A complete ecosystem

Normally reticent to talk about what it’s up to, Exertis Supplies is now ready to change that. Managing Director Andrew Beaumont talks to Workplace360 CEO Steve Hilleard about the company’s current state of play, future plans and its laser-like focus on the dealer channel

Workplace360: Let’s start with your career journey. Andrew Beaumont: My background is in finance and I started my working life in the building products industry. I’ve spent most of my career at Advent Data/Exertis Supplies except for a couple of brief periods when I left and then returned.

I was at Advent in 2011 when DCC acquired the company – it was a fabulous time. Little old me against the PLC guys was fun. I had a break from 2014-2017 but returned to Exertis Supplies as Operations Director. There was a succession plan in place at the time, which meant when Raj Advani, Managing Director of Exertis Supplies, stepped back, I would assume his role. This happened in April 2019.

W360: Tell us about Advent Data and DCC.

AB: Raj started Advent in 1990 and it was then acquired by DCC. Despite stepping back from his role as Managing Director, he is still very much involved in the business as our Commercial Director.

DCC is one of those large PLCs you’ve never heard of and was built predominantly through the energy sector. It’s an Irish company but on the FTSE. It’s a £22 billion business with three main divisions – Energy, Healthcare and Technology. Exertis is the global name for DCC Technology, with Exertis Supplies falling under this wing.

W360: How much of that £22 billion comes from Exertis/DCC Technology?

AB: Just over £5.2 billion.

W360: Is it correct to say that Exertis Supplies only transitioned into business products after the acquisition of Advent?

AB: Correct. Exertis Supplies didn’t dip its toes in the office products sector until 2014. At that point, another Exertis business had tried to enter the workplace products arena, but it wasn’t gaining any traction. Raj suggested Supplies give it a go as many of the dealers were already part of our customer base.

While still dabbling, we hired Tim Holmes. He immediately saw we had the wrong stock at the wrong price and simply said: “This is not how you do it.” Most of the stock was moved on swiftly and we started afresh.

W360: You’ve just alluded to Tim, may he rest in peace. How does the management team look today?

AB: Raj is focused on workplace products, with Ben

Appleby as Commercial Director for the EOS and technology side. Victoria Hilton is Director of Sales and Paul Kipling, who was our IT Manager, is now Operations Director.

W360: You’re now in Elland. Are there any other distribution facilities?

AB: There is another centre in Raunds, Northamptonshire, where we still utilise a large group warehouse for handling some of the bulkier product. It was also used for our van run service in the southeast of England. However, when everything came to a halt during lockdown, we migrated the van run stock back to Elland and modified the management of our night deliveries.

Whereas five distribution companies were helping us in different areas pre-COVID, we’re currently under one umbrella with Royal Mail and leveraging its Relay distribution network. This service is gradually being turned on, but it has been a game changer as we can now offer a viable, reliable service and cover the whole of the UK.

W360: What’s the rough SKU count currently?

AB: 10,000+ for business supplies, 4,000+ in ink and toner and 8,000+ in our tech category. From a core products perspective, I think we can now offer a full range for our dealers.

W360: Are you able to share revenues?

AB: What I can tell you is the office products category currently represents around 35% of the business, ink and toner supplies about 55%, while tech stands at roughly 10%.

W360: Beyond the traditional dealer community, are there other important customer types?

AB: On a day-to-day basis, we’re still close to all the VARs and the e-tailers.

W360: Amazon as well?

AB: To a point, although our business with Amazon is not what it used to be. Our focus is very much on the workplace supplies dealer.

W360: I sense there’s little interference from your parent company.

AB: That’s very much the case. DCC is a benevolent parent which aims to acquire good businesses and invests in its management teams. It’s different to how some VCs operate – ie not a ‘let’s buy them this week, then try to sell them next week’ kind of organisation. But it’s not an easy ride as DCC sets very high standards. We are currently looking across the entire DCC Technology estate to figure out how to cross-sell and offer the dealer community the 50,000-strong tech products that it lists. In addition, many resellers are telling us that they are active in the healthcare vertical; DCC is also in this segment, so we will certainly look to leverage this in the future.

