Yoke Har Lee: Rural retailer strikes a natural balance

Peter Butler (on right) and HealthPost staff tree-planting in Golden Bay. Photo / Supplied

Collingwood in Golden Bay is about as far northwest as you can go in the South Island. It also seems about the most unlikely place from which to run a successful online business, but Healthpost has not let isolation prevent its success.

With 15 or so staff, the web-based natural health products retailer is a significant employer in the town of just over 4000 people. Like most business owners, director Peter Butler faces the challenge of finding the right talent to power his family-owned store.

"Right now, we are looking for someone with technical expertise using AdWords (a Google advertising product)," Butler says.

The laid-back culture seems to be part of HealthPost's success. "It comes through in our staff's communication with clients," says Butler. "They are not your typical harried workers in South Auckland who have just spent an hour travelling on the motorway to get to work."

Other success factors are speed to market, a comprehensive range of products, competitive pricing and attention to customers' needs.

Speed to market is something Butler is proud to offer. With the help of the local courier service, any order that gets in by 2pm can be processed and delivered within New Zealand in a day, he says.

HealthPost was started in 1988 by Butler's ex-wife, Linley, who used to order barley grass for her own use but eventually sold to the local community from her bulk orders, creating a business around her own consumption.

As a former librarian, Linley's meticulous records began to produce a catalogue for her buyers. "Twenty years ago, I believe, we were the first one off the block to produce such a detailed catalogue," Butler says. For many years, Linley and her friends Di Potter and Sandy Cawldron operated the business. Butler later bought the operation, now owned by the Butler Family Trust.

The company's online store offers thousands of products in the natural health, personal care, food/ingredients and household products categories.

About 10 per cent of its sales come from overseas markets, including Australia, Korea, Taiwan, Britain and China.

While the location may be laidback, the company has invested in an automated processing system coupled with a barcode system to boost efficiency and help remove human error. "This sophisticated processing system gives us the ability to scale up as well," says Butler.

He is increasingly convinced of the value of using web promotions to push products.

"With our website, we can measure each dollar return for our advertisement. I just can't justify using print advertisements anymore," says Butler. Radio advertising didn't work for HealthPost, he reckons, because natural health products and radio hype do not go well together.

Giving online customers a traditional retail experience is a constant challenge. Son Abel Butler, who is general manager of the company, says it has to be able to convey to customers some of the Golden Bay personality and friendliness when they order online.

"On our website we have snapshots of staff in their work clothes at company environmental plantings, a scenic photo gallery and a chatty page about our origins.

"At the same time, we realise most people are in a hurry and want the least clutter - they're there because they want a product delivered tomorrow at the best price. It's a bit of a balancing act," Abel Butler says.

The advent of social media such as Facebook has added another dimension to the customer relationship. Abel Butler says social media give the company an opportunity to get close to customers and offer new products based on feedback.

"The praise and support we've received on our company page is really encouraging, but there's nothing to stop someone from having a very public go at you either, of course," he adds.

Peter Butler says competition in the natural health products industry is intense. "We are quite conscious of the competition and we try to get customers the lowest deals." However, in negotiating with suppliers, he is mindful of being decent. "The impression I get is, there's a lot of goodwill involved. I hope I don't sound too smug but the lifestyle people we have - their personalities - that's expressed in the way we deal with our suppliers. We don't try to screw our suppliers over the deals."

He says this approach has helped win deals against other more aggressive competitors.

Mindful of the threats to the business, which has been achieving double-digit growth for the past few years, Butler says it is looking into diversifying its product categories. Where there is a gap in the market, the company manufactures products under its own brand, Bio Balance.

Predatory pricing by competitors - a feature of the market for some time now - is also a challenge for the business, he says.

The planned Natural Health Products Bill, governing the future sale of natural products, could also present a barrier to growth, and Butler is hoping that the legislators decide to take a "light-handed approach".

HealthPost, which is in the process of moving to bigger premises, has been able to pursue growth through reinvestment, rather than by borrowing.

A few months ago the company decided to donate $1 for every online order placed, with customers able to choose from several charities. Staff this year also planted 500 rimu trees in a Golden Bay park to help mitigate their company's carbon footprint.