September 16, 2019

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HOME FEATURES › INTERVIEW: Andrzej Przybyło, CEO at AB Group

INTERVIEW: Andrzej Przybyło, CEO at AB Group

by Stuart Wilson, Thursday 23 January 2014

Central & Eastern Europe distribution giant AB Group continues to drive greater efficiency into its operations and explore new business opportunities. With a continued emphasis on complete channel support and positive vendor relationships, AB is keen to extend its leadership position in the market. AB is one of hundreds of distributors from across Europe, Middle East and Africa (EMEA) that will be represented at next month’s DISTREE EMEA event in Monaco. Channel EMEA caught up with Andrzej Przybyło, CEO at AB Group, to find out more.

Channel EMEA (CE): What were the most significant business achievements for AB in 2013?

Andrzej Przybyło (AP): 2013 turned out to be a very significant year for the AB Group’s growth. In September, we revived the legendary Polish brand – Optimus – as a franchise network for small and medium-sized integrators. As a new member of the AB Group, it offers extensive knowledge and wide experience while engaging the best specialists in the Polish IT market.

The Optimus revival created a lot of interest. In the first few weeks after we bought the brand, a few dozen companies expressed their willingness to join the newly formed franchise network. The AB Group has also expanded its portfolio with the acquisition of Rekman Company – one of the most significant players in the toy distribution sector. And finally, we launched our own line of tablets under a new brand – TB Touch.

Last year, we also continued to expand our partnership network consistently as well as our product offering. This was possible due to the very close working relationship we have with suppliers of new technologies. Likewise, we have been continually improving our sales and logistic processes.

Nevertheless, our financial results are the demonstrable proof of our dynamic business development. Due to the high efficiency of our business model, we managed to retain a high market share in the Polish market, and we even increased our share in the Czech Republic. This has allowed for more effective and more comprehensive dealings with both our suppliers and our resellers.

At the end of the third quarter of 2013, the AB/AT Computers Group had achieved 26.7% year-on-year growth in revenues, an increase from PLN3 billion (US$980m) to PLN3.9 billion (US$1.28 billion). At the same time, the company’s EBITDA grew by 16%, from PLN44.9m (US$14.7m) to PLN52m (US$17m).

Rekman acquisition

CE: How important is expanding the business outside Poland to meet your growth and business development objectives?

AP: For AB, export is an evident source of revenue, but at the moment we feel it is much more important to utilise our logistic and financial strength by developing business in interesting niche sectors in Poland - as in case of the Rekman acquisition or in the home appliances and consumer electronics markets.

Our priority is to strengthen our position in the countries where we are already present - in Poland, Czech Republic and Slovakia. It does not mean however, that we do not want to expand into new, foreign markets. On the contrary, we would like to build safe and low-cost sales structures there and develop our position organically. As such, we are focusing on regions that can be serviced both logistically and by our customer service operations from our Polish location.

CE: AB has placed great emphasis on profitability in 2013. What steps has AB taken internally to drive this and how do you plan to increase your business efficiency even further in 2014?

AP: In 2013, we saw the results of many months work in this area. We are continually improving our efficiency – in the last quarter we managed to further reduce our SG&A costs to 2.4%, which is a level unattainable by our competitors. We managed to lower the conversion cycle from 40 to 36 days and our debt was reduced by more than PLN62m (US$20.3m). The results are also better as a result of the greater number of high-margin products in our product portfolio.

However, we still see room for improvement. Our aim is to retain our profitability at least at its current level, though this does not mean that it cannot be higher, which also seems possible. Our business is based on the consistent focus on optimisation of all our processes – both logistic and financial. We are always looking for solutions that are best suited at any given moment, so as to result in the lowest possible costs. This allows us to offer very attractive terms to our partners.

Long-term vendor relations

CE: How does AB approach the management of its vendor and product portfolio? How important is the profitability of a specific vendor? And how much emphasis is AB placing on new areas such as large appliances?

AP: We would like our product portfolio to be as wide as possible in order to satisfy the growing demands of our sellers and their clients. Currently, our offer consists of 70,000 products from 700 producers, which we supply to 16,000 partners in Poland, Czech Republic and Slovakia. These are mostly IT products, consumer electronics, home appliances, and products connected with mobile telephony, and since 2013, as a result of the Rekman acquisition, also toys.

According to experts, sales of toys in Poland are worth about PLN2.5 billion (US$820m) annually, which is divided between the producers and many distributors. Through the acquisition of Rekman, we would like to play an important role in the natural process of consolidation, which is inevitable in this market in the near future. We also think that the large appliances sector will grow. In 2013, AB recorded almost 100% growth in sales in this segment alone.

One of our key advantages in building relationships with producers is our extensive partnership network as well as the high competency and skills of our product managers responsible for particular product groups. Vendors often appreciate our reliability, our ability to influence the market, our fast response to changing market needs and our incredible operational flexibility. This results in long-term relationships with most of our vendors.

CE: How is the role of a major distributor like AB changing in an era of multichannel models? Are retailers and e-tailers changing the way they work with AB?

AP: When you look at our partners, as well as retail and telecoms operators there are also a number of small and medium-sized resellers and integrators who play a very important role in our whole model of distribution. They are more demanding than giants such as supermarkets or operators, as they have to be more flexible, efficient and faster in their operational activities. We would like to be the ‘one-stop-shop’ for them, meeting all their potential needs while still maintaining sensible margins on both sides. That’s why we are constantly expanding our product portfolio, increasing our number of vendors and improving sales processes.

