August 2012 Issue 206
INSPIRING BUSINESS SOLUTIONS FOR DEALERS
DEALER SUPPORT AUGUST 2012 | ISSUE 206 SPICERS ON AMAZON | IT AND OP | KEEPING PRICING UP
DIRECT QUESTIONING CEO Alan Ball on why Spicers is navigating the Amazon COME TOGETHER, RIGHT NOW How IT and OP dealers can collaborate for a better future ON THE UP AND UP How to succeed in business without dropping prices
FROM THE EDITOR
Navigating Amazon
How dealers can compete in a world of one-click orders and web stores
people
dealer interview
There has been a paradigm shift in the office supplies channel. Shocking as it was, the news that Spicers has been selling direct to the end-user through Amazon by way of a pseudonym shouldn’t be surprising. It’s a competitive market out there, and if anything, news like this should make dealers wake up to the fact that they are the makers of their own destiny and the going is only going to get tougher. So what’s to do? Exactly what Alan Ball says in his interview with Dealer Support at the time: “Dealers need to focus on how to retain a market edge through service proposition and differentiating from what the e-tailers are doing.” Rather than necessarily taking an if-you-can’t-beat-‘em-join-‘em approach to selling online, independent office supplies resellers should consider working that much harder name to differentiate themselves from the competition and emphasise that service model that has done them well so far. For more on what Ball has to say on the subject, have a read of our interview with the CEO on p28. For an example of a dealer doing this kind of thing well, take a look at the success story that is Discount Office Supplies on p22. Relatively new to the independent channel, director Dave McFarlane has already won awards for his work, which relies heavily on top-notch customer service he learned while working for Lyreco. This brings me to the point that competition is coming from all angles, so dealers have to think creatively. On page 14 we speak to Derek Jones of IT dealer group Synaxon to find out what dealers 23 can do to work closer with IT dealers. It seems the two channels are converging with speed, so if you’re not already expanding your IT offering, or speaking to experts in the field, the time is now. A good dealer group will certainly help. As I say again and again, we want to tell your story and put your questions to the experts, so please drop us a line on editor@dealersupport.co.uk with your questions, advice, news or breaking news. Or if you’d rather call in a story, give us a ring on 020 7288 6833. dealer interview
Discount Office Supplies
Discount Office Supplies
On his first visit to the Superstat conference, Dave McFarlane of Discount Office Supplies was pleasantly surprised to win
Dealer of the Year up to £1m. George Carey talks to the
former Lyreco rep about getting started, dealer group politics and ensuring their service is anything but discount
D o n ’ t b e f o o l e D by t h e
What inspired you to leave lyreco and start on your own? I think I did well at Lyreco because I’ve always had an entrepreneurial attitude. I started at Lyreco with no experience in the industry but I took to it pretty quickly, and rose up the ranks ending up as area sales manager. It was great to get to that point but I always wanted to work for myself. I actually put my business plan together five years before I left but I didn’t work up the bottle to do it for a while. When they started making redundancies I thought it was time to act. I stepped down to a rep’s job while I got the investment that I needed to start up.
page 28
page 22
How did you attract investment? I was fortunate because one of my friends recommended that I go and see someone he knew, a successful businessman, who might be able to help. It was a bit like a presentation for Dragons’ Den. He’s a serial entrepreneur so he brought loads of expertise to the business as well as investment. It was important for me to have that help and advice as well as the money when I was starting out. In August 2010 I decided to resign and then set up in October. Was it just you initially? Yeah, me and the back of my car. I had to build a base and I obviously had contractual obligations not to go near any of my old clients. Poaching does go on when people set up on their own but in my opinion, there were so many potential new clients, I didn’t need to do that. Within six months, my business partner
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auguSt 2012 www.dealersupport.co.uk
www.dealersupport.co.uk auguSt 2012
“Spicers has dealt with Amazon for over a year and now they are in our topfive account list” MANAGING EDITOR Julia Dennison julia.dennison@intelligentmedia.co.uk
DESIGNER/PRODUCTION Peter Hope-Parry peter.hope-parry@intelligentmedia.co.uk
REPORTER George Carey george.carey@intelligentmedia.co.uk
SUBSCRIPTIONS MANAGER Natalia Johnston natalia.johnston@intelligentmedia.co.uk
SENIOR ACCOUNT MANAGER – MEDIA SOLUTIONS Matthew Moore matthew.moore@intelligentmedia.co.uk
PUBLISHER Vicki Baloch vicki.baloch@intelligentmedia.co.uk
ACCOUNT MANAGER – MEDIA SOLUTIONS Krystle Davis krystle.davis@intelligentmedia.co.uk DESIGNER Sarah Chivers sarah.chivers@intelligentmedia.co.uk
Julia Dennison, managing editor
CONTACT US
intelligent media solutions suite 223, business design centre 52 upper street, london N1 0QH tel: 020 7288 6833 fax: 020 7288 6834 email: info@intelligentmedia.co.uk web: www.dealersupport.co.uk web: www.uspmagazine.com
Annual subscriptions are ABC available at a cost of £68.00 for UK and overseas by surface mail, £90.00 for airmail. Subscription enquiries should be sent to the above address Dealer Support is the leading monthly publication for dealers in the business supplies industry. It provides information on the industry (both in the UK and overseas), information for and about the UK’s independent dealers, as well as information and advice on running a small business. The views expressed in this magazine are not necessarily the views of the publishers. Copyright of all the material published remains with Intelligent Media Solutions Limited. No part of this magazine may be reproduced, copied, stored in an electronic retrieval or transmitted, save with written permission or in accordance with provision of the copyright designs and patent act of 1988. Printed in the UK by Buxton Press www.buxtonpress.co.uk
INSPIRING BUSINESS SOLUTIONS FOR DEALERS
CONTENTS August 2012
10 37
INDUSTRY 6 NEWS AND VIEWS All the month’s news and views in the office products industry 10 WHOLESALER REPORT Merchandising updates from VOW and Spicers 14 COME TOGETHER, RIGHT NOW Synaxon’s Derek Jones on IT and OP dealers collaborating
PEOPLE 22 A GOOD DEAL BETTER Discount Office takes the channel by storm 28 DIRECT QUESTIONING Spicers’s Alan Ball on Amazon, pseudonyms and the channel
MANAGEMENT
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34 GROW YOUR BUSINESS This month: binding and laminating 37 A FLEXIBLE APPROACH Is flexible working a possibility at an OP dealership? 40 ON THE UP AND UP How to succeed in business without dropping prices 44 FINAL WORD Kyocera’s Steve Pearce on the importance of customer service
Flip over for the August edition of USP magazine
INDUSTRY
NEWS
NEWS Spicers admits selling direct under pseudonym Spicers has admitted to selling directly to end-users using a virtual storefront on Amazon called Ernie’s Office Supplies. CEO of Spicers UK and Ireland, Alan Ball admitted to Dealer Support that the wholesaler had been selling through Amazon for over a year and the e-tailer is one of Spicers’s top five accounts. A source told DS that they became suspicious after noticing that Ernie’s Office storefront listed Spicers’s Cambridge HQ as its business address. It was later confirmed that the Ernie’s customer service address was Spicers’s Glasgow facility. Ball was unapologetic about selling directly through Amazon in this way, instead encouraging dealers to work harder on offering a unique proposition in the market. CEO Alan Ball He told Dealer Support: “I have asked the question many times: What are dealers doing to look at, and counter, the effect of the large e-tailers? Dealers need to focus on how to retain a market edge through service proposition and differentiating from what the e-tailers are doing.” Spicers has been busy doing what it can to support its dealer customers of late, including offering a £10,000 prize to one of its top-performing dealers; freezing prices on its own-brand 5 Star products and sharing free e-commerce data with them. For more on the Amazon story and what Spicers is doing to support its dealers, see our exclusive interview with Alan Ball on page 28 of this issue.
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Egan Reid makes an educated acquisition Egan Reid, an independent dealer in the North West, has completed the acquisition of Head Office Supplies, trading as Education Express, in West Yorkshire. Brothers and MDs Martin Reid and Andrew Reid said: “We had been looking to make a significant addition to the Egan Reid family for some time, and when the opportunity to buy Head Office Supplies came along, it seemed a perfect fit. “Like Egan Reid, it is a family-run business with strong business ethics, and with its core business in education supplies, it allows us to broaden our horizon into what has been a growth sector for us in recent years, as well as expand geographically into Yorkshire. The Harding family and their staff have made the company a real success, and we are extremely proud and excited to bring HOS into the Egan Reid fold.” The acquisition takes Egan Reid’s turnover to £15m. Head Office’s staff, offices and warehouse Brothers Andrew and Martin Reid are to remain in place.
