POS VAR Expands Business Through Reinvention

By Lisa Terry — March 08, 2013

Edward Ip, CEO of IUG Business Solutions (iug.net), likes to show his customers a good time during the annual National Retail Federation BIG show in New York City by ushering them off to an evening of unexpected experiences. Throwing rival distributors into the ring at a fight club and then celebrating together James Bond style at a martini bar; inviting surprised guest to cook side by side with Food Network stars; dining in Armani’s private restaurant—these are just a handful of the over-the-top ways Ip has given back to his clients. But breaking down the barriers and building relationships isn’t a once-a-year event for the entrepreneur and his business, IUG Business Solutions.

For Ip, business IS relationships. Technology is incidental.
That focus has enabled IUG to survive growing pains and difficult transitions—that might spell the end for other businesses—and emerge like a phoenix to take on a new form. Doing business with IUG Business Solutions is much more about people and opportunity than about products and technology.

Continual Reinvention
Despite its growth, IUG maintains an entrepreneurial feel, and with good reason. Edward Ip started his first business while still in high school, selling computer products via an online precursor to eBay and learning valuable lessons about accounting, supply chain and business management. Then during college, MTV made an offer he couldn’t refuse, and he quickly moved from technology consultant to team manager and then full-time employee, leaving school.

But MTV was laid back, and Ip wasn’t. After 11 months, “I realized a corporation was not right for me,” says Ip. “It’s too routine and I wasn’t challenged.”

So in 1998, Ip launched IUG Business Solutions as an e-commerce company, serving businesses from its downtown, Manhattan offices. He began to plant the seeds of what would become his deep commitment to customer service, and the business took off—then came 9/11.

“We lost access to our offices, we lost our phone and power,” says Ip. Employees spent the next two weeks volunteering, then came back to find a pile of cancelled orders. The company was in crisis.

But the groundwork Ip had laid in cultivating customer trust paid off. IUG found a new, nearby office space, and even better, a few remaining clients who were willing to prepay for their entire projects. It meant IUG could keep going.

But when the Internet bubble burst, so did the money in e-commerce. IUG decided to change its focus too, and soon found its niche in retail technology consulting, specializing in specialty retail. It gave Ip the chance to combine his passion for luxury goods and fine foods with his skills in technology.

IUG grew, and with it came the growing pains of a small business becoming a larger one. Taking advantage of the recession, the company opened offices in Florida and California. But the hard times also brought bankruptcy for IUG’s top three customers. Ip figured it was time for expert management experience, and hired a former Fortune 500 executive. The decision would prove disastrous over the next two years—substantially increasing overhead and even more significantly, imposing big business infrastructure on an entrepreneurial culture. “We lost our way,” says Ip. “We had the headaches of a large company and none of the benefits of a small company.”

So after two years, he let the executive go and returned IUG to its roots: people, then process, then technology. It took time to rebuild morale and the right staff. “It was definitely a learning experience, very enlightening,” says Ip. “I learned that the value of culture is above all else.”

Today IUG is a successful project-based POS and managed services solution provider, with a staff of 18. “Since that changeover, not only has our top-line revenue grown, but we also minimized the portion of revenue from hardware and had a record year in many of the metrics that we go by including revenue, margin, growth and customer retention,” Ip says. The company has a substantial installed base of retail point-of-sale systems in museums, sporting goods, gift shops, toy stores, grocery, clothing stores, school book stores, gourmet food retailers, specialty retail and general retail stores. IUG boasts some impressive technology credentials, including being a member of the Microsoft President’s Club and an HP certified Elite provider.

Lead with an Ear
But retailers aren’t necessarily shopping for POS systems or seeking out technical accolades. They’re looking for solutions to their business problems. Listening—really listening—and taking time to completely understand the business before formulating a solution is IUG’s stock in trade.
That focus enabled the solution provider to help venerable New York City specialty retailer Murray’s Cheese, for example, overcome the technical roadblocks that were restraining its expansion into a now-thriving five-channel business. They’re helping empower healthy eating lifestyle retailer Organic Avenue take similar steps in the exploding organic foods category.
Those results come from its focus on the businesses and their goals. “When we sit down with a new customer we do not show demos—It’s a conversation,” says Ip. “They do more talking than we do. We want to understand the lifestyle, the culture of the business, as well as the people behind the business.” Even cold callers take a problems-based approach.

