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HOME FEATURES › INTERVIEW: Michal Ruminski, ABC Data

INTERVIEW: Michal Ruminski, ABC Data

by Stuart Wilson, Friday 3 February 2012

ABC Data is a major IT distributor in Central and Eastern Europe (CEE) with plans to expand its channel reach to more than 100 million people in 2012. With more than 20 years’ experience under its belt, ABC Data remains a dynamic and modern company with a clear expansion strategy. ABC Data is one of hundreds of top distributors sending delegates to DISTREE EMEA. Michal Ruminski, president of the management board at ABC Data explains to www.channelemea.com how the company plans to continue its development in 2012 and beyond.

Channel EMEA (CE): What does ABC Data hope to achieve from attending DISTREE EMEA 2012?

Michal Ruminski (MR): First of all, we are eager to once again meet with our longstanding friends and business partners. As is our tradition, we hope to make them aware of new services we can offer them at DISTREE EMEA. ABC Data is a leading distributor of IT hardware, software and consumer electronics in a region of Central and Eastern Europe consisting of seven countries – Poland, the Czech Republic, Slovakia, Romania, Lithuania, Latvia and Estonia. Altogether, our market comprises 85 million people. In 2012 the company will extend its reach to three additional countries: Bulgaria, Hungary and Slovenia, thus increasing our potential market to 100 million people.

The company cooperates with 16,000 resellers, supplying them with approximately 30,000 products from over 300 renowned manufactures. We also offer state-of-the-art online sales tools to our clients and are capable of filling orders in 24 hours. We believe that a developing company, such as ours, interested in extending its market share and strengthening its position in the region, cannot ignore DISTREE EMEA, which – in our opinion – constitutes the most important meeting venue for key players in the European IT distribution sector. In spite of the technological sophistication of the modern world, personal contacts still play a crucial role in conducting business. Many new contracts for ABC Data can be traced back to meetings held in Monte Carlo.

CE: What new technologies and products interest ABC Data most and why?

MR: In the coming months the IT distribution market will be dominated by mobile devices such as tablets, smartphones and ultrabooks. Manufacturers estimate that 4 million smartphones were sold in Poland in 2011, and this number is expected to increase in 2012. Another very promising niche – particularly in our region – is ultrabooks. Their price will continue to drop as the underlying technologies become more advanced and widespread, which should translate into increased sales. Finally, we expect to see growing demand for entