When one of Europe’s largest distributors, Cyprus-based Asbis, embarked on a strategic alliance to form what was then the first true BEE distributor in South Africa, Asbis Africa, the announcement was so low-key it barely registered with the local channel. But over the past couple of years, under the steady guidance of channel veteran and CEO Wade Calenborne, with some innovative distribution methodologies and with a carefully controlled growth strategy, Asbis Africa is starting to make its presence felt. Mark Davison spoke to Calenborne about how the formation of Asbis Africa came about, some of the strategies he’s put in place, and where the distributor is heading in the coming years.
You spent many years at Storgate before Asbis Africa, so what was the background to its formation and your move across?
The initial reason for starting Asbis Africa up was that, from a Storgate perspective, the group (MB Technologies) had absolutely no intentions of embracing black economic empowerment (BEE) at that moment in time.
The creation of Asbis Africa brought the balance that we wanted in this regard.
We had a long-standing relationship with Asbis in Europe and our strategic alliance with them allowed us, firstly, to bring about proper BEE – the first distributor to do this; and, secondly, gave us access to a broad range of products.
So we had the ability to capitalise on these aspects, both of which were very positive from a South African point of view.
But there was also a negative on your side?
Obviously, the first problem was my restraint of trade which lasted for about nine months. So, yes, we probably got off to a slower start than we would have liked – from inception to when we were able to really get things going.
But the growth has been where we want it to be. One of the biggest things behind Asbis Africa is that we have focused on growing it at the rate we want – not at what the market determines. We’re very wary of the accelerated growth that you always see with a new distributor in a good economy.
You can go back as long as you want: when the economy is thriving, distributors mushroom; then a couple of years later, when the economy slows, there’s big consolidation again.
Anyone could have got it right and been a big distributor over the past couple of years, if you didn’t then there’s a serious problem with your business.
We’ve adopted a controlled growth strategy during this period [of boom]. We don’t do business just for the sake of doing business – we’re here for the long-run and we’re comfortable with the size we’ve attained.
And this is a strategy we’ll continue with – it has never been our intention to become a R1-billion company overnight.
So how have you managed Asbis’ growth?
The way we’ve done it is to split the business into three key areas. Firstly, we have a focused division selling PC components, or building blocks; then a retail division, where our own inhouse brand, Canyon, is doing exceptionally well due to our ability to control the flow of product into the market; and, thirdly, we have a focused storage division – Odirile Storage Distribution or OSD – which specialises in supplying storage based components and working with a select group of resellers that have the necessary skills to add value in the small to medium storage market place.
The whole idea behind this is that retail, with the whole convergence trend, needs a special go-to-market strategy that is very different from components and selling storage. That’s why we’ve kept the three silos separate.
Likewise, we have a different sales strategy for storage. There are longer sales cycles in storage, there’s the whole solutions aspect to it.
This also provides real focus for our storage vendors such as Quantum and QLogic. So we’ve kept it separate and we go out and target the right resellers to add value to these products.
On the components side of the business, we won’t sell competing products within this division.
Our philosophy is that we’re here for the long-term so we look for a product where we think there’s an opportunity and where we think we can add value and show real growth in the region.
So there’s no overlapping products at Asbis?
Well … on the disk side, we’ve got Seagate which we’ve always done, but we brought Hitachi on board where Seagate used to have a gap – in mobile drives, smaller drives, only in the interests of our customer base.
Seagate has now come to market with product range to fill this gap, so we will be re-evaluating the situation in the short term.
We get access to a lot of product through Asbis and what we try to do is identify what is best for our customer base and where the opportunities are.
If we feel that a vendor has the right product and the right strategy going forward, but either they’re not represented in the region, or feel they’re not represented to their full potential, then we’ll take a look.
An example of this is ECS with mother-boards. We partnered with them and they’re now well-positioned as one of the top three suppliers in terms of customer growth since we took over. Kingmax is another vendor we’re doing quite nicely with.
We chose to work with AMD and not Intel because we saw an opportunity with AMD – they only had single-digit marketshare in South Africa.
As everyone knows, AMD has made huge strides in the last two years in terms of its technology and this has been healthy for us. It’s been good for both of us.
Once we embrace a vendor, we nail our colours to their mast!
You also have a specific philosophy when it comes to staff?
We focus on making sure we’ve got great people who can add value and provide good service. That’s what creates the differentiator between us and all our competitors.
Salespeople that know what they’re doing, that can provide value to the customer, and who know they can back this up with their service levels.
This is the backbone of the growth that we’ve experienced.
I think everyone underestimates the value that good people bring to an organisation – all the way through.
I’ve always been a believer in this and I think the biggest mistake a lot of current distributors make is that they go for the lowest cost-type sales people just to have more people manning their phones.
I believe this irritates customers more than anything, because inexperienced sales staff can’t really add value over the phone. We’ve taken a concious decision to hire people who have spent time in the industry.
Sure, they may cost a little more in terms of salaries, but it does pay back – customers are happy and many of them have commented on this being the way to go. They trust the people they’re dealing with at Asbis.
You’ve got to remember that when you’ve got an economy that’s flying – and along with it IT – a lot of resellers who weren’t in the industry suddenly spring up.
