Economy

Straw wars: selling commodities overseas

Written by Charmaine Noronha

When Albert Marshall left the world of law for business, he was hoping to encounter new challenges and successes. Perhaps eventually to be bestowed some of the oft-desired titles, like entrepreneur of the year, company MVP or sales guru. “Straw King” definitely wasn’t one of them. But, as president of Stone Straw Ltd., a plastic drinking straw and stir-stick manufacturer based in Brantford, Ont., Marshall proudly reigns.

“I never would have imagined I’d be doing this,” says Marshall. “When you’re not in business, you never sit in a restaurant and pick up a toothpick and say, ‘Someone makes a living selling this thing.’ The concept doesn’t cross your mind, yet so many people’s lives depend on that product. I’m one of those people, and I’m pleased with the work I do.”

Marshall should be pleased. Since Stone Straw’s parent company, Wentworth Technologies, bought Stone in 2002 and made Marshall its president, annual revenue at Stone has doubled to $12 million. While 80% of revenue is derived from sales to Canadian companies and 10% from sales to the U.S., Marshall is most excited about Stone’s success and prospects in Europe. It’s a small victory, but one that’s difficult for any company to achieve — never mind one that sells a highly commoditized product in competition with low-priced Asian products. Marshall’s law? Take smart approaches to cost-cutting and learn to death what your customers want.

Instead of shipping products overseas from Ontario, Stone set up a manufacturing plant in Poland to capitalize on the country’s low labour rates, expanding economy and status as a European Union member. Local production means Stone can export to Germany, the U.K., France and Russia with minimal freight expenses, cutting costs significantly. The company also incorporates various low-cost Chinese raw materials into its European straw manufacturing. Combined, the two tactics allow Stone to equal or even beat the prices of its Asian rivals.

On top of price protection, a European presence provides quicker and cheaper travel to Asia to assess its rivals’ products. “We visited our [then] competitors and their clients — it’s amazing how many will speak with you — to see what they were doing,” says Marshall. “We then adapted our proposed products to meet market needs, taking a lot of thunder out of [the Asian companies].”

That also helps Marshall develop a keener sense of the European market’s needs. For instance, although the continent comprises many different markets, Europeans have a few universal needs as far as straws are concerned. Stone had to shift its thinking from “super-size it” North American products to smaller goods and packaging for the daintier, portion-controlled Europeans. They also want fewer straws per case, with less packaging, more colourful straws and variety packs, and unique packaging presentation.

Think twice if you believe you can support European customers from Canada. “We initially assumed we could do a lot of the customer service from Canada with minimal support out of Poland,” Marshall says. “But it didn’t work because Europeans feel like they’re calling the moon when they call Canada, and it’s expensive for us to call Europe.” Stone has since built a sales force local to its trans-Atlantic market, and seen an unexpected benefit: increased trust of Stone among its customers and prospects, which greases the wheels of every sale. It’s strong evidence that service is as or more important than price when selling a commoditized product.

Marshall could be the poster child for entrepreneurs looking for an edge in any market and any industry. “You must view the world as a potential competitor, supplier, partner and customer,” he says. “Only then will you understand how to be a player in the marketplace.”

Originally appeared on PROFITguide.com