Tech Data Mobile MD Matt Child believes that there will be more consolidation than ‘ever before’.
Child was speaking to Mobile about the competitive distribution environment and how he plans to make sure that Tech Data Mobile is successful in 2016.
He explained that for a distributor to be successful they need to be strategic in their choice of partners, he said: ‘There’s only so much space in the market. Gone are the days of having lots and lots of distributors by vendor. We’re quite careful, we pick the vendors that we want to work with and pick them for lots of different strategical reasons.
‘I can see further consolidation this year – there are only so many mouths you can feed. I think it’s really important that you make the right decisions on who you work with. We’re going to see consolidation right across the industry; it's started and it won't stop so you have no choice but to rip up the old instruction book and create your own.’
Good end to 2015
The former Phones 4u director took over the Tech Data Mobile hot seat last summer, and says that the business performed particularly well towards the end of the year: ‘We’ve managed to grow strongly in a very short space of time, and that suggests we are covering the bases really well. There’s an element of risk where you’ve got to play some big hands with the vendors. You’ve got to be in the game and get out of your comfort zone.
‘We’ve had a really good last half of the year, for lots of reasons. We’ve had a lot of support from the manufacturers who are keen to improve their breadth and their volume, as you’d expect. We’ve also had a really good response from the operators, where we look to fulfilling requirements for stock that they might not necessarily have.
‘Our retail business has grown quite dramatically, we’ve got great partnerships with the usual big cohort of power retailers; the Amazons, Argos, John Lewis. We’ve done a huge amount of work with all those guys.’
Diversify to survive
Child believes that it is essential for the modern distributor to be able to sell a selection of services to a range of different customers. For that reason he has been developing a number of additional services for the distributor and trying to increase the number of SMB customers the business has.
Child says that this shift is part of a wider change in the distribution landscape: ‘You’ve got to make sure you have a deep understanding of your customers to build a proposition, not just supply a product. For a long time distribution has been relatively content with products and supply chain, but those days are gone – however the opportunity is huge when you re-calibrate your thinking and realise that distribution does in fact sit right in the hub between customers and vendors and that gives us a really advantageous vantage point.
‘One huge opportunity that we’ve not capitalised on until recently is in the hard-to-reach SMB reseller base, where we’ve got around 15,000 warm customers that have been buying IT-related products from Tech Data as and when they’ve needed them. As the lines between mobile and IT blur we’ve been getting a lot of SIM-free sales through that channel. Our revenue in the past three months has increased ten-fold and it’s now a multi-million pound business.
‘We’re quite unique in our size and scale within that reseller market, so it makes it really appealing to the vendors to get involved with Tech Data Mobile. Historically, it’s been the hardest terrain to conquer because you’ve got lots and lots of smaller customers rather than one or two big ones. I think every distributor has felt the pain and disappointment of losing big customers in the past, and it tends to be cyclical, so it does improve our position to sell to these types of customers as well.
‘We’re just venturing into the airtime market – we’re in the warranty market, we’ve got a salary sacrifice programme that we are very close to launching, we’re into mobile broadband. So there are maybe five or six different services that we are now seriously in and engaged in and openly selling. Our services portfolio will definitely grow throughout this year. Again it’s another way of spreading your risk and adding more value.’