Many of them don’t necessarily have skills in certain areas and they really need salespeople or product managers who are on top of their game when it comes to their products and markets.
And you concentrate all your service and skills in your Midrand office?
We’ve chosen to be based in Johannesburg and not establish branches anywhere else for a simple reason. If you look at the infrastructure involved in having offices around the country … renting premises, the staffing, the security, moving stock around … consider the costs.
Then add these costs to your customer service requirements of logistics and warranties. Why go to the extra expense? So, rather than spend vast amounts of money on branches, we decided to spend more on delivering on our warranties and logistics.
From Johannesburg, we offer our customers exactly the same service they would have recieved from a branch office in any of the major centres – probably even better.
We’re happy to deliver to our customers, and we’re happy to collect any warranties from customers outside of Gauteng.
I think that our focus on this area of the business is important – and will be even more important in the future. At the moment, people don’t really have to offer great service because the market is running. But, when the market turns, it’s going to be a differentiator for us.
Customers are going to be a lot more specific about the value-add they’re getting; does the salesperson know what they’re talking about? Will they get delivery? How difficult is it to sort out a warranty issue?
Another thing about growing too fast and becoming a monster-sized, broad-based distributor: how long does a customer wait in line? How long does he wait for a delivery?
That’s not what we want. We want the customer to walk in and then walk out.
Ten percent growth does not necessarily mean 10% more profit. And a lot of people think that 10% growth doesn’t add any cost, this is not always true. Just ask some of the bigger disti’s.
And if you’re not going to make more money, then why strive to chase more business? It is important for us to be profitable to sustain our customers business in the long term.
Obviously, vendors chase for more every year, but you have to find a balance on the vendor side and ensure that you’re not trying to over-achieve just for the vendor.
Vendors chase revenue, but if you can show them that revenue isn’t everything, and the investment in the brand is more than just sales it’s also the service and warranty that comes with it, it’s a win win situation.
Asbis also offers an online ordering facility?
That was one of the nice-to-haves when we started the business. Asbis developed a system called IT4profit, a B2B e-Exchange which has enabled it to create its own community of customers, suppliers and value-added service providers.
The system gives complete visibility from the vendor to the customer as to stock availability, pricing, all the way through to when stock is shipped, where it is and how long it will take to reach your warehouse.
From a logistics perspective it is brilliant. It has all our products and all their specifications, but it is the visibility all the way through from vendor to customer that’s really amazing.
And how many of your resellers are using the system?
Not as many as there should be, which is a bit of a contrast considering the industry we’re in.
An interesting fact that we’ve found is that there are resellers who will do everything online and there are others that will do nothing online at all. You don’t find occasional users.
Usually, resellers who have been in the market for a long period of time will still phone – these customers place emphasis on the fact that our sales team have value to offer over the phone.
It is the newer guys who use the online services a lot more. Guys who have been resellers for a year or two, a lot of the younger guys who seem to be a lot more comfortable online than older guys who are pretty set in their ways.
Also, we find that its the smaller resellers who go online – the larger resellers usually have a person responsible for purchasing, so they don’t seem to bother.
But the small guy, running around delivering all day, gets home at 6pm, goes online, places his orders and then can track them all the way through to delivery the next morning.
I must admit, though, that I do find it strange that a lot more resellers don’t make use of the online system, especially from a time-saving point of view.
Do you have any regrets leaving the corporate environment for a smaller distributor like Asbis?
I’m extremely happy that I made the move when I did. Being part of a big organisation is great, but it’s nice to have the flexibility that a smaller organisation allows.
I think we’ve created a model here at Asbis that is flexible, of such a size that we’re still comfortable, and with a superb team of people who have worked with each other for a long time.
We have the ability to be flexible from a customer standpoint and make decisions on a daily basis rather than wait for board meetings.
We can move as the economy or the market moves and that’s where I found working for a big group difficult – the time it took to get things done, to have a decision made timeously.
What are your plans for Asbis over the next 12 to 18 months?
Our focus will continue to be around the brands of Seagate, AMD, ECS, Canyon, Kingmax, QLogic, Quantum and Prestigio amongst others. The market acceptance around these products has been great for us and we aim to build on our current success by continuing to address niche markets.
We will be adding Hitachi Data Systems’ new modular disk-based products to our storage offerings which will round these off pretty nicely.
This combined with our sole distribution of QLogic’s fabric and connectivity product’s and the Quantum tape and disk backup ranges.
On the components side, there’s not a whole heap that we’re missing, but I suppose we will look at one or two things in this area.
I’m very happy with the agencies that we have at the moment – we certainly don’t want to increase the number. We’ll probably look to consolidate where we are and show the necessary growth over the next 12 months that we’re happy with.
Obviously, there will be external factors that could change which way we go with the vendors that we do represent, and where vendors that we don’t represent may go – those that may feel they’re not being properly represented now.
We don’t go out of our way looking for vendors, but it’s a fact of life in our industry that they’re constantly looking at additional distributors.
We are at a point where we need to look at our operations, we do need a few more people, so there’s going to be controlled growth in staff, in revenue and in our customer base.
I see Asbis possibly getting to the stage in the next 12 to 18 months where it gets to its ideal size, where it reaches the magic number of profitability. From there we’ll manage all aspects of the business in the interests of adding further value to our growing and supportive customer base.