NEWS
Altooffice names new sales director Altooffice, a division of Altodigital, has promoted Simon Harris to the position of sales director and his colleague Chris Snadden has been made sales manager to support him. The company says Harris’s appointment signals its continued commitment to customer relationship management to improve service levels, drive sales and encourage additional growth. Dave Gibson, MD, Altodigital, said: “Simon has worked with us for many years and has, in that time, consistently proven to be an asset for the company. “His extensive experience in the sector means that he has not only got a comprehensive knowledge of our products, but also our customers. He was therefore a natural candidate for promotion. “I look forward to working closely with him going forward and applying his expertise across the organisation to ensure that we are exceeding the expectations of our clients and attracting new business.” Harris has over 15 years of experience working in the industry, having started working with Altodigital’s previous incarnation in 1996 before taking a sabbatical in 2001. He rejoined in 2003 as a salesperson and was swiftly promoted to sales manager, during which time he successfully built up a solid and loyal client base. Harris commented: “Having worked in a number of different roles across the business I’ve been able to see first-hand what has worked in Simon Harris the past, and what hasn’t. “Altooffice has enjoyed considerable growth in recent years, but I’d like to see us working more closely with clients, spending more time developing relationships and less time doing admin. “I’d also like to review our existing product ranges to make sure we can fully meet the needs of our customers.”
Denny Bros takes home leading regional award Bury St Edmunds-based Office Club member, Denny Bros Supplies, recently attended the Anglian Business Awards evening and left with no fewer than four awards, including the top prize for being the region’s Business of the Year. The company won both the Environment and the Family Business of the Year categories, and then beat off competition from eight other category winners to claim the night’s top honour. Denny Bros’s Simon Gray was also among the individual winners at the ceremony, being named Customer Service Person of the Year. Daryn Reffell of Denny Bros admitted: “We are still in shock to be honest. It is an absolute honour to be recognised in the region within so many categories – it is testament to the hard work put in by everybody, and our work ethics that we adhere to. “In recent months we have been working much closer with our dealer group, Office Club, looking at new ways to present areas of our business, maximising opportunities to be a genuine market player, but still being able to offer the local, personal service and all the benefits a customer would expect from dealing with a local company…an award winning local company. We are very proud.”
The Denny Bros team
Not only does our sales team look great in spandex (ok, well not all of them) but they are armed with information and tools to help you conquer the facilities management market. We have over 3,300 products in all five main FM categories “Communication flow is a fundamental including catering, cleaning, health & safety, premises management and mailroom & packaging, all available on next enabler of change and to that end day delivery plus an extended range of 1,300 products from thethe premises management category through our unique structure I haveThat implemented partnership available within 72 hours. means you cangives get everything from door wedges to wheelbarrows to cycle for discipline racks. Plus we comeownership equipped with oureach 300 page bespoketo FMown Catalogue, quarterly mailers, monthly flyers and a whole and share information across all of ourpresentations, VOW has all the support you need range of promotions and incentives as well as training literature and stakeholders. This is a team with a to be a true FM Superhero. Get in touch with your VOW Sidekick (aka Account Manager) to learn about all of the strong balance of OP industry experience artillery they have available for you.
and sectors that have seen successful growth and change.”
0844 980 8000
Alan Ball, CEO, Spicers, explains the logic behind the creation of the company’s new strategic management team.
www.voweurope.com
www.dealersupport.co.uk AUGUST 2012
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INDUSTRY
NEWS
Sinclairs’s Kirkpatrick says so long to industry
news in brief... NEMO EXPANDS ITS REMIT
Industry stalwart Alistair Kirkpatrick, long-standing sales director at family-run office supplies manufacturer Sinclairs, retired last month. Kirkpatrick began his career with Sinclairs in 1984 and soon became known throughout the stationery industry for his loyalty, integrity, business prowess and keen sense of humour. Andrew Howard, chairman of Sinclairs, shared the sentiments of many when he said Kirkpatrick would be missed, particularly for his knowledge of the industry. “I wish him well and hope that he has a long and happy retirement,” Howard commented. “I’ve been overwhelmed with the amount of good wishes and cards; it’s been quite amazing,” Kirkpatrick told Dealer Support on his last day in the office. Over nearly three decades in the industry, Kirkpatrick has witnessed significant upheaval and new challenges. “There’s greater contraction in terms of numbers of customers and distributors,” he reflected. “If you take the contract stationer end, there were seven or eight different commercial wholesalers and now we’re down to Office Depot, Staples, Lyreco and office2office, so we’ve gone from about 11 or 12 players down to four. It’s that contraction all the way through.” For the dealer channel, Kirkpatrick said, “it’s battle against the big boys”. With all the change, he predicts the wholesalers may look to new markets over the next decade. But his advice to the colleagues he’s leaving behind is to be optimistic. “I think there are plenty of challenges but the industry is certainly robust enough to take those on board and adapt,” he said. “It is a changing world and I think we all adapt a bit quicker than we imagine.” Future planning will be critical, he adds, as “the days of just throwing money at something and hoping it works will be long gone” Challenges aside, Kirkpatrick has fond memories of the industry he’s leaving behind: “I’m going to miss the buzz and I’m certainly going to miss the people and friends I’ve made in the industry over the last 28 years, but hopefully I’ll bump into them Sinclairs’s Alistair at various dos with a bit of luck.” Jon Green has Kirkpatrick retired last month been promoted to replace Kirkpatrick.
Office Solutions (Wales) and Cartridge World Franchise Support (CWFS) are the latest dealers to join Nemo. The former, based in Powys, extends Nemo’s Welsh contingent and the latter represents a new type of business for the group. Cartridge World is the largest retailer in cartridge refilling in the UK and CWFS acts as the distribution hub for over 200 stores. Nemo’s Kath Slattery commented: “It’s always pleasing to welcome new members, but particularly in this case, as we didn’t have a presence at all in mid-Wales, and CWFS is a different profile in this channel.”
VOW STAFFS UP FOR SUPPORT VOW has taken on new staff in the shape of Andrew Tsierkezou as dealer group national account manager under Steve Blowers, and Morag Vandepeer to its pricing assistance for contract tendering (PACT) team, in the role of PACT corporate account manager. Tsierkezou has over 12 years of experience in the industry working for the likes of Bic and Jiffy Packaging and will focus on building partnerships with the UK’s leading dealer groups. Vandepeer has
“Selling remains an art that not all dealers are comfortable with and sometimes a confidence boost or a good practice reminder can give them the extra impetus they need to go out and grab the opportunities that exist”
worked in the industry since 1990, holding a variety of roles with Office Depot.
PAPHITIS BUYS ROBERT DYAS The Robert Dyas Group has been sold to Theo Paphitis, who owns stationery retail chain
Mark Austen, MD of Office Club, on the launch of the dealer group’s training library
Ryman. Outgoing chair Geoff Brady said he was “delighted that the business has attracted an entrepreneur of Theo’s stature”: “His track
DIARY
record for growing retail businesses is second
8-9 September Office Club conference Newport, South Wales
which shares both the ‘convenience’ retail
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of companies that lease out office equipment have lost money in the last 12 months
AUGUST 2012 www.dealersupport.co.uk
Source: Creditsafe
12-13 September Office 2012 Earls Court
to none. Under his chairmanship, Ryman, positioning of Robert Dyas and a long and distinguished history on Britain’s high street, has gone from strength to strength.”
RAO CELEBRATES 20 YEARS Family-run office products dealer RAO Stationers is celebrating a milestone anniversary: 20 years in the business “While we constantly look to move with the times, still providing the best deal for our customers, we are confident we will continue to hold our own in this hi-tech age.”
For more information on RAO Stationers call 01933 679555 or visit www.rao.co.uk
Photo: Brillpix Photography.
The Wellingborough-based company has grown from modest roots in a small industrial unit to become one of Northamptonshire’s leading stationery suppliers. Husband and wife team Roger and Anita Osborne founded RAO in 1992 and have kept it in the family, with daughter Louise joining as a fellow director back in 2007, along with Darran Pye. In addition to the office essentials that formed the basis of their business, RAO now supplies furniture, electronic equipment and computer hardware. All 30,000 of today’s products are available online, 24/7, and delivered free. Providing a bespoke service to customers, most of them small to medium-sized businesses, is what Roger Osborne believes has helped ensure “constant growth” during tough economic times. “We offer quality goods at competitive prices but we go out of our way to help small business, with free delivery and no minimum order size,” he said. “Our customers seem to appreciate that we are a family business; they understand that big is not always best. They know they will receive personal attention from knowledgeable staff with many years’ experience.” RAO enjoys purchasing strength in numbers as a founding member of dealer group Office Friendly and has also sought to get greener, cutting costs and carbon through award-winning environmental programme So-Go-Eco, as well as providing a free recycling scheme. “Being part of a dealer group like Office Friendly helps to give us the edge over our corporate competitors in terms of buying power,” Osborne added.
The RAO Stationers team (L-R): Darran Pye, Sanjay Dholakia, Louise Osborne, Martin Hill, Roger Osborne, Sheila Thurnham, Anita Osborne, Jason Smith.
