LogBuy: Karina Thomsen and David Wall
Husband and wife team Karina Thomsen and David Wall have looked overseas for their business inspiration, successfully importing a Danish idea to the UK market.
LogBuy, founded in 2002, was created by a Denmark-based small business frustrated by its inability to get competitive prices on business supplies, compared to the discounts enjoyed by their larger rivals.
The Danish business set up a discount club for firms with up to 50 employees, allowing them to secure reduced price supplies such as petrol, travel, computers and stationery.
The club works by finding small business members discounted goods for no charge. In return, the suppliers gain a potentially loyal customer base and LogBuy pick up a marketing fee.
After gaining 500,000 members in Denmark, LogBuy was launched in the UK in early 2005, with Karina and David starting up the Milton Keynes-based operation.
“We wanted to go over to Denmark and talk to them about the business model and how they’ve made it so successful,” explains David. “So we took a trip over to Denmark in May 2004, they gave us an overview of what they’d achieved and we then had the opportunity to go into a partnership arrangement for the UK limited company.”
The couple commissioned market research in the UK and got a “positive response” from small businesses about the LogBuy concept. With the help of some funding from the Danish business and a personal financial input after they started planning and putting assets aside 10 months before the launch date, David and Karina got the business off the ground.
“With our market research in the UK, we looked at the non-core business purchasing, so if one of our members was a carpenter, we wouldn’t look to acquire a deal on wood,” David says.
“What we would look at is deals on anything that all businesses need, anything from telecoms, transport, IT and stationery.
“Then we’d break down those sector markets and look at the players within that market, then go for the top in terms of their size in the UK, their brand and their ability to give substantial discounts to our members.
“We don’t always go for the cheap and cheerful, there’s a lack of quality associated with the cheap, we want to go for the best suppliers at the best prices.”
The Milton Keynes-based business then had the task of persuading leading brands to come on board and offer their products at a discounted price in return for increased exposure and a small fee. Luckily, the couple had the success of the Danish business as a bargaining tool.
“We go to the key major suppliers in the country, such as Shell, Regius, Europcar and Apple Store, just to name a few, and we’d negotiate over what they’d provide for a large corporate account, and we’d provide that discount to small businesses, because the negotiation is done as a whole, but they are purchasing direct,” explains Karina.
“It wasn’t the easiest of jobs to convince the likes of Shell to partner up,” admits David. “But they bought into the vision of what we were achieving and that we have the ability to go out to a very large number of businesses and provide loyalty to our suppliers.”
In addition to directly approaching suppliers, David and Karina have launched various PR and marketing campaigns to lure small business customers. Along with advertising and email campaigns, the couple also exhibited at a number of business events in the South East, where, on average, 10 to 12 per cent of the audience signed up.
This success has seen membership swell to over 5,000, despite the fact LogBuy has only been up and running for a matter of months.
In fact, the main obstacle to LogBuy’s success is that small firms believe it’s simply too good to be true.
“Most of our members said there must be a catch, because it’s free to join, they wonder where we make our money,” David says. “Once we explain that we get a marketing fee from our suppliers, they totally understand, and then they are totally on board.
“What we’ve done in terms of the arrangement is set up a marketing fee to come to us based on volume of members using the deals, and it is high volume, because we wouldn’t be able to negotiate the deals that we’ve got if we didn’t have a very large volume of businesses using the actual agreement.”
LogBuy has managed to trim costs by keeping lean – IT and telemarketing is outsourced, meaning that there doesn’t need to be any staff other than David and Karina. With membership expected to rise to 50,000 by the end of the year, it wouldn’t be a surprise to see the success of its Danish equivalent replicated on these shores.