In order to fulfill all these aims, we have implemented specialist tools, such as a warehouse management system (WMS) for comprehensive management of warehouse processes and improved the AB online platform, which now better fits the needs of both retailers and e-tailers alike.

Partner support

CE: Central & Eastern Europe is dominated by several large broadline distributors. How does AB make its channel offering stand out from competitors to ensure business success?

AP: As I mentioned before, we are constantly expanding both our portfolios of partners and product offerings. We are planning to open the most modern logistics centre in the region and we are focused on the continual streamlining of our sales processes. For the SMB market, we have implemented a fully automated ordering system. The AB online platform has been in existence for 15 years, but in 2013 we introduced a totally innovative version of this facility, created in close cooperation with e-commerce specialists, and this will definitely provide us with a competitive advantage for the next few years.

The new system offers automated adjustment of the user interface to the type and resolution of a device, making it possible to use from a desktop computer, laptop or tablet. There is also a wide range of tools supporting cross and up-selling processes, and others which are designed to increase customer loyalty. Partners using the AB online platform also have the possibility of selling through the Allegro website. This automation makes the sales processes easier and faster.

We are constantly supporting our Partners who want to expand their knowledge and improve their skills. The AB competence centre runs a series of training sessions, for products and technologies, as well as sales. We have also launched a TB Partner loyalty programme, where points collected by partners may be exchanged for different prizes or donated to needy children.

CE: Do you expect further M&A activity to reshape the distribution landscape in Central & Eastern Europe?

AP: Consolidation is an issue that has been discussed for a long time, but it has not been taking place naturally. The main players in the market have been growing faster than the market, resulting in smaller entities disappearing completely. I think that we should not expect any spectacular moves here in the near future. In respect of our M&A activities, we are looking for interesting niche sectors besides IT, which could fit our core activity and be easily amalgamated into our logistic and financial structure. As for foreign acquisitions, we are not planning any at the moment. Our current focus is on building sales structures in Germany, Austria, Switzerland and the Netherlands.

CE: How are you developing the range of value-added services you offer to channel customers?

AP: Our competitive advantage is built upon the basis of offering our partners services that creates added value for them. These include comprehensive logistical and financial services, certifications and training courses. In the last year alone, the AB competence centre assisted more than 500 companies. One of centre’s main aims is not only to share knowledge, but also to train practical skills in terms of improving sales techniques, business presentations or negotiating skills. This is possible thanks to the cutting edge technology we have available in our training centre, as well as the support of leading producers of IT solutions.

In 2011, the AB competence centre was the only facility in the EMEA region awarded by Intel for the successful implementation of technical training for customers using Intel server and vPro technologies. Then in 2012, the competence centre designed a programme of in-house workshops – the Advanced Technologies Academy - mainly for the reseller market and SMB sector.

Financial support

CE: What are the real advantages of AB’s scale in the market? How does it support your finance and credit offering to channel customers?

AP: The biggest advantage we have as a result of our economy of scale is the possibility to offer very appealing trading terms to our customers in various areas. Hence we have the largest network of business partners in Central and Eastern Europe, consisting of nearly 16,000 companies. Thanks to the large scale of our business, we can offer highly competitive prices and value added services such as training courses, certification and comprehensive logistics solutions.

On the other hand, we are also able to provide our partners with very attractive financial support. We are one of only a few companies that can offer such a wide range of financial services, giving our partners the freedom to choose what suits them best and in what form. Our credit policy enables those with whom we do business to maintain lower operational costs and ensure cash flow stability. And a company requesting credit that has an established market position can have it granted without any problem.

CE: What are AB’s top three strategic business priorities for 2014 and how do you plan to achieve them?

AP: This year, we would like to continue our work on improving our business efficiency through the optimisation of logistics processes and financial management, meeting the requirements of the market. In addition to this, one of the main aims for 2014 is to develop the Optimus network and Rekman, as well as the home appliances and consumer electronics sectors. We will be looking for as many synergies as we can find between these new activities and our core business.

And last but not least building our new logistics centre near Wrocław. It will be one of the most modern complexes of its type in this part of Europe. It will double our warehousing space and will be perfectly suited to the many different product categories offered by AB. Its establishment will definitely enhance the quality of our relationships with our partners as it will ensure even greater efficiency and faster order completion for all - from small businesses to the largest players in the market.

Channel EMEA is an official media partner for DISTREE EMEA 2014. Distributors and retailers attending DISTREE EMEA that would like to feature in a Channel EMEA pre-event profile article can contact news@channelemea.com for more details.

DISTREE EMEA 2014

Top distributors, retailers and e-tailers from across the EMEA region are invited to attend DISTREE EMEA 2014, the premier event for the regional ICT and CE channel, from February 11-14th in Monaco.

DISTREE EMEA gathers hundreds of senior executives from EMEA’s Information Communications Technologies (ICT) & Consumer Electronics (CE) volume channel. DISTREE EMEA is a powerful business platform for vendors looking to manage, build or launch routes-to-market within EMEA. From A-brand vendors to start-ups, the DISTREE EMEA structure and reach offers business benefits and powerful return on investment.

During the course of the three-day event, delegates take part in thousands of pre-scheduled one-on-one meetings with hundreds of vendors. Each year, hundreds of new distribution agreements are struck across the region as a result of business relationships initiated at DISTREE EMEA.

DISTREE EMEA 2014 will also build on successful initiatives launched at last year’s sold out event including a regional awards ceremony. The ‘EMEA Channel Academy: 2014 Awards’ will include more than 20 categories for vendors and distributors from across the region.

www.distree-emea.com

For more information on attending DISTREE EMEA 2014 please contact fhemraj@distree.com quoting code DEMEA14

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