INDUSTRY
MERCHANDISING
Geo rg merc e Carey hand ising gets the and V lowd fro asan ow ta Gr m Spice r oup’s s’s A n on m Nige l Mit anda M urra chel y l
with Merch and the ising mid dle m en
I
n an increasingly competitive market, it’s important to get your merchandising right and many dealers look to their wholesaler for inspiration and guidance. So I got on the phone to Spicers’s marketing manager, Amanda Murray, and Vasanta Group’s director of merchandising, Nigel Mitchell, to find out about their merchandising and specifically their catalogues. It wasn’t a conference call, we wouldn’t want any comparing notes, now would we?
What products have you noticed experiencing sales growth, and therefore catalogue space? u MURRAY We’ve seen huge growth in workplace solutions – facilities management – in our catalogue, which has been driven by demand. Workplace solutions give dealers the chance to widen their offering to consumers, so we’ve developed additional material to support that trend and help our resellers market those products to end-users. We’ve produced a separate catalogue with [an] operator focus and it covers safe, legal and productive working environments. The key for us is to ensure that our dealers can go to market with a credible offering. We’ve also introduced an informative website
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“People are looking for functionality and price and research showed that they don’t want that spread out over pages and pages”
that dealers can point their customers towards if they want to know about products in more detail, and we’ve got over 4,500 products in that range. u MITCHELL The fastest growing sector for us is the facilities management category. That is largely driven by our own activity. Our own FM business is more than 25% up this year to date. It’s been driven by more focus; additional product management; promotional activity; and an extended range. We’ve got a huge number of new SKUs that we’ve added to the range, through the course of last year and into this year. We’ve got a new FM catalogue and we’ve arranged for some extended ranges through virtual partnerships with other manufacturers. There’s been an awful lot going on in FM in our business. We’re now reaping the rewards from that and I think the dealers are as well. We’ve got a great programme and that is showing in the performance of the category, in terms of sales and margin.
How about products that are in decline? u MITCHELL There’s no doubt that what I would describe as ‘traditional stationery office products’ are in long-term
MERCHANDISING
slow decline. People are printing less, using less filing products and the whole market is in decline. I think the printer market is also struggling a bit, which I guess goes with the economic climate – people are buying less hardware. I think the own-label ink and toner market, along with MPS, is playing a big part with a lot of bigger end-user customers going down that route. We will continue to trim any of the declining categories and we will also reduce the choice. Any products that aren’t performing within our internal thresholds will be reduced. We’re not quite at the end of our range selection for the 2013 catalogue yet, but I would say that we’ll be adding more facilities management products, particularly in the janitorial and cleaning category – there’s quite a lot we’ll be adding there. I think we’ll probably be adding packaging products because online trading is increasing the demand for small package cartons and jiffy bags. u MURRAY In the past few years there hasn’t been as much demand for green products. I think that’s got a lot to do with the economic climate at the moment. People
“I don’t see catalogues being replaced by websites. I think there will be an increase in online trading but people like a catalogue”
are having to be careful with their budgets and there’s an assumption that green products are more expensive than regular products, so there just hasn’t been that same demand that we saw a few years ago. We used to produce specific green publications but the drop-off has been quite telling with regards to those particular products being ordered, and the demand for the publications went into rapid decline.
Do you get much input from manufacturers when you’re putting the catalogue together? u MURRAY Working with manufacturers is integral to the activity that we do with regards to informing our customers and some of the selection within the catalogue. We work in unison to look at market and product trends. With that in mind, if there have been peaks or troughs in certain areas, that will be reflected. When we did our research with end-users, we found that consumers wanted choice but didn’t want it to be overwhelming. We used to have around ten pages of staplers, but we’ve now reduced it to two. Some of these products are fairly limited in terms of what you can do with them, so people don’t
www.dealersupport.co.uk AUGUST 2012
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INDUSTRY
MERCHANDISING
need too much choice. People are looking for functionality and price and research showed that they don’t want that spread out over pages and pages. u MITCHELL We are getting an increasing amount of input from manufacturers, particularly those that are on our category management programme. The best example is 3M, they are a classic example of a vendor getting it right in terms of catalogue production. They produce the pages that their products are featured on, within the constraints of our own design template. They do the proofing and decide which products are featured and where, including the positioning of our private label in the categories that they’re managing. We are encouraging vendors to help us with this, because they know their market and their products better than anyone else, so they should be in a position to do that. Sadly there are still plenty of vendors that leave the whole matter to us, although we do insist that they proof it to ensure that we get all the information right.
What processes do you have in place to get dealer feedback? u MITCHELL Earlier this year we held a number of online feedback sessions with resellers and we also set something up for resellers to get feedback from some of their customers. That’s quite useful and that’s what’s driven some of the cosmetic changes to the catalogue this year. In addition to that, feedback also generated some good information about products that the resellers want to see added to the catalogue and into our product range. We’ve listened to that and it will appear in 2013. We’ve been trialling Apple products through our special service and done quite well with that. It’s something that resellers have asked about, so we’ll have a couple of pages of Apple-branded products and Apple compatible accessories like cables and cases.
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“The fastest growing sector for us is the facilities management category, it’s largely driven by our own activity”
u MURRAY We have sales force days and customer days. Customers and groups are invited in and they can talk to our merchandising team about products and new initiatives that we’re working on. That opens the avenues for conversations and we find that particularly useful. We monitor our promotional activity with click-andprint so that we can observe open rates and predict different peaks and trends with products.
How do you think the relationship between hardcopy catalogues and newer merchandising tools will develop? u MURRAY It just depends how people want to browse; it’s a very personal thing. Sometimes at work, it’s much easier just to flick through a catalogue, so I don’t think you’ll ever see the end of printed catalogues. We offer a Flicki option, which is a digital version of our catalogue, and we give people the chance to brand that personally as they can with a hard copy, and we also make it so that they can change their pricing. I personally think that it’s very useful for online dealers, or those who do a lot of sales over the phone, rather than face-to-face. If they’re looking to demonstrate to a consumer what a particular product looks like, they can send them a link to that page in the catalogue. That’s quite a cost-effective option for dealers. u MITCHELL I don’t see catalogues being replaced by websites at all. I think there will be a continuing increase in online trading but people like to browse through a catalogue. It’s easier to look through a paper publication than it is to browse online. I think those two things will continue to complement each other. Our catalogue circulation isn’t increasing but it’s stable and it’s a good number and we can’t see any reason for that to decline. It’s been pretty stable for a good number of years now. DS
Pelikan Hardcopy Production AG announces new structure Company updates positioning and philosophy Pelikan Hardcopy Production AG has announced that after months of studying the future development of its company, restructuring measures have now been introduced and successfully completed. Based on strengths such as experience, know-how and professionalism, the company has taken a new approach to diverse market challenges as well as the varying needs of its customers. Convinced they have found the right solutions, Pelikan Hardcopy Production AG is pleased to announce the most important points of the company’s current positioning and philosophy:
Prime Printing Technologies – The New Brand
Prime Printing Technologies is a Pelikan Hardcopy Production AG brand. It stands for top quality with the best value for money on the market as well as having innovative power together with an optimised time to market. Behind the new brand there are decades of experience and enormous market-proven development, manufacture and sales of imaging toners and inks to the printing industry. This is why all prime printing products are based on the sound competence of its own technology centre – located in Switzerland.
Philosophy – Vision and Mission
The company’s philosophy consists of an uncompromising customer focus, professionalism and high quality continuity ensured by strict monitoring and control. Assured fast response times – directly from the factory to the customer’s warehouse – are of prime importance. As market partners with the printing industry and distributors of white as well as private labels in the European market, Pelikan Hardcopy Production AG sets standards in reliability, customer proximity and flexibility. The company offers a comprehensive range from which all products and solutions can be tailor-made as required; perfectly suited to the specific market requirements and needs of its customers. Pelikan Hardcopy Production AG is proud of its past successes, but continues to work hard every day to ensure its product range will continue to meet the rapidly changing requirements in the future. According to the company, all of its customers will benefit directly from the innovations and achievements of the new technology, and through these improvements the company will facilitate and enable its market partners to achieve substantial and sustainable success. Pelikan Hardcopy Production AG Haldenstrasse 30 8620 Wetzikon Switzerland Fax: +41 44 986 12 52 info@prime-printing.com www.prime-printing.com
INDUSTRY
IT DEALER GROUPS
Building a network Is there room for office supplies dealers to connect with IT resellers? Billy Taylor thinks so. He finds out more
I
t is becoming more and more routine for the OP and IT channels to find common ground. In fact, the differences between the two sectors are increasingly blurred through strategic alliances that are producing creative solutions to old issues. Such an alliance was announced in 2011 between OP dealer group Superstat and IT dealer group Synaxon. The agreement gives Synaxon members the opportunity to boost their margins by offering a comprehensive range of office products, while members of Superstat benefit from the option to choose IT products from 45 different suppliers. Commenting on the alliance, Alex Dunn, sales director for Superstat, said: “The IT market is worth £10bn in the UK but it’s an area that most office products dealers steer away from because accessing the right products at the right prices can be a challenge.” If this is true, shouldn’t the OP industry be more eager to find out the ideas and innovations coming out of the IT channel?