That’s an expensive business model, because of the time a solution provider invests. But it still pays, says Ip. “It’s what allows us a much longer-term relationship. We build long-term trust.”

When trendy European retailer Suit Supply set its sights on a U.S. presence, they looked to IUG to help create infrastructure from the ground up that would support their expansion plans. Suit Supply is about to open its fourth and fifth stores, both in major cities. “They’re very hands-on and quick to respond, which is great for a growing company,” says Corina Baldwin, operations manager for Suit Supply. “They make it all very easy.”

Solving the customer’s problem, rather than selling the technology you have, means IUG often needs to deliver solutions outside its core competency in POS. So Ip leverages his people skills in building relationships with partners as well. As a member of Ingram Micro’s VentureTech Network as well as its
advisory council, Ip has a ready group of like-minded solution providers to share ideas with. But he also reaches beyond that, seeking out partners with similar cultures.

“Ed does not try to do everything himself,” says Justin Scopaz, vice president and general manager, Data Capture, Point-of-Sale and Physical Security business units, Ingram Micro North America (ingrammicro.com). “He looks to develop relationships with other resellers with complementary technology or to expand his network.” That extends to Ingram’s general IT partners as well as its own in-house marketing agency, which Ip leverages both to reach his base and expand his target markets.

“One of the things we like about IUG is that they’re very agile,” says Julio De Villasante, president and COO of bLoyal (bloyal.com), a hosted multi-level loyalty service for multi-channel businesses, and an IUG partner. “They’re really engaged with the customer and try to respond very fast to customer requirements. They like to bring us into the loop early in the conversation. It helps us help them.” But at the same time, they don’t impose bLoyal on clients where they are not a fit, he adds.

Cultivating a Culture
If the key to understanding a client inside and out is listening and building relationships, then the critical enabler is people capable of relating to customers in that way.

“We hire people with personality, who are fun to work with and are enjoyable to the customer,” says Ip. “There is a negative perception among a lot of people that technology people are very geeky and introverted. But that hurts relationships. We hire people who can relate to customers.”

So Ip uses a third party consultant to administer personality tests to potential new hires. Instead of technical skills, the number one attribute IUG seeks is empathy.

“We’re in the business where things will go wrong,” Ip explains. “You need to feel bad for the customer and what they’re going through,” an attitude that builds appreciation and trust.

On the flip side, “when things are going well, we want to have fun together.”
Ip exercises his interest in people through a broad range of charities as well, engaging deeply in his beloved NYC community through work with the American Cancer Society, PAALC (Pan Asian American Leadership Council), The Lions Club, Taste of Tribeca and the Entrepreneur Organization.

Lessons in Reinvention
Like any good story, IUG’s past is replete with setbacks and epiphanies. But all those missteps and gearshifts taught Ip and his team important lessons that he and others can rely on to ensure ongoing success, Ip says:
You don’t know what you don’t know. As a young entrepreneur-turned-seasoned business executive, Ip says this is the first insight he would offer any aspiring business owner. The lesson: seek out as much information as you can.

Seek a mentor. Ip relies heavily on a fellow business owner for insight and advice.

Trust your instincts. When he hired the tier one executive, “my mistake was trusting other people’s experience over my own instincts,” Ip says.
Be bold. “Ed’s comfort zone is bigger than most people’s,” says Ingram’s Scopaz. “He’s part of a large VTN chapter with large VARs, and he jumps right in and is not afraid to be vocal. He squeezes the orange to get as much juice out of it as possible.”

Choose the right partners. While IUG’s network is large, it’s also deliberate. “Ed takes the time to carefully select who to work with, says bLoyal’s Del Villasante. “Making a good selection is important, because they become part of your brand and your name.”

Focus on people. IUG excels at focusing first on people, not the technology that can help them. “Even though we all sell technology, at the end of the day there is a human being on the other side of the phone or the table,” says bLoyal’s Del Villasante.

Be open. Opportunity lies in unexpected places. “I feel like he doesn’t come to things from a defined perspective,” says Ingram’s Scopaz. “He has an open mind.”

Ip is now a thirty-something with kids. He’s no longer a kid with an itch, but his energy and enthusiasm for people and his business continue to be the driving force behind IUG.

“In my opinion, resellers need a good balance of structure and entrepreneurial spirit,” says Ingram’s Scopaz. “Each company has to find their own combination. Ed has found that sweet spot for IUG.”

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