W360: What sort of products do you consider to represent a natural extension for the reseller community within that technology portfolio?

AB: When I meet dealers, I always say there’s nothing you’d encounter in an office we can’t provide between us. For instance, sitting with you here today, there’s a screen on the wall, a monitor, a coffee machine, a docking station, laptops, cables and comms equipment.

Last year was immensely successful in terms of growth for the tech category, but we need to help make more dealers comfortable selling it.

We’ve created a FAQ sheet, for example, to enable them to provide the right answers for any questions their customers may have. This is really starting to gain traction.

W360: How do you encourage and support those dealers to transition beyond just providing product?

AB: We have created an ‘ecosystems’ document to demonstrate what products dealers can procure. There are the FAQs I’ve just mentioned as well as access to specialists within the business. However, it’s primarily about education and communicating how Exertis Supplies can help. As a team, we are speaking to technology vendors and pushing our sector as an area with huge potential. We’re establishing relationships and bringing them into the fold.

W360: Do you think the dealer community truly understands that looming on the horizon is a massive drop-off in some of our core categories?

AB: The majority do, yes. We witnessed their entrepreneurial spirit during lockdown – it keeps this industry alive. When Amazon arrived a decade ago, it was supposed to be the death knell for office products dealers. It didn’t happen.

W360: But what we’re observing now is digitalisation, which is disruptive and accelerating. You can fight a competitor but you can’t easily win market share when legacy products are in secular decline.

AB: I believe the demand will be there – albeit with new products. I think the big opportunity is hybrid working and replication. Many employees still have the same set-up as they had when they moved out of the office at the start of lockdown. People possess two of everything – desks, monitors, docking stations, etc. The ecosystems I referred to earlier are even more key today.

W360: In a few years, are we not just going to reach a period where everyone’s office and home office are filled with technology? What happens then?

AB: The great thing about tech is it’s constantly evolving. As end users, we desire the latest technology to help us become more efficient. We all want to have the next new thing, or we wouldn’t be upgrading our laptops every couple of years.

Delve a bit further and you’re in the realm of software and SaaS – with recurring revenues. There is a dealer platform available through Exertis Technology and we’re investigating ways to provide this opportunity to our customers.

W360: This is quite a departure from your no-frills model. It was one of the aspects that certainly attracted many resellers to Exertis Supplies when you launched – no unencumbered costs.

AB: We’re not changing, just providing different products. With service-type offerings, it would have to be presented to the industry with all the complexity removed to make it economically viable and simple and easy to use.

At the end of the day, from a wholesale point of view, we’re trying to move complexity out all the time. Up to a point, our core business will invariably be about assembling a set of products from vendors into a warehouse and then selling those to dealers – or, as most orders go today, straight to their end user. We’re merely adding to the portfolio.

W360: Why should a savvy dealer buy from Exertis and not anyone else? What sets you apart?

AB: First and foremost, I wouldn’t say don’t buy from somebody else. We have to offer a service that makes dealers want to trade with Exertis Supplies. So why should you buy from Exertis? I think we’ve always done what we said we would do and as you’ve just said, we like to keep things simple.

Every dealer has a named account manager. In fact, during lockdown, our account managers used to phone their dealers simply to ask if they were ok and needed someone to talk to. It wasn’t about the business; it was about the people.

Our customer care team, for example, is still a person on the end of a phone; our people are our greatest asset. Plus, along with the core range we offer, let’s not forget our technology expertise.

W360: You are affiliated with some substantial cooperatives or dealer groups, primarily Advantia and Superstat. What’s the nature of your relationships with those two groups?

AB: Somewhat of a cliché, but with both it is a genuine partnership in the truest sense. If Steve [Carter, Managing Director of Advantia] or Alex [Dunn, Managing Director of Superstat] were sitting here, I believe they’d be nodding in agreement. Working with Exertis is different to anything they’ve experienced before. There’s no overpromising and we’re transparent and honest if promises can’t be met. I think they appreciate that. It’s very similar to the way we do business with our dealers. Exertis Supplies has developed the range and service offering it has today mainly because of the strong relationships we’ve developed with the two groups.