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INDUSTRY
IT DEALER GROUPS
Dealer Support staunchly believes that an entrepreneurial approach combined with an ability to adapt to a changing market are the lifeboats to an ageing sector. So to help bridge the gap between two like-minded channels we travelled to the Synaxon National Conference to find out what the IT dealer group’s MD, Derek Jones, thinks about the two channels. The two-day event was held at the DeVere Wychood Park in Crewe, Cheshire, and hosted over 100 dealers and 38 vendors. The keynote address was articulately delivered by Jason Beal, senior director of software and services for Ingram Micro, on how to make a cloud transformation work. But it was Jones’s opening presentation on the ‘ultimate channel network’ that had us in the crowd eager to hear what he had to say. “We all need to belong to a network of like-minded, motivated people. We need to be singing from the same hymn sheet, on the same team, and working together towards our goals,” he said. “Times are hard and we all need all the help we can get. We need to unite, we need to create a solid and trusted community and we need our suppliers to know that the Synaxon community represents more value and greater opportunities than any single technology business in the UK.” Adding: “If we work together we can achieve anything.”
Building a sustainable business model The Synaxon model is not new – it has been working in the German market for the last quarter of a century. In fact, Synaxon has a German parent company that has been making continual investments in the UK expansion programme. They are aware that the growth will be slow and organic, but Jones’s vision of the future is worth the wait. “You don’t have to agree with my opinions but please allow me to share my vision,” he announces to the crowded room of dealers. “The future is in being united. My vision is a united group of 1,500 independent technology businesses all buying into the elements that are best suited to their unique and individual businesses.” But what are these elements? After all, Dealer Support was in the audience to hear specifics. Thankfully, Jones didn’t disappoint. According to the London School of Economics, Jones explains, the future development of cloud computing will
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“I believe that we will very soon see a rapid swing away from the old wholesale OP supply route to the more professional and streamline IT distribution channel”
promote economic growth and increase productivity – creating tech jobs and a better future, but most of all, creating a massive opportunity for all involved: “Other than delivering a sustainable business model for the independent sector, cloud also delivers new device or hardware opportunities as well as new web connection opportunities – whoever the customer they all need to access their cloud service, they need new hardware and improved internet access.” Jones’s message was clear: in a depressed economy, customers can’t afford to ignore the promise of cost reductions and improved efficiencies that cloud services offer. It’s not just a sustainable business model that’s offered by cloud, it also delivers new device or hardware opportunities that dealers should not ignore But it’s not just cloud services that are going to save the dealer, Jones believes there is a great opportunity being missed by many resellers in managed print services: “MPS is all about providing a more efficient and value added service around your customers’ printing requirements. It’s about a consultative sell in, having a conversation at a higher level – it’s a Trojan horse.” Jones explains that MPS is a ticket to locking your customers to your service, ensuring you are the guy supplying new print hardware, of course, but also all of the consumables, cabling, and paper. The idea of a paperless office is a fantasy according to Jones he says print is alive and kicking: “Yes, your customers want better efficiency, they want cost savings and they want to reduce their carbon footprint, but they don’t want to get rid of paper.”
INDUSTRY
IT DEALER GROUPS
I caught up with Derek Jones after the conference to get his thoughts on the OP industry specifically. How can the IT and OP channels work together better in the immediate future? The concept is nothing new; the two channels have worked together for many years with the OP wholesalers taking basic computer hardware products (mainly print), and the IT distribution channel, of course, being the best source for EOS. Although the true integration of the two sectors has been slow – spanning the last 15 years – I believe that we will very soon see a rapid swing away from the old wholesale OP supply route to the more professional and streamline[d] IT distribution channel. If any one of the four or five principle IT distribution companies decided to distribute commodity OP products in the same professional manner that they currently distribute technology products, they would change the face of the OP channel forever. In your opinion, is it inevitable that the two channels will merge into a ‘super’ channel in the long-run? I’m not sure that the word “merge” is the best terminology. I personally believe that the independent OP channel is evolving. Professional OP dealers are adapting their sales approach to include technology products and wrap around basic service, they present a hybrid model offering everything for the modern office. It is beyond question that the days of making a living from commodity stationery alone are long gone, and the professionals have already changed with the majority following.
“A more effective and streamlined technology channel will simply consume the OP channel”
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What are your predictions regarding the OP wholesaler? The stationery wholesaler will be squeezed out as the larger, more modern and efficient technology distributors start to distribute traditional OP products to their customers. This will take place whilst manufacturers from the OP sector realise that distribution via technology distributors is significantly more cost effective than the old fashioned wholesale catalogue route. So in answer to your question, the two channels will not merge, the larger more effective and streamlined technology channel will simply consume the OP channel and professional OP dealers will adapt and survive. It does feel like dealers and manufacturers alike are becoming less forgiving of rising costs and fee increases. I cannot imagine it staying this way in the years to come. That’s why my answer is not a merge, but a swallowing of the OP sector. In the IT sector, you have many more and much bigger distributors. You only need one of them – for instance an Ingram Micro – to build a similar business model to the current OP wholesalers. Suddenly a small dealer would be able to buy at 30-40% less, and manufacturers would be happier because they’re not paying ridiculous catalogue fees. From the outside one might think making such changes are common sense. Absolutely. For me, that’s where you’re going to see huge sweeping changes in the future. DS
INDUSTRY
VENDOR PROFILE VOW
The partner promise The VOW+ programme has gone from strength to strength since it was launched last year as a way to strengthen the wholesaler’s ties with its resellers. Dealer Support finds out how dealers are benefiting from working with VOW to improve their business and strengthen their offering
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A
t the beginning of 2011, VOW launched VOW+, a programme designed to further strengthen the partnership between the wholesaler and its resellers by providing a range of business services and solutions to enable mutual growth and benefit. The programme continues to grow with over 30 tools and services available today. Eighteen months on, VOW is delighted with the results. VOW+ Partners now represent more than 50% of VOW’s overall sales and have recorded consistent year-on-year growth in excess of eight per cent since the programme began in 2011. Helen Beckett, business development director at VOW (pictured), comments on the programmes: “By working as a team with our VOW+ Partners, we have been able to launch services that are really valuable to our customers and which have enabled them to grow their business and position themselves as a business solutions provider rather than just a reseller of office products. With such a vast array of options available through the VOW+ Programme, we are confident that no matter what their business needs are, or the needs of their customers, we have a service that will benefit them.”
VENDOR PROFILE VOW
n Chrysallis Programme: VOW’s graduate recruitment, training and development programme, in partnership with Bright Futures Resourcing and OnTrack International, will source graduate candidates for the resellers and train them on a completely bespoke training course, preparing them with sales training plus industry- and product-specific information and then work with the reseller and the candidate to develop their skills in their working environment. n MPS: VOW’s three-tiered MPS solution offers a solution for every size of end-user, including Just-in-Time print audit software Printreview, a unique service called MPS Lite that allows end-users the fundamental elements and full benefits of a comprehensive MPS service while continuing to use their existing machines, and a full MPS solution that covers the entire end-user print environment, from hardware to consumables and servicing. The VOW MPS service is run in partnership with Europe’s leading independent managed print and IT services company, M2. n Secure shredding: VOW’s secure shredding service is offered in an exclusive partnership with Iron Mountain, the UK and Ireland’s largest off-site destruction organisation. The service offers scheduled or on-demand secure shredding for information stored on old hard drives, DVDs and CDs as well as paper records. Iron Mountain are experts in safeguarding data and also boast an environmentally friendly solution with a recycling programme that recycles 100% of all paper collected.
“We have been able to launch services that are really valuable to our customers” Some of the most recent additions to the VOW+ ‘menu’ of tools and services include: n Corporate gifts: Just launched in August, VOW’s corporate gifts scheme, in partnership with market leader The Sourcerers, gives VOW+ resellers the opportunity to offer over 50,000 corporate gifts, which can also be branded, to their customers. This is a fast-growing market and will enable dealers to develop new business both with existing and new customers. As part of the service, resellers can receive a bespoke website, fully tailored promotional flyers, a branded online catalogue, personalised presentations tailored for client pitches, product sample packs and market planning support. n Water coolers: VOW’s water coolers offering gives resellers the opportunity to give a bespoke and versatile solution to their customers with proven cost-saving and environmental benefits. The service includes the purchasing or leasing of a wide variety of models perfect for any business environment. The service, offered in partnership with Water Coolers Direct, also offers end-users the opportunity to personalise the coolers with their brand and messaging.
