Karma Medical’s Mark Duffield has revealed to AMP how the supplier is doing its best to absorb fluctuations in currency so it doesn’t have to raise prices too much for dealer partners, for the time being. AMP visited Duffield to see how Karma is navigating the industry and what this will mean for it’s retail partners.
Tell us about Karma as a brand — how does the company try and set itself apart in the market?
We sell on the quality and uniqueness of the product. Karma Medical spends a lot on R&D to differentiate itself from everybody else in the market, so we have got patented products and we have probably got the lightest wheelchairs available in the market, which is a good selling point for us. There is probably a fair number of wheelchair suppliers available in the Far East but they all tend to be a much of a muchness, whereas Karma — because it spends so much on R&D and design — stands out. I think people are often quite surprised it is a Taiwanese company and not European.
As a business that essentially imports products into the UK, how have you dealt with currency volatility during the past 12 months?
At the moment we are absorbing most of it, so that’s been quite painful.
Is that unusual? Most retailers I’ve spoken to suggest suppliers have been passing on costs down the supply chain…
We have put the prices up a bit, but in no way are they enough to cover what’s going out the door.
Is that a policy you plan to continue for the time being?
Yes, for the time being — as long as we can. There comes a point where you can’t and it is a judgement call. And I don’t imagine the retail market is going to be very easy in the coming months. People keep getting told how poor everybody is going to get.
How big is the team here in the UK?
There are five of us. In terms of sales, we do a lot with the amount of staff we’ve got. It then becomes hard to think that you need more staff because each additional person could almost have a negative effect on efficiency and productivity. But we are getting to the stage where we will need additional team members because it is just not feasible —there is no fat anywhere.
Karma has always been strong in lightweight aluminium wheelchairs, but the factory is also branching further into powerchairs now as well. Is that a fairly new area for the brand?
Yes. They have done powerchairs for a while, but they have got a lot more options now and they are into it in a more serious way. They do products that we don’t do — very high-end power wheelchairs. But the things they have learnt from doing those products filter down into the products that we do.
Do you see enough demand for those kind of products in the UK market place?
There is enough demand but unfortunately there is plenty of supply as well! There is certainly a market for them, but it is dominated by a few major players. We are there to provide an alternative.
Do you think the competitive landscape is becoming more crowded? Or do you generally compete with the same players that you did, say, five years ago?
It comes and goes. I think that there are several names that are always going to be there no matter what. And then there are one or two that don’t exist anymore, and others that spring up.
Are there clearly defined boundaries for low-end, midrange and high-end wheelchairs? Or are the price differentials getting squeezed?
I think the boundaries are quite clear. The lower end products, they are what they are. We do dabble in it and we tend to sell them in bigger quantities, but they are very, very price sensitive.
What do you try and do differently from competitors to stand out as a viable partner for dealers and retailers?
We try and concentrate on working with people who have got retail showrooms, and who have the facility to provide after-sales care and service. We strive to offer them next working day delivery so they can minimise their stockholding. We provide point-of-sale material and we spend a lot on internet marketing so that when people are researching a wheelchair or a powerchair they find us. And when they do find us, if they are interested, there is a ‘where to buy’ section which feeds them into the retailers.
What is your retail strategy as far as market coverage goes? Do you focus the business through a narrow channel of retailers or do you try to access as many points-of-sale as possible?
We like an even spread, so it’s a mixture of the two. You probably can’t have too many customers but you can have too many customers in the same area — that’s the thing. You have to try and get a good relationship with people in an area and then we try and stick by those customers. We probably work with 300 retailers right cross the UK and Ireland. There are always areas where we could do with a bit more coverage but we have got good shops in almost every city.
Tell us a bit about your stockholding model. You’ve got a huge facility here in the West Midlands. Why is it important to have such a big warehouse?
I don’t know whether it’s ‘big’ by industry standards, but it is big by our standards. It’s important for us. We like people to get the products promptly, so we have to have them in stock and it’s a long lead time from getting something from the Far East to here. There are several months’ worth of stock that we’ve got there. We are anticipating what we may need in a few months’ time and holding enough stock to cover that.
You must need to be very precise in your forecasting…
We try to be — it doesn’t always work! But we are looking ahead, and every month we will place an order with Karma and they will ship us products. The lead time is quite long from order to receipt — you are looking at about three months for a quick delivery — so you have to be on top of trends or peaks in demand. There is seasonality, too. There seems to be less of that than there was. There is still the peak in the summer. It used to really tail off in the winter, but we are still busy now.
Do you manage all the spares here, too?
Yes, we do. We don’t want to have a reputation for being very prompt at delivering wheelchairs and powerchairs but taking a long time to deliver spares. So we try to hold a good stock of them and get them out promptly as well.
Do you have any preference when it comes to working with online or physical retailers?
Yes, we’d prefer people to sell it locally because they can service the wheelchairs and they can assess the person before they buy it.
Do you think retailers share that view?
Broadly, yes. We did go through a stage where there were some disagreements. But it’s our product, it’s a medical device, and if there was ever a problem with it, or a product recall, then we’ve got to make that happen somehow. If somebody has sold them here, there and everywhere, and we can’t trace where they have gone then you are looking at advertising in the national press or trying to track the people down, which is difficult and expensive. It’s not that this happens a lot, but you have to think what might happen.
Moving onto the product side of the business, what are the key trends shaping the design of the products that Karma is currently developing?
Until a few years ago Karma had lightweight chairs that were in the box and if it was suitable for you that was fine, if not there was nothing you could do. But now they have got more configurable products. So we are starting to see that come in, and that goes for the powerchairs as well. You can tailor them to suit the user, which means having more varieties in seat widths, or changing seat depths, those kinds of things. I think in their home market they sell a lot of powerchairs, but the seats are possibly not as clinical as you’d see over here. So that is something they’ve learnt and started to bring through and I see that trend continuing. We sell around 30 different products here in the UK, which is the largest the portfolio has ever been.
What do you see as the biggest challenges facing the industry?
The currency and the competition are challenges. I think for the retailers, if you’ve got people offering things online — for not too much profit — then that’s a challenge for them, and by consequence that’s going to impact our business if they are not healthy.