Sourceability is a global technology company that specialises in the distribution of electronic components across the world. Read on to discover how it delivered profitability within just three-and-a-half years of being launched. Jens Gamperl, founder and CEO of Sourceability, talks about this and much more in a face-to-face interaction with Rahul Chopra of the EFY Group. Excerpts from the interview…
EB: What is the secret behind Sourceability’s phenomenal growth in the past few years?
We have grown from zero to US$ 160 million within just three-and-a-half years. This is all because of our people and the huge network of suppliers we have created. If suppliers aren’t good enough, then it is difficult to convince the customers. Also, it’s not easy to survive in this highly competitive industry with several big companies already operating in this domain.
Having been in this industry for 30 years, I know quite a lot of suppliers with global footprints. I have also worked with some of the top EMS companies. All these past experiences helped me to build good relations with customers.
EB: Sourceability launched SourceEngine.com in October 2018. Please share the idea behind the search engine and how it works. How is it different from other search engines?
Our aim was to develop an open marketplace. We wanted to consolidate all data and guarantee competitive pricing, and give the best service resulting in the utmost satisfaction among customers. We started out as a traditional, independent distribution company and gradually moved on to develop software. Today, our California office has 50 software developers who are working on our unique search engine, SourceEngine.com. The idea was to create a single platform for the purchase of any electronic component.
Our search engine is different. It has 1200 distribution companies offering their products, but these companies are not visible to our customers, since the orders are fulfilled by Sourceability. It provides complete transparency about the availability, stock and pricing of any specific product. This method ensures that it is the manufacturer itself or the authorised distributor who is selling the product. When you buy a product, the search engine automatically issues an order to our supplier. That means, the moment you place an order, we immediately connect to the supplier and within four days (the minimum time required) the order gets fulfilled.
However, the invoice is raised by Sourceability and it is we who deliver the product. What we wanted was to develop a technology that allows the suppliers to put their products on the search engine so that these always remain there. Usually, with changes in availability or pricing, the data in the Excel sheet becomes obsolete. But the search engine is as good as the supplier.
To provide data, certain suppliers have APIs, so we can query in real-time. Then we have suppliers who use FTP and update once a day. So, if you place an order at 22:00 pm, then it is already 22 hours late. This means, as some of the data may be old, sometimes customers place orders after the stock is over.
But we still fulfill the orders by finding the parts from somewhere else, and may even take a loss because it is all about customer service. It is my goal to make our search engine the No.1 and most user friendly tool.
Our plan was that the data we develop in the search engine should integrate with every customer’s ERP, no matter what it was. We spoke to the IT people regarding how to make this data available, so customers could see all our data at the push of a button, without manually placing an order. This is what we have worked on and will continue to do so in the future.
Our search engine is an important platform where people can consolidate their sourcing and purchase needs. You can upload a bill of materials at the push of a button, thus validating it (which might require a little time) and when this process is completed, you can start to work on the price or come up with an internal part number.
EB: So the supplier sends the material to you and you send it to the customer?
We work together with the supplier. If the customer buys from four different suppliers, we ship all of these products to our warehouse, pack them in a single box and raise one invoice.
EB: How much time did it take to build this search engine?
The system is built to provide customers with the highest level of flexibility and visibility of the market circumstances. It took us two years to build it after deciding on the product. We started three years ago, initially outsourcing the work to another software house, and in a year’s time we were able to manage the search engine on our own.
EB: Can the search engine be extended to any industry?
Yes. There might be only one supplier, but we simply provide the transactional platform. At the end of the day, it is a technology that can be tailored to every customer’s need. We offer the customer our catalogue (known as the VIP catalogue) and for this customer, we add suppliers offering certain electronic parts and later integrate this into the client’s ERP.
EB: Please share details about your offline presence.
We have 15 global offices. In Asia, we are present in Shenzhen, Shanghai, Hong Kong, Singapore, Taiwan and Bengaluru. In Europe, we are in Munich in Germany, Italy, the Netherlands and Scandinavia. In North America, we have offices in Miami, New York, Austin (Texas) and Irvine (California), which is also the innovation hub. We also have an office in Guadalajara in Mexico.
EB: Is Sourceability making a profit now? When did you touch the break-even point?
We made a profit this year (2018). The break-even point was in May or June. We have faced losses in the three years before that, but it’s interesting that the developments in technology have nearly doubled our profit to millions. Those losses did impact us but did not cause any negative results this year.
EB: Do you see players like Amazon as competitors, with their B2B platforms?
“I am not sure they have started looking into components per say, but they seem to be getting in the B2B products.” Whatever Amazon does, they aim to be a key player. So, one always has to take them into consideration, as they might decide to enter this particular market as well at a certain point.
EB: How is India shaping up on Sourceability?
I think India is a real success story, if we talk about our young companies. We have built good relationships with our local sales, so I’m very excited. In the past, my experience with India was never that good, and I learnt that for all-round success, you need to have the right kind of people.
Indian customers mainly suffer due to foreign exchange fluctuations and inadequate banking facilities. The rate of interest is too high here compared to Singapore, Hong Kong or the US. India is a very competitive market. Our intention is to enhance and add value to our suppliers and customers.
EB: Do you offer any tool or facility to save Indian customers from currency fluctuation?
In India, unfortunately, we don’t have any hatching tools. That is a downside of certain local markets.
EB: Are there any expansion plans for India?
India is a huge source of intelligent people and engineers. We are trying to develop an application engineering team comprising Indians as the talent pool for hardware and software design. The work is already in progress and we will be implementing it soon.
EB: Are you also projecting your website as a source of knowledge for engineers?
Yes, that information is on the search engine (data sheets, product change notifications, and things like that) and it’s free. But on www.surcle.io, which is a different digital platform, we are talking about the crowd engineering environment, where we take projects from developers and put them on the Web. It is a source for commercial as well as freelance hardware and software engineering.
Talking about engineering, we also provide another platform called www.theburnin.com, through which people can take advantage if they have limited resources. What we’re trying to do is to implement this digital platform where other engineers can report issues and get solutions.