The newest recruit to the VOW+ Partner programme is Frasers Office Supplies, located in the Thames Valley. Frasers switched to VOW last month after majoring with Spicers for over 40 years. MD Alan Fraser comments on the reasons why they decided to switch to VOW after a visit to VOW’s Arrow Distribution Centre in Lutterworth: “We were very impressed with what we saw at Arrow, but more importantly with what we heard about the VOW+ Partner Programme and the benefits that it could bring to us. We were also impressed by VOW’s willingness to listen and understand what we were looking for in a supplier, and, moreover, how keen everyone was in trying to explain to us how VOW could make Frasers a stronger and more flexible business. After returning to Reading we quickly decided that VOW was the best fit for our business.” In the first four weeks of their partnership with VOW, Frasers not only signed up for the secure shredding service, but also won a very large one-off shredding deal with a consumer from the IT sector with over 100 employees. Following the completion of the job, the customer has since decided to sign a contract for scheduled shredding services through Frasers. Secure shredding is not the only VOW+ service that Frasers has begun using; they are also utilising VOW’s PACT+ service for contract business support, as well as Wrapide to provide direct, third-party delivery via UPS to a large national contract. Other services that have been of interest to Frasers are the new water coolers and graduate recruitment programmes launched by VOW this year. Frasers may be the newest but they are just one of many VOW resellers utilising VOW+ Programme’s tools and services to grow their business and develop customer loyalty by diversifying their offering to stand out amongst the competition. The VOW+ Programme continues to be a key strategic focus for VOW and remains a priority in the business, which is why VOW will not only continue to research and develop new services for their VOW+ Programme, but also continue to support the VOW+ resellers to implement the existing solutions to create maximum growth and benefit. DS
www.voweurope.com 0844 980 8000
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PEOPLE
DEALER INTERVIEW Discount Office Supplies
DON’T BE FOOLED
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DEALER INTERVIEW Discount Office Supplies
On his first visit to the Superstat conference, Dave McFarlane of Discount Office Supplies was pleasantly surprised to win Dealer of the Year up to £1m. George Carey talks to the former Lyreco rep about getting started, dealer group politics and ensuring their service is anything but discount
BY T H E N A M E What inspired you to leave Lyreco and start on your own? I think I did well at Lyreco because I’ve always had an entrepreneurial attitude. I started at Lyreco with no experience in the industry but I took to it pretty quickly, and rose up the ranks ending up as area sales manager. It was great to get to that point but I always wanted to work for myself. I actually put my business plan together five years before I left but I didn’t work up the bottle to do it for a while. When they started making redundancies I thought it was time to act. I stepped down to a rep’s job while I got the investment that I needed to start up. How did you attract investment? I was fortunate because one of my friends recommended that I go and see someone he knew, a successful businessman, who might be able to help. It was a bit like a presentation for Dragons’ Den. He’s a serial entrepreneur so he brought loads of expertise to the business as well as investment. It was important for me to have that help and advice as well as the money when I was starting out. In August 2010 I decided to resign and then set up in October. Was it just you initially? Yeah, me and the back of my car. I had to build a base and I obviously had contractual obligations not to go near any of my old clients. Poaching does go on when people set up on their own but in my opinion, there were so many potential new clients, I didn’t need to do that. Within six months, my business partner
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DEALER INTERVIEW Discount Office Supplies
I know the truth now. I was indoctrinated into the Lyreco way of thinking: that nobody could compete. It’s just not the case. The bigger you are the more restricted you are moved me into a 2,000 sq ft unit and suggested that we needed another person to answer the phone and take orders. The next stage after that was to get a driver, so that I wasn’t running around all over town delivering. I assumed you would have have been stockless at that stage? Initially I was, but I learnt very quickly to get control of my costs and the only way to do that is to buy and stock certain items. When we first moved into the unit I thought it was far too big, but I think we’re going to have to move soon. It’s a good feeling, but a slightly daunting one. I panic at every stage, and that’s when my business partner steps in with reassurance. There are five of us now and at the moment I’m looking to put someone else in place. One thing I didn’t envisage is that I now have someone working full time, just to chase up outstanding invoices. Cash-flow is king, so her job is essential. We’ve decided that we need someone else on board so that I’m free to go and start chasing bigger accounts and it’ll also give me a little more time to concentrate on running the business. We decided that we needed to get someone in by the end of the year but making the right appointment is so important for a business of our size that it’s proving to be tough. Did you decide on the name ‘Discount Office Supplies’ for SEO purposes? Yes, at the time, and now I regret it because discount means cheap and I’m not selling myself as the cheapest out there; I don’t like the message it sends. We haven’t really done anything with the SEO yet, but hopefully it will become useful in the future.
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Does the e-commerce function on your site bring in much business? Not really. We do get some traffic from customers further afield but it’s not a side of the business that we’ve focused on so far. I think I’ve gained about 10 regular customers from it this year, which pleases me because it means that I’m being found, without really focusing on it yet. What was the biggest difference when you started out on your own? I know the truth now. I was indoctrinated into the Lyreco way of thinking: that nobody else could compete. It’s just not the case. I feel that the bigger you are the more restricted you are. When your customers ask you about something they want a quick decision, which is tough in a big organisation. I’m in a much better position to offer great service. Do you review your business plan regularly? Yes, every time I get depressed or stressed out I go back to it. I think you stretch yourself when you write up a business plan, more than you realise, and that’s something I see when I look back at it. I’m a little bit behind where I should be, but I’m happy so far. I smile to myself because I remember how enthusiastic I was and how easy I thought it would be. I’m a little bit older and wiser now. Someone asked me if I’d do it all over again and my answer was that I don’t think I could go back to working for someone else again. I couldn’t put in the hours that I do, day after day, if I didn’t enjoy it. Did you always plan to become a member of a dealer group? Yes, because you just can’t come to market on your own, you won’t be able to compete.
PEOPLE
DEALER INTERVIEW Discount Office Supplies
I was shocked when I first approached dealer groups that a few of them wouldn’t even speak to me. One dealer in Bolton, about 40 miles away, objected to me joining a particular group because he had customers in my area; so they turned me down. That seemed like a stupid move to me. I contacted four or five dealer groups and Superstat stood out. The thing I really liked was that Graeme Hargreaves, who came out to see me, didn’t over-promise anything. He told me in a very matter of fact way what they could do. The way it was presented and the way they spoke to me was very friendly and family-orientated. They didn’t sell themselves as the cheapest out there. I prefer that to people promising to beat everyone on price, because it’s just not going to happen.
CV DEALER GROUP: Superstat NO OF VANS: 1 STAFF: 5 BACK OFFICE SYSTEM: Pulse TURNOVER: 300k plus GROSS MARGIN: 32%
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Did you have to put yourself forward for the Superstat award? No, I didn’t even know about it. Last year I didn’t go to the awards because I’d only just started and I didn’t see the point, but this year I really wanted to find out where I was in comparison with people who’d started around the same time. I’m relatively new as a dealer and I wanted to speak to the more experienced dealers and learn from them. I was chatting to the sales director in the bar and when he asked why I was there, I said that my biggest struggle was trying to benchmark myself. He wrote it down and said: “I might be able to help you with that.” I was sitting messing around on my phone in the awards dinner and then I suddenly heard them announce me as the winner, I couldn’t believe it. It told me that I was on course and really focussed my attention moving forward. It was great to be able to take the award back to the office as well to show everyone what a great job they were doing. What sets you apart? I’m more proactive in going out to see my customers and talking through their needs, I don’t just sell them things from a catalogue. I
Poaching does go on when people set up on their own but in my opinion there were so many potential new clients, I didn’t need to do that
find out about their situation and what products will work best for them. It’s all about working in partnership with your customers to offer the best possible service. Do you have much of an eco-friendly office product offering? No, in the current climate, customers just don’t tend to prioritise it. Although I went to one customer in Preston and they had lots of environmental certificates on the walls and were very proud that they bought environmentally friendly products. When I asked who they got their stationery from, it turned out to be Whitegrove…based in London. That tickled me. Where do you see yourself in five years? My plan at the moment is to hit £1m turnover within the first five years and then £5m within 10 years. I expect that the business will grow steadily and as it does we’ll have a bigger reach and more buying power, to help us keep growing. I think we’ll probably need three sales people excluding me and two more drivers. There’s a lot more work to be done, but I’m looking forward to it. DS
PEOPLE
INDUSTRY INTERVIEW Spicers
SPICERS SPELLS IT OUT
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INDUSTRY INTERVIEW Spicers
Spicers has made headlines this month for selling direct to end-users on Amazon using a code name. Billy Taylor speaks to CEO Alan Ball directly to find out what’s going on and what the wholesaler is doing to support its dealers
At the recent Superstat conference, Spicers’s Tom Rodda announced that the wholesaler would actively work with dealers to secure large contracts. Will you elaborate on this programme? What we’ve found over the last 12 to 18 months is that contract stationers have started to enter contracts that would’ve traditionally been seen as a dealer contract arena. As they lose business at the top-end they are starting to creep down into the bottom-end, and therefore our dealers are being squeezed from a contract point-of-view and also a market point-of-view. So we can sit by and watch our core market disappear or we can do something about it. Spicers had to ask: Should we follow VOW and set up a Supplies Team business that competes directly, or do we find a mechanism to facilitate supporting dealers to win big contracts? Now there’s no doubt about it, there is a level of contract and a level of contract customer whereby our dealers are unlikely to get onto the tender because of turnover or profitability. Most contracts that go out now state that you cannot have more than 25% of your business represented, and if it’s more than 25% you’ll not get through the first stage. Therefore, dealers need someone bigger to facilitate the contract in order to have a chance to win it. From a dealer point-of-view, local dealers get the opportunity to go for tender business that they historically would not have been able to go for. It’s business they haven’t got today, it’s business they’re unlikely to get, and it’s business that’s being captured and taken by contract stationers. Can you provide an example of how this might work? A good example is recently, through a dealer, we managed to win a large retail contract – not for resell, but retail. We had to attend the presentation and then write a letter to the retailer giving them comfort that if this dealer went into financial difficulty we would be able to find an alternative dealer to satisfy that business. The fact that we did this helped the end decision, and we were supporting the dealer to deliver that business. It’s proven that we can become part and parcel of that chain. I think historically we were always frightened about sticking our heads above the parapet because there was always a fear that we were going direct, but I think if we openly say what our objectives are and what it is we are trying to achieve, we can embrace the dealer and support them. Is the plan for Spicers to source potential business and approach dealers, or for dealers to source the business and approach Spicers? A bit of both. We get asked, and in the past we would’ve passed it to a dealer and said: “There you go, that’s a lead.” Now, we work with the dealer. If we get a lead that says a tender is coming up, we’ll go and find the most appropriate dealer to work with. We’re building through synergy and through our dealer network a partnership whereby we’ve got certain dealers in certain locations and postcodes that we can go to, advise and support. So it’s a bit of both really, it depends on the contract and the local relationship with the dealer on which road we take it. Speaking of sourcing business, it was recently revealed that Spicers was selling to end-users on Amazon via a storefront called Ernie’s Office Supplies. Can you tell me about that? Yes, it’s been quite a news story. In truth, Spicers has dealt with Amazon for over a year, and they are now in our top-five account list. Amazon has taken the US market by storm and will do the same in the UK and Europe, so for me the best way to tackle this is to be on the inside and understand the model.
