‘The rate of decline will slow'

‘The rate of decline will slow'

Changing marketplace
Dextra boss James Browning believes the addressable market has contracted by 40%-50% in the past 12 months.

‘The rate of decline will slow, but it would take a brave man to say it would stop completely,’ he says. To illustrate his point, he draws a graph with a steady downward curve. ‘It won’t ever hit zero, but it’s reaching the bottom of the curve and it should be levelling out,’ he explains.

Sales director Angie Simpson (pictured) says Dextra has emerged from the cashback fiasco ‘relatively unscathed’, and Steve Marsh, finance director for Dextra, admits everyone is ‘glad to see the end of 2007’.

Impact on the chain
The fallout from cashback has resulted in the distributors’ key phrase, ‘quality not quantity’, suddenly growing in importance. Browning says: ‘I think that after Ofcom’s announcement [to tighten controls around mis-selling and cashback], networks are looking for robust and transparent processes and controls, and I completely agree with them.

‘A lot of dealers have been dismayed by the cashback activity and are glad to see controls, checks and balances.’

In the drive for quality, networks are trying to equip distributors with detailed analysis of their customers. ‘It’s important to see the pool you are fishing in,’ Simpson explains.

Marsh says: It’s not only about the type of customer they choose to deal with, it’s also about encouraging their current dealers to ’leave the space they are comfortable in and create a sale rather than wait for it.’

Internal changes
Dextra’s step-change from consumer to b2b has been dismissed by some competitors as an after-thought prompted by the demise of high-volume distance sellers and the departure of Vodafone’s consumer account. However, Simpson points to the restructure of the sales team as evidence of Dextra’s commitment to b2b.

Over the last quarter the sales team has changed from 3:1 in favour of consumer sales to 2:1 in favour of b2b. ‘And if we increase head count further it would support b2b,’ Marsh adds.

The shift to b2b is set against an overall reduction of 25 employees over the last six months. ‘The focus now is on growing the top line - I don’t think there is any more costs to be taken out of the business Ð it’s about growing,’ Browning says.

New products and services
Many distributors have chosen to expand into the IT arena with products like mobile broadband. However, Dextra is focused on growing sectors it already has a presence in, such as accessories.
Browning sees the accessories market as an area for further growth, estimating that it will increase by 4-5% in value over the next two to three years.

In addition to running the accessories websites for Orange and Motorola, Dextra won the sole supplier contract for 3’s core essentials and fashion range last month, supplying car chargers, cases and mains chargers for the operator.

And the ever-increasing array of functions and memory on mobile devices is the reason that Browning is keen to maintain a tight focus on accessories.

‘It’s always good news for the accessories market – the more capable the handset, the more opportunity for peripherals around it,’ he says.

Connect, Dextra’s monthly magazine for dealers, has also shifted towards b2b over the last six months, and marketing boss Richard Jones says there are plans to include more advertorials and make it more advisory, as well as improving the currently limited online access.

Dextra also plans to create an online portal to give dealers access to all its product sets and accounts through one window.

Future plans
Browning is clear that the glory days of mobile distribution are well and truly gone. ‘We’ve got to be realistic,’ he says. ‘It would be a very optimistic distributor who thought they could take it back to the levels of two years ago.’

Would Dextra enter the acquisition market as a seller or a buyer? ‘In a challenging market, it’s hard to agree on valuations. I wouldn’t rule anyone out, but Dextra is not a seller. Is it a buyer? The valuation issue is still a problem.’

Written by Mobile Today
Mobile Today


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