Connected Solutions Group (CSG) is acquiring 5Gstore in a deal that gives a value-added reseller access to an online marketplace focused on IoT hardware and solutions. The companies announced the merger in late January and it’s expected to close this month.
Richmond, Va.-based CSG is a wireless-focused VAR with an exclusive Verizon partnership, not to be confused with the Denver-based CSG Systems, which provides SaaS platforms and back-office software for hundreds of telcos and enterprises.
5Gstore sells 5G routers, antennas, and related IoT hardware for vertical industries including construction, hospitality, and agriculture. Together they’ll form a channel partner organization with almost $80 million in annual revenue, CSG CEO Michael Pittman told Channel Dive.
“The challenge will be getting us to that triple-figure mark and trying to maintain the special small business culture we have without outside influence,” said Pittman, whose firm put the deal together without private equity investors.
The companies look very different aside from their mobility focus. As a member of Verizon’s Mobility Co-sell Program, CSG works closely with Verizon sales reps, offers discounted promotions for Verizon-connected hardware and provides services around deployment. 5Gstore is closer to hardware manufacturers, including Ericsson’s Cradlepoint and Peplink, and sells carrier-agnostic equipment.
“I'm going to guess 99% of his revenue is Verizon,” 5Gstore CEO Michael Ginsburg said. “Verizon, T-Mobile, AT&T combined are not even 1% of our revenue.”
Pittman said 5Gstore might implement promotion-based SKUs in the future, but that wouldn’t be for a long time.
“Everything's just going to operate exactly the same,” he said.
Existing customer overlap is scarce. While Pittman typically finds business through its vendor partners and their sales outreach, 5Gstore drives vendor partners to its 5Gstore.com website through search traffic. The company previously operated at 3Gstore.com and has purchased the domains 6Gstore.com and 7Gstore.com.
“If you Google any type of fixed wireless equipment in this business, they are the number one thing that populates,” Pittman said. “They have 30 years of SEO mastery.”
The deal establishes a goldmine of leads for CSG.
“We are not getting referred to the business by our friends at Verizon or anyone,” he said. “This is us finding the customer off the street and being able to bring opportunities back to Verizon, or to do whatever we desire with that customer.”
5Gstore will also expand its customer base, and Pittman said CSG will eventually help modernize the website.
Ginsburg said his team ultimately chose CSG as a buyer because it would be a safe landing spot for employees. 5Gstore nearly agreed to an acquisition three years ago but backed out two weeks before closing due to concerns about potential post-close layoffs.
Ginsburg said he will stay onboard at the combined company.
Owning the digital front door
Ginsburg’s background is in software development, not mobility or resale.
He wrote software for small businesses from 1988 to 2005 before learning about EVDO — a 3G broadband standard deployed in 2000. He built websites to track technology, his version of Consumer Reports, but he initially wasn’t selling anything. An antenna company asked him to build a website to sell their products, and he agreed.
When the OEM missed overnight shipments, customers blamed Ginsburg.
“I couldn't say, ‘Well, it's not my fault; the manufacturer didn't ship it.’ It was my fault. So I'm like, ‘Ok, I’ve got to take over shipping,’” he said.
He began shipping antennas from his basement with help from a neighborhood high school graduate. Inventory grew until the company opened its first warehouse, then another. Twenty-one years later, 5Gstore owns five warehouses and sells a full range of wireless equipment. Ginsburg said the company is Peplink’s largest reseller.
5Gstore thrives on ranking at the top of Google search results. Ginsburg runs a daily blog reviewing updates from OEMs. The blog often leads web visitors to the site’s marketplace. It’s the commitment to detail that has cultivated a loyal customer base who don’t mind paying MSRP.
“The guys that run the CDW site aren't going to do a post and a video every time Peplink releases a firmware update,” Pittman said.
5Gstore has also been a resource for other resellers.
“He's made the site far beyond where you just go to transact. It is an information source for this type of equipment in the industry,” Pittman said. “My own salespeople at CSG will tell you that they're on 5G Store all the time, referencing the material that he creates.”