CEO Alan Ball
How do you understand the Amazon model to work? Amazon deals in three ways. First, they buy well known items from Spicers and place them in a bulk warehouse, they then deliver direct to the end-user. As the volume increases they start to go to the manufacturers for direct deals. When the high volume items are all in the warehouse, the Amazon model looks at the tail and establishes if
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INDUSTRY INTERVIEW Spicers
Spicers has dealt with Amazon for over a year, and they are now in our top-five account list
there is sufficient volume to justify going into the warehouse. This is a new venture for us because up till now we have been busy supplying bulk volume. Basically, we put lines to Amazon and they list them on [the site’s] Marketplace, the end-user buys the line and we fulfil it, and the end-user pays Amazon. If the volume through this method reaches a volume acceptable the line will move into the warehouse, if it does not then it will be dropped. What are your thoughts on large e-tailers in regards to the dealer community? I have asked the question many times: What are dealers doing to look at, and counter, the effect of the large e-tailers? Dealers need to focus on how to retain a market edge through service proposition and differentiating from what the e-tailers are doing. Interestingly, and my hat’s off to them, six dealers have asked me for support and assistance in getting their range of products onto [Amazon] Marketplace, and one dealer has asked me if they can take over Ernie’s to “take the flack off Spicers”. That’s the type of entrepreneurial spirit that will win the day in this new environment. Several months ago you started investigating the possibility of selling your Sawston location. Where does that stand? We’ve moved a long way since we looked at the investigation of the site. We made the decision that, culturally, to move from the site
would give us a significant opportunity to change the culture of the business and drive a new emphasis on the direction of the business. The site is very cumbersome, it’s over 500 acres, and situated on a farm, making it very difficult to communicate and do business. We have had the site marketed for the last three weeks and we’ve had a number of interested parties. There are about 12 interested parties that have been in the data room and collected the data required in order to make a bid. We have a bid date closing within the next two weeks, then we’ll evaluate the bids and move to final stage negotiations. Our expectation is to have the site sold by the end of September or October. Have you confirmed a relocation site? We have secured a new location in Waterbeach, which is about 12 miles from here – north of Cambridge. It’s a unit office building that has the opportunity to house everybody on a single floor. That is going to give us significant benefits in terms of communication and the ways in which we work and operate. We will be in that site in September. We have signed the lease and we are now in the process of getting ourselves kitted out with phones and furniture, etc. Spicers recently changed the sales team and regional structure. What was the reasoning behind this move? The main thing we wanted to achieve was to put salespeople with the right skill set in front of the dealer, so that we could offer value and opportunity for them to help grow that business. We needed a sales team that had the capacity and the capability to sit in front [of] dealers and talk through business plans, understanding their mix of business, and to know what opportunities were available for both the dealer and for Spicers. That was the objective in putting an appropriate team in place. Effectively, it was upscaling the department to make sure we had the appropriate skill set and quality of sales team to deliver. Any changes to your distribution facilities or product offerings? The CDC [Central Distribution Centre] will remain here, so from that point-of-view products will still come here and still be distributed to the RDCs [Regional Distribution Centres]. However, we have invested in a new forecasting system, which was somewhere in the region of a quarter of a million pound investment, that will be up and running by September. That will give us a much cleaner forecast view of what’s happening out of sales in the RDCs and the CDC, which means that we can stock more appropriately and give a higher level of service. In terms of product ranges, we continue to extend our product range. We’re also looking to improve and increase the number of SKUs in our own brand opportunity – particularly with the new move to the Chinese office.
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INDUSTRY INTERVIEW Spicers
Is diversification still as important as ever? It’s as important for the dealers as it [is for] us because the dealers are being squeezed by the market and by contract stationers and by retailers, therefore we have to continue to add value to the sector. The dealers need to add value to their end-users so they can retain the business they have. If they can become a one-stop-shop for small businesses, they will be tied to their customers, creating a stronger relationship. Will you explain why Spicers changed credit terms for some customers this year? We received, and continually receive, a lot of comments from our dealer partners who spend a very high percentage of their wholesale spend with Spicers. They’re constantly asking for differentiation. They’re under pressure from the market and they’re under pressure from their own sector, from local dealers. One of the things they believe [is] required is more differentiation from a sector that supports Spicers, [from] those that do not. So we looked at this, and one of the ways that we support all of our dealers is credit terms. We support dealers with credit and take that risk on, but we know there are dealers that use Spicers as a very small percentage of their spend. If you look at the e-commerce sector, everyone struggles to get more than 14/30 days, and yet we happily give 30, 45, or 60. So what Spicers decided to do was for our non-supporters – people that do not spend a high percentage of their wholesale spend with us – was to put their terms at a more appropriate level, giving visible support to those dealers that do support us. We’ve had an overwhelmingly positive response. Clearly, from the dealers that got their terms reduced it wasn’t great, but for those people that support Spicers they saw it as a very positive move. I think, for us, it really stuck out as the right thing to do because they represent a much higher percentage of overall turnover. Are we likely to see further changes to credit terms in the future? No, but I think future changes will be driven by European legislation. What’s coming in 12 or 18 months’ time is European legislation that has already hit mainland Europe in which you have to pay suppliers and vendors have to pay you, within a prescribed time period. At the beginning of the year you changed the pricing structure for manufacturers. What was the rationale for this move? One of the clear challenges Spicers had when it came under new ownership was a fear from the market that Spicers would lose terms because of its size – effectively it had halved. There was a concern from the market that the manufacturers would come in and try to take terms away because, in effect, we were only buying half as much as we used to as a
European operation. One of the things that we had to do was to protect that position so our dealers didn’t see any degradation in their terms – because if my price goes up their price goes up – and we needed to protect that. The second area, and it’s something that I’m passionate about, is that I’ve seen commodity prices reduced consistently month-on-month for the last six, nine, 12 months, and I’ve seen the strengthening of the Euro, but I’ve not seen a reduction in price – all I’m seeing is price increases. From a dealer community that’s experiencing tough financial challenges, why do we keep constantly seeing price increases coming through to the market when we should be seeing price stabilisation and price reduction to help our dealers to compete? So the other big message to the manufacturers was: give us a reduced price because we need to support our dealer community with more competitive pricing.
One dealer has asked if they can take over Ernie’s to take the flack off Spicers Manufacturers were obviously critical of the decision. Did it produce results? Yes, we were aggressive, but what I would say is there were a lot of manufacturers who at the time made a lot of threats about their position, but we were very clear with them that we were here to negotiate. Our position was that we would negotiate and listen to any alternative proposals. What I can say is that not one vendor walked away. That’s not to say they all gave us what we asked for, but no dealer has had a reduction in terms and the last price fell that was issued, Spicers had a significantly less quantity of price increases in the market than any other wholesaler. So I would say is we did a good job because the beneficiaries of that are the dealers who have seen less price increases from Spicers in the last six months. What’s next? The next big thing for us is our sourcing office out of China. We identified there was a lot of our own-brand products that we were buying from branded manufacturers, and we know that 5 Star pricing has had some criticism in the past for being priced very close to the RRP, in some cases ahead of the RRPs of the branded manufacturers, so we needed to do something about that. The opportunity arose for us to secure a buying office in China so we could drive more of our own brand product into that channel, and therefore give more competitive pricing to our dealers. If we can give them more competitive prices on an own-brand then it strengthens our position. DS
DEALER BOOKMARK
Paul Ramsden Director of operations D3 Office Group Hull and Leeds
SPECIALITY
Our company strapline is ‘we do it your way’, this encompasses D3’s mind-set in customer care. We believe in having ‘experts’ in all areas of our business.
