Despite international supply chain delays that have been caused by freight congestion across ports around the world, online retailer Harris Technology (ASX: HT8) has found a surprisingly simple solution to those problems which has resulted in a 23% increase in revenue.
As International shipping delays see a backlog of ships idling at sea awaiting entry to ports, most of the retail industry has been hit hard by higher importing expenses and inventory turnover issues. An outlier of sorts however, Harris Technology quickly pivoted to source a range of its products from domestic distributors that already had their goods on Australian shores which could be dispatched immediately.
This contributed to Harris Technology reporting $12.6 million in sales revenue for the March quarter which represented a 23% increase from the previous year, with net positive cash flow of $278k.
“With the $12.6 million in sales generated through the March quarter, it takes our year-to-date sales to $41.2 million, and has Harris Technology on track to set a new revenue record after reporting $41.8 million across the FY21 full year,” said Harris Technology CEO, Garrison Huang.
“Since moving into our new warehouse facility in November 2021, our focus has been to consolidate the business by optimising our operations and focusing on business fundamentals.
“We have conducted reviews on our technology product offerings and expanded into higher margin household products. We anticipate stronger margins on products going forward with less working capital tied up in low margin products.”
For many retailers, products often need to be paid for in advance or within 30 days of purchase and in the event of shipping delays, those payments may need to be made before the products arrive. Combating this issue, Harris Technology has been able to utilise its network of domestic distributors which has also included expansion into non-tech products. Such products, like household goods, have been delivering attractive profit margins to Harris Technology.
As one of the largest marketplace sellers in Australia, Harris Technology has thousands of products listed across Amazon, eBay, Catch and more where their large online profiles enable their listed products to be featured prominently by marketplace operators.
Without the cost of retail storefronts, Harris Technology is able to pass cost savings onto consumers. Continued surges in their sales have drawn the attention of domestic retailers that do not have the resources to list large amounts of products across multiple marketplaces, and manage the shipping logistics.
This has seen growth in Harris Technology’s eCommerce services where they partner with domestic businesses, offering eCommerce rails to have products listed across all major marketplaces quickly. Utilising the Harris Technology warehouse facility, shipping is then dispatched quickly without the traditional retailer needing to engage postal services themselves with the related administration.
Offering these eCommerce rails to importers, distributors and under-resourced retailers draws upon Harris Technology’s historic mantra of reacting quickly to retail trends. In this instance, their eCommerce infrastructure has delivered on new revenue opportunities alongside their flagship tech products business.
In the months ahead, Harris Technology is set to benefit from increased online search traffic around home office upgrades if historic trends are repeated. This included a massive increase in sales two years ago as Australians scrambled to set up home offices at the start of the pandemic which contributed to the $13.6 million in sales generated in FY20.
12 months later with working-from-home and remote learning having become the adopted norm, Harris Technology’s sales rocketed to $41.8 million in FY21.
With Harris Technology having already achieved $41.2 million in sales from the first 9 months of FY22, the Company is on track to smash all sales records in FY22 which will be further boosted by new Government incentives for businesses to upgrade their office products.
Alfred Chan is a Business Reporter at The Sentiment specialising in ASX-listed small cap companies, a bloodstock enthusiast and former equities analyst.
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