W360: Let’s talk about range. Are you venturing into being more of a broadline wholesaler with cleaning, catering, safety, etc?

AB: Very much so but doing it at our pace and being extremely conscious of service levels. We’re growing at a planned rate right now and won’t allow our service levels to drop.

W360: One of the accusations levelled at the wholesalers is that, when moving into new categories, they cannot purchase a product competitively enough to enable dealers to stand a reasonable chance of being taken seriously by some of their larger customers. How do you intend to overcome that?

AB: This is where the value-add comes in. There are great discussions constantly taking place with our vendors on what they think we should stock, but a lot of the time we’re talking to dealers. Asking questions such as: what do you want us to stock; where does it need to be price-wise; what do you require from a service point of view? Then we ask ourselves if it can be done.

We have to be brave. Exertis Supplies is unique as a wholesaler as it only has a B2B arm, so stock is exclusively for the independent dealer.

W360: It’s taken you until now to get to the “we’re trade-only” message. Impressive. You’ve been itching to tell me!

AB: [Laughs] But it’s true. The success of Exertis Supplies is solely based on independent workplace products dealers being successful.

W360: Let’s talk about the challenges facing the industry and your thoughts on what’s unfolded over the last crazy few years.

AB: Looking back four years ago, just before the pandemic, we were fortunate to have already gone beyond the embryonic stage. Needless to say, so much has happened since then, not least with COVID and the demise of the original Spicers business. But all that has transpired has provided us with the chance to find our place and thoroughly develop our identity and core range.

W360: Some dealers said to me they didn’t feel Exertis – or VOW, for that matter – really moved quickly or deeply enough to capitalise on the demise of Spicers. A fair accusation?

AB: We were still finding our feet, so no. Competition comes and goes and dealers deserve strong wholesalers. I want to be tested by dealers and to ensure we are doing everything possible to help make them be successful. One area we have now developed is our Value X range to compete with the Q-Connect and 5 Star brands, for example.

In addition, we are about to announce significant investment into the Exertis Supplies business to help support our customers over the coming years.

W360: When you say invest, is this in product range, infrastructure, or something more exotic like M&A activity?

AB: Everything’s on the table. I have the backing of DCC to grow Exertis Supplies as a long-term player in the business products industry.

And there are plans to do just that. We are preparing to launch our new website in the coming months and a lot is happening in the background in terms of digital marketing.

We announced to the business in May that we’re migrating the Exertis Supplies division to a new site in the area. It’s a much larger and more modern space which will enable us to offer the best service levels for our customers in order to meet the current and growing business needs.

W360: Final question. Does anything keep you awake at night?

AB: Not really. I’m lucky as I enjoy what I do. There is an extensive plan in place and the full support of DCC to invest in this industry.

Unfortunately, there still seems to be a credibility issue with some independent dealers that don’t understand our office products range has now grown to 10,000+ and that Exertis Supplies is here to stay. It’s our job to convince these dealers in the coming months and years.

While it’s always been our nature not to shout about what we do, I think we need to be a little less introspective. Operating on the basis of “if we’re good enough, dealers will come and buy from us” may, admittedly, be a little naïve.

It’s unusual for us to put ourselves out there, but I think this is the appropriate time to start getting the message across that we’re here and we’re in it for the long haul.

On 31 March 2023, the government’s 130% capital allowance ‘super deduction’ scheme came to an end. It had been introduced two years earlier to encourage companies that pay corporation tax to make investments post-COVID – allowing them to deduct 130% of plant and machinery costs from their profits when calculating the amount of tax to be paid.

As well as industrial equipment and machines, eligible purchases under super deduction included computers, printers and office furniture – as long as they were new and unused. With no expenditure ceiling, this tax relief was a timely boost for the business products industry as companies looked to implement workplace refurbishments and reworking projects as pandemic restrictions were lifted.

Spread The Word

Of course, companies had to first be made aware the tax benefit was available for office refits. In February 2022, the Office for Budget Responsibility (OBR) admitted the take-up had been less than its initial forecasts. To help spread the word among its membership, the BOSS Federation teamed up with chartered accountants