Harris Technology has announced plans to acquire Fstop Labs, an online drone accessories supplier, a day after terminating its joint ventures in China and Hong Kong.
Fstop Labs is a US-based online retailer that sells via Amazon, eBay and direct sales from its website, supplying products from popular drone vendors DJI, Mavic and Spark. The company pulled in US$1 million in pre-tax profit in 2018 with the majority of sales coming from the US.
The price tag: Harris will pay upwards of $2 million, consisting of $1.2 million in cash and $800,000 in shares, if Fstop Labs hits its target of US$900,000 in accumulated profit over the next four financial quarters.
Harris said in an ASX statement that the acquisition “signifies a tangible move by Harris in realising its manufacturer to consumer (M2C) strategy.”
It’s a timely move granted Harris announced it had cancelled its M2C joint ventures in China and Hong Kong on Thursday afternoon.
Harris launched its Chinese division two years ago, which leveraged the company’s traditional B2B model and relationships with Chinese manufacturers to sell directly to Australian consumers, beginning with mobile accessories.
The company didn’t elaborate on the reason for the closure other than saying its Chinese and Hong Kong businesses were not “trading satisfactorily” and that there were no extra costs incurred as a result of the termination.
Much like its previous M2C venture, Harris said it will utilise its existing supplier relationships in China to further expand the Fstop Labs business in terms of its range of products and countries of operation.