CV
I’ve spent more years than I care to remember in the industry. I joined D3 five years ago when my then company was taken over.
WINNING MOMENT
Achieving ISO9001/14001 earlier this year. Also successfully implementing the use of PDA signature capture through Horizon at both D3 sites.
CATCHPHRASE
“If they didn’t want it why did they order it?”
WORD FOR THE WISE
Horizon has enabled D3 with complete transparency of information and a reliable audit trail. The web offering also gives us a stable and classy online ordering platform that’s easy to manage and maintain.
THE LEADER IN INDUSTRYSPECIFIC BUSINESS SOFTWARE
www.eci.eu
MANAGEMENT
PRESENTATION PRODUCTS
Presen
the facting ts
As busin esses s trive to r consum educe th ption an eir pape d invest what do r in es it me n e w technolo an for tr products g y a , ditional ? Geor presenta trends in ge Care tion y looks presenta at the tion, bin ding and laminatin g
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PRESENTATION PRODUCTS
W
ith the increasing prevalence of tablets in business presentations and the proverbial paperless office ever on the horizon, it may appear that more traditional presentation products are following in the footsteps of the dodo. So, are they heading for the boardroom or the museum? BINDING
Most seem resigned to the fact that, to say the least, binding is not a sector in growth. Hugh Darcy, VP of global binding and laminating for Fellowes, is well aware of the problems involved: “The binding market faces the largest challenge, as there are many systems available, but no one system can offer all the benefits consumers are seeking. As the market goes into sunset, I would expect to see a high degree of consolidation, as more niche systems fall away. The challenge is to create a system that meets most needs at a reasonable cost and is simple to use.” The relatively restricted size of documents it can produce and high costs has made thermal binding relatively unpopular and it could prove to be one of the “niche systems” that fall prey to Darcy’s prediction. There is some debate as to the most popular machines, but Paul Simpson, office machine sales, Renz UK, is in no doubt: “One thing that has not changed is that wire binding is still by far the most preferred binding method. Wirebound documents are still seen as the most professional looking and wire binding machines are increasingly easy to use compared with coil binding, which is frequently seen by customers as fiddly.” He continues: “At Renz we have also noticed an increasing demand for more unique and bespoke documents. As wire bound documents are frequently utilised for pitches and presentations, which can essentially be worth thousands of pounds to that company, a professional and personalised looking document is becoming very popular.” While Darcy agrees that wire binding is on-the-up, in his experience, it’s not the most popular in the office environment: “At the moment, in the UK and Europe, comb binding is by far the dominant form. Mainly because it’s cheap; you can open and close it; it’s pretty robust; and everyone knows how to do it. The next most popular is wire binding, that’s seen a huge surge in the last few years. If you go to somewhere like Paperchase, you’ll see an awful lot of wire bound notebooks, and oversize wire has become very trendy. In the commercial world, it’s very popular.” LAMINATING
Unlike binding, laminating is enjoying increasing popularity, which shows little sign of abating. Simon McLaughlin, Vasanta Group category head for traditional products, has seen an encouraging increase in their use: “People are using laminating machines more and more as the technology gets better. The major developments are around increased automation, cutting down on the need to mess around with settings. The newer machines are able to optimise the speed and work out what they’re laminating, so it’s a much more user-friendly process.”
Darcy sites reliability as being an equally important factor: “The thing that stuck out for us in our market research was that people are sick of laminators jamming. Some cheap laminating pouches have a very high glue content, so they can leak in the machine and cause jamming within 10 or 20 laminates. So we launched a 100% jam-free laminator.” This is something that Simpson has noticed as well: “The market has become so saturated over the past few years with increasingly cheaper laminators which are manufactured in the Far East and are often sub-standard.” He goes on to say: “As a result, customers are prepared to pay slightly more for a quality laminator that is reliable and made to last. This has been reflected in our sales of pouch laminators, which have seen significant growth in the past year.” There are, of course, significant improvements that can still be made to the technology and Darcy believes that eco-friendly advances are heavily in demand: “Responding to the environmental requirements is the largest issue, as resellers and their corporate customers increasingly seek to address the green agenda through how they consume. On one level, a laminated document is an environmentally friendly solution as it extends the life of paper potentially for many years. However, PET pouch film is not ideal, as the resulting laminate cannot be recycled. The future lies in solving this issue.” While not disagreeing with the benefits of greener products, McLaughlin fears that consumers may be disillusioned by manufacturers over-egging their planet-saviour credentials: “We’re not seeing much additional demand for eco-friendly products generally, although when bio-degradability is available at the same price, it seems to get some traction in the market. I think there is a danger that the ecological message gets so watered down by people constantly over-playing it. People try to hang an ecological hat on everything and maybe the long life of a product and its usability and re-usability is a better ecological message.” LOOKING FORWARD
So it seems there’s life in the old dodo yet. McLaughlin asserts: “We’re not seeing a decline in the use of presentation products. From our perspective, people see it as an external representation of their company and that’s not an area that they are willing to compromise in.” Simpson is in agreement, saying: “Paper will still play an important role in the office and more importantly as a powerful marketing tool for attracting new business. For example a wire bound document which is presented to a potential new customer arguably has more impact than simply a PDF attachment in an email. While the increase of IT in presentation cannot be ignored, it doesn’t have to mean the decline of more traditional methods. McLaughlin concludes: “Most of the new developments in presentation have always been designed to supplement the hard copy. People still tend to bring something on paper... It could be a generational thing but I think people always prefer a hard copy.” DS
www.dealersupport.co.uk AUGUST 2012
35
FLEXIBLE WORKING
As the UK prepares to debate the European Working Time Directive in the EU, employment lawyer Emma Clark explains why the answer might rest in flexible working
FLEXIBLE WORKING Is
the way of the future?
I
n a recent speech, Nick Clegg said that the Government wanted to examine the option of extending flexible working beyond mums and dads. He talked about extending flexible leave to grandparents or close family friends in order to make it “much more common – a cultural norm”. The law currently restricts the right to request flexible working to parents with children under 17 (or 18 if the child is disabled) or to carers. Sometimes such a request can stall or, at worst, end careers. It is often sensible for working parents to mention at interview stage that they want to work flexibly, whether it is working four days a week, asking for a job share partner or leaving early on a certain number of days to collect children from school. Refusing these requests can result in an unnecessary loss of talent. An employer is fully entitled to refuse such a request on the basis of a “genuine business ground” such as the negative effect on customer demand, quality or performance or due to the effect on existing staff.
