Interview for IT Europa provided by Trish Egan, country manager, ASBIS Ireland
– How would you describe the health of the Irish distribution market?
The problem of continuous commoditisation is one of the biggest concerns for distributors in today’s market. This has created a situation of increased price pressure and shrinking profitability, with even speciality products likely to be at risk. Not so long ago a TFT was seen a speciality product and now is most definitely seen as another commodity. Manufacturers from low-cost countries, such as China and India, entering the market will create further pricing pressure.
To combat this ASBIS have focused on trying to understand their customer's requirements holistically. Despite the margin erosion our customers are still demanding extended payment terms; quality, stylish and innovative products; choice of brands; next day delivery and immediate turnaround on warranty goods. One of our recognised strengths has always been combining extensive knowledge of our local markets with the primary objective of bringing value to both our customers and suppliers.
By focusing on developing and strengthening these relationships it enables us to offer our clients individual components or complete solutions. Simply we have a unique pre and post sales service that differentiates us from other IT distributors. We can gauge that this approach is working very successfully by the loyalty of our customer base and the continuous business from them. This is further demonstrated by the number of new customers we have acquired in 2006.
Also as ASBIS Ireland is part of the ASBIS Group , which serves 25 countries. The Group purchases directly from manufacturers and possesses a strong purchasing power, as it buys large volumes for all ASBIS offices in the EMEA region. This buying power proffers ASBIS Ireland with real competitive advantage and we are able to offer real competitive prices on a comprehensive range of products. The current product portfolio encompasses over 15,000 products.
We think customer expectations will continue to grow and market forces will continue to erode margins. The challenge for ASBIS will be to maintain our phenomenal revenue growth, maximise shareholder value and continue to build on our successful relationships with both suppliers and customers.
– Has the Irish distribution market become more or less competitive over the last two years?
The market has become much more globalised as the Internet has made information freely available to everybody. It has been instrumental in helping to educate buyers with detailed technical information easily accessible and for facilitating the comparison of prices and brands. Customers and end users are more likely to consider buying from other countries especially if price is the key differentiator.
ASBIS believe that understanding the true cost of ownership is often overlooked by the buyer. By only focusing on bargain hunting and seeking the lowest price, factors including after-sales service – such as technical support and warranty, and payment terms – cost of cash versus credit and currency exchange rates should also be considered in the decision making process.
We believe customers should look for the best price but with the full service surround. At ASBIS we focus on innovation, style, quality, price, service and support.
– What have been the most significant market developments over the last 2 years?
The retail channel has now become a major route to market and the constriction of the traditional IT channel. Reviews of our advertising campaign have helped us to identify more opportunities to move closer to the consumer electronic market.
At ASBIS we believe that the current market view of the opportunities for IT and audio-visual convergence is a narrow interpretation of where the true market potential lies. Most distributors appear to be just selling televisions and projectors. At ASBIS we believe in the holistic lifestyle approach where home, leisure and office are all interlinked. The Prestigio Net Drive is a fantastic example of this concept. It provides instant and safe remote access to your data wherever you are. Whether this is business or personal files and multimedia content – it can all be easily and securely shared between PC users in the office or at home, via LAN or even via the Internet!
We have also been working closely with some of our key manufacturers in designing packaging that will create enhanced shelf impact. Canyon in particular have now created a series of new package designs that we believe will make a significant impact on growth for their products. Not only is the visual impact important but also the quality of the packaging and when this is complemented with the facility to actually be able to view the product in the box.
Our biggest growing market is lifestyle products and this includes products such as:
Net Drive – instant and safe remote access to your data wherever
Prestigio Data Safe – stylish portable external storage device from 40 GB to 120GB;
Prestigio’s Portable Multimedia Recorder – a compact device with 3.5” LCD screen for watching films and listening to music;
Prestigio Digital Media Centre – unique all in one digital device which can facilitate all the computer and multimedia requirements of home or office users;
Prestigio LCD TVs ;
Canyon’s GPS Outdoor Trainer which provides a full-sealed waterproof (IPX7) and large LCD wrist watch device, as well as GPS navigation function with a physical training system;
Canyon’s Digital Multi Functional Pedometer which is a step counter, shows distance travelled and calories burnt and has a clock and radio!
Canyon Platinum Card – state of the art storage device from 1GB to 4GB
Canyon MP3 players.
– Have UK-based distributors lost or gained market share in Ireland since 2005 – and does the VAT issue give them a head start?
We believe that the UK-based distributors seem to have a cherry-picking strategy at the moment where they court the larger customers but this often means making less margin and offering longer payment terms. We have maintained a healthy growth rate in the last few years – ASBIS Ireland’s profits increased by 449% in 2005, turnover increased by 44% and the number of customers increased by 63% . We have placed greater focus on market intelligence, database marketing and marketing communications. It is absolutely paramount that we strive to offer our customers the best choice of products at the right prices.
– Which vendor accounts for the majority of your sales?
In terms of revenue our top 10 are INTEL, AMD, PRESTIGIO, SEAGATE, HITACHI GST, CANYON, PQI, LITE ON, MICROSOFT and SAMSUNG
– How would you describe the relationship between distributor and reseller in Ireland?
One of ASBIS Ireland’s USPs has always been combining extensive knowledge of our local markets with the primary objective of bringing value to both customers and suppliers. By focusing on developing and strengthening these relationships it enables us to continue to offer our clients individual components or complete solutions. Simply we have a unique pre and post sales service that differentiates us from other IT distributors.
By working closely with some of our key suppliers – Canyon, Prestigio, Seagate, ViewSonic and AMD we have created a suite of products that are unique and have generated strong demand for their innovation, style, quality and price. Canyon and Prestigio in particular have designed a number of products such as Canyon Packs, Canyon MP3 players and Prestigio LCD TVs that have extended the ASBIS portfolio and developed a strong brand awareness that has stimulated interest and increased demand for other products within these brands.
We have initiated a series of incentives including a loyalty programme to reward customers for spending with us. This has a series of revenue spend thresholds so that small, medium and large customers all have the opportunity to be rewarded for their business.
We liaise closely with manufacturers to introduce and stimulate demand for new products. Some of these include advertising, prize draws, special offers and bundle offers. An advertising campaign has been developed which is targeted at both trade and end-user publications. More focus has been placed on increasing pull-through from the end user so that profit can be achieved right through the supply chain. Adverts have been placed nationally and locally.
This has been complemented by product reviews in magazines such as Stuff and also with direct mail advertising. This coordinated campaign has helped to firmly establish ASBIS as a recognised IT distributor of most major brands. This has also been instrumental in creating the opportunity to broaden the ASBIS portfolio with recent agreements established with ViewSonic and Gigabyte to distribute their products.
– Can you tell us anything about your revenues/sales figures in Ireland over the period 2005-2006?
We are currently undergoing our annual financial audit, and figures for 2006 will be available in late February 2007.