporean, number three. The next biggest customer outside of SEA is South Africa where the company has a toll-free Skype line as it does in England and France. It's also big in France, Italy, Spain and even Finland.
Customers include the Four Seasons Hotel in Chiang Mai, which buys binoculars and lifejackets, the Bangladeshi Navy buys lifejackets and flares. Orders also come in from India, Sri Lanka and the Pacific Islands.
Summing up, Julian says, "We do everything by the book, everything by the law; we don't have two sets of books. You can send in any government official you like and I can back everything. It's so easy to cut corners, but what you can't do is sleep easy at night if you are wondering who is going to check on your records and inventory tomorrow."
Phuketsail.com ships free by regular mail within Thailand (this can take up to 5 days), while express shipping obviously costs a little extra, details are on the website.
Right now Phuketsail is researching setting up a European subsidiary based in France. There are 466 marinas in France alone, as opposed to 6 in Thailand, but they buy and use exactly the same products they stock and sell in Southeast Asia. Phuketsail's close relationship with the Navimo Group, Europe's leading yacht equipment manufacturer, and ITT/ Jabsco/ Rule, means they will be able to cost effectively sell throughout the European market. "We're in the planning phase right now, but everything looks very promising and I hope to go 'on-line' in France in early 2012", says Julian.
(Malaysia, Singapore, Indonesia, the Philippines, Hong Kong and beyond)