www.dealersupport.co.uk AUGUST 2012
37
MANAGEMENT
Emma Clark
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FLEXIBLE WORKING
As we have read many times before, flexible working can instil immense loyalty in workers and improve staff morale. This is often seen by management as a “nice” employee relations exercise and something that firmly falls within the remit of human resources. Yet, true change should come from management. There are many positive business advantages of flexible/remote working and the real-life examples detailed below illustrate the benefits. Now is the time to consider extending the option of flexible working beyond the current legal remit. Remote working does not mean working from a kitchen table surrounded by noisy children and builders. It means working anywhere that is not the firm’s physical office assisted by the use of Skype, FaceTime and video conferencing to discuss matters with colleagues and clients. Employers often argue that they cannot be certain their employees are working hard. There is an element of trust in every employment relationship. Unproductive people will find ways to procrastinate irrespective of whether they are remote working or gossiping with colleagues in the office. These issues should be managed through appropriate HR procedures. Remote working provides an employer with access to new markets. If your employee wants to spend a couple of hours after school with their child to assist them with their homework or coach a sports team every Wednesday afternoon or pursue a passion for music by giving regular piano recitals, then why not let them take the afternoon off work and reach your American client market for four hours that evening? This will invariably deliver a better and extended service for clients in our age of amazing technological advancement. Remote working can also have an enormous benefit in reducing sick days. According to a study of 24,000 IBM staff worldwide, employees who worked flexibly were able to work an additional 19 hours a week before they experienced the same levels of stress as those who did not work flexibly. Reducing current levels of sickness is key for any employer and the positive effects of flexible and remote working could therefore result in a win-win situation. Remote working can manage the increasing high percentage of office space that employers fail to utilise. Companies, like BT, allow its staff to vary their hours for a range of different reasons. This has resulted in the need for less office space and BT claims to have saved £500m. Remote working frees up this space and reduces what is
AUGUST 2012 www.dealersupport.co.uk
often considered to be “dead commuting time” especially when individuals need to change their mode of transportation a number of times in one journey in order to reach their office. How about the environmental impact? 22% of UK domestic carbon emissions are from traffic. The government is currently considering legislation to reduce parking spaces at work with Nottingham leading the way and imposing a “Workplace Parking Levy”. With the ongoing focus on reducing carbon emission, remote working is a pragmatic solution and is certain to impress employees and shareholders. The UK government has re-commenced the fight to prevent Europe from making our employees work less than 48 hours per week. Trade unions and employer organisations (collectively called “the social partners”) are trying to reach an agreement on ‘working time’ issues by September 2012. The main debate in Europe relating to the Working Time Regulations 1998 which implement the European Working Time Directive (the “Regulations”), is whether or not Europe will still allow the UK to ask its middle management and junior staff to sign a document, often attached to an employment contract, in which they agree to “opt out” of the 48 hour working week. Although it is often hard to exceed the 48 hour working week (as it applies over a rolling 17 week reference period), the fundamental aim of the restriction is to protect workers from the health and safety consequences of overworking. Rather than rely on this stringent 48 hour working week or lose sleep over the health and safety liabilities that might arise if these hours are exceeded, employers could start to focus less on potential loopholes and consider offering employees the right to work flexibly and remotely. Meeting clients and colleagues face-to-face is hard to beat and should always be encouraged. However, all employers, whether large or small, should think imaginatively. A strategic business decision that is led by members of management who want to move out of the Victorian era and embrace the benefits of ever-changing technology could change the workforce of the future. Employees should be judged by the results they achieve and not by presenteeism. DS Emma Clark is a senior associate at employment law firm Fox Solicitors
MANAGEMENT
FEATURE
Have you ever considered lowering prices for your products and service in order to win business? Chris Merrington explains why that’s a bad strategy for a sector built on differentiation and service
A Win business without reducing prices 40
AUGUST 2012 www.dealersupport.co.uk
winning athlete is often 0.01 of a second faster than the athlete who comes second. Yet that 0.01 second is likely to mean subsequent earning potential to be six to ten times greater. Sometimes that’s all we need, the equivalent of 0.01 seconds, just a small edge over our competitors so that customers choose us and are prepared to pay more for our product or service. Dropping your price to win business can be a fool’s game. Anyone can drop their price. If you win business purely because you are the cheapest you will lose the business just as quickly when someone else offers a lower price. If you sell a commodity then don’t bother reading the rest of this article. If you sell a differentiated service or product then read on. A commodity is where we sell the same product or service with no discernible difference to our competitors. Why would anyone pay more for the same thing? We will pay more if there is a real or perceived difference(s) – in ways the client values. Let’s be clear. As a commercial business your number one objective is not turnover but to generate a profit, a fair return on the investment. Before you reduce your price, consider the following implications. The price reduction will come straight off your bottom line profit. The price you charge this time will influence the price you can charge next time, and the next time and the time after that. This may negatively impact your relationship with your client and even your self-belief and confidence. Confidence is vital. Clients are attracted to your confidence and success. Remember, you are the person you must sell to first. If you don’t believe in your price and value then why should anyone else? How reliant you are on a particular client will affect that confidence. No client should be more than 15% of your business. This means you can say ‘no’. This is a vital part of any negotiation. Sometimes I meet businesses
MANAGEMENT
FEATURE
where their biggest client is 30%, 40%, even 50% of their business. This is crazy – all you can say to them is ‘yes’. Even if no client is bigger than 15% of the overall business if that client represents 100%, or 90% of the business of one or more members of your team, then the danger is that those employees prioritise their security, client ‘happiness’ and turnover ahead of optimising profitability. There are three key strategies regarding price. The first two strategies are about understanding your value and how your client is better off afterwards. Find the right moment and ask your current clients why they like doing business with you and how they have benefited from your product or service. Ask really probing questions to get under the skin of what they value and what is important to them. Get as much details as you can. Then ideally translate that value into money. Do this with as many clients as possible and then look for trends and patterns in what they are saying. See how they compare you to your competitors. How are you better? In what ways are you better? When you have distilled their answers take time to think about how you can use this to position your business, your offering, as different to competitors. The third strategy is understanding how you are differentiated from competitors. The more differentiated you are from competitors and in ways which the client really values the more readily you can charge a premium price. Mark Ritson once said that “most companies’ strategy for pricing is a mixture of Voodoo and Bingo”. Take more time to plan and develop your pricing strategy so you maximise your revenue and profitability. Ideally increase
42
AUGUST 2012 www.dealersupport.co.uk
your prices – when you do that, deliver even more value to your clients. Identify the triggers which mean prospective clients are more likely to need your product or service. For example households who have been burgled are more likely to now buy a burglar alarm. People who buy a conservatory are more likely to buy garden furniture. If you sell B2B services your client may be more likely to buy if they are expending rapidly. What triggers are precursors for your service or product? If you provide clients with detailed budgets then beware of leaving them to the last minute or doing them in a rush. The other common mistake is not thinking through the detail and missing out obvious items. These can be positioned as optional extras but this is better done at the first stage of costings. I used to have a boss who believed in going in with a low price to get the business and then creeping our price up once you are in. In hindsight, I think this is stupid and also incredibly difficult to increase your price once you have set a precedent. When all the client wants to talk about is cost and price you must shift the focus of the client’s mind to value, not price. DS Chris Merrington is the author of Why do smart people make such stupid mistakes? – a practical negotiation guide to more profitable client relationships for marketing and communication agencies, sales teams and professional service people
2012
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FINAL WORD
The Customer’s always right For independent resellers success comes from always understanding what your customers really need and going out of your way to provide excellent customer service
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AUGUST 2012 www.dealersupport.co.uk
Steve Pearce, channel marketing manager, Kyocera Document Solutions
E
xcellent service is what everyone wants but these days it’s increasingly hard to come by. Whether you’re in a restaurant, a shop or buying a service – when someone goes the extra mile for you it’s always memorable. And it’s really a shame that something which should be understood as a basic principle of good business – keeping your customers happy – has become notable by its exception. In the independent reseller channel meeting customer expectations never mind exceeding them can be a daily struggle. We all recognise that our customers are demanding more and are less inclined to accept poor service. Good service shouldn’t be based on pricing – providing a good service costs less than giving bad so there really is no excuse. As Benjamin Disraeli said, “diligence is the mother of good fortune”, and for independent resellers success comes from always understanding what your customers really need and going out of your way to provide excellent customer service. Make sure you fully understand the problem before you sell the solution and really excel in the service you provide. For instance when it comes to MPS (managed print solutions) one customer might think that it is having next day delivery on toner rather than ordering from a catalogue whereas to another customer it means having engineers in to repair a machine before the customer even knows it’s broken. Now both customers will be absolutely correct in their understanding of what MPS means to them but for the reseller it can be a rocky road full of ambiguity and misunderstanding. Customers want to know that independent resellers understand their pain points and can help them to save money, streamline operations and reduce waste while supporting their plans for business growth. Independent resellers also need to understand how they can develop their reputation and customer relationships by using social media. Twitter, for instance is the ideal way to respond to customer service enquiries and address an issue publicly to the customer’s satisfaction. Everyone knows a story of complaints that didn’t get anywhere using traditional customer service channels but which were miraculously dealt with as soon as the Tweeting started. Twitter works because customers have the expectation that action will be taken where phone and email has failed. Resellers who use Twitter to handle customer expectations can benefit from public praise and recommendations. Great customer service is the key to differentiating independent resellers – with the right internal culture and approach it will pay dividends. A reseller who has customers who implicitly trust them will succeed – even in these tough times when budgets are being cut and projects put on hold. DS
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hallenge Pioneer C mber 2012 te 17-30 Sep
ARE YOU UP FOR THE CHALLENGE? With the buzz and excitement surrounding the London 2012 Olympic and Paralympic Games taking place, this year is undeniably a year of sporting achievement. If you’re feeling left out of the fun, here’s your chance to do something good for yourself and others. Dealer Support magazine is partnering with Antalis McNaughton and Pioneer Paper to take on the Pioneer Challenge 2012, to get the office supplies industry on their bikes in aid of Breakthrough Breast Cancer. Taking place from 17 to 30 September, the goal of Pioneer Challenge is to have 20 riders on each of the 10 stages of the relay. If every rider can raise around £100, with all the expected participants we will blow the £20,000 figure of last year.
The challenge Cycle one or more of the stages from Aberdeen to Brighton (each stage is around 85 miles)
The charity Breakthrough Breast Cancer, dedicated to saving lives by finding the causes of breast cancer, improving detection, diagnosis, treatment and services
The dates 17-28 September
How to enter Please go to www.dealersupport.co.uk to find out more about the challenge, dates, cycle routes, setting up a donation page, logistics and cycle support, then email matthew.moore@intelligentmedia.co.uk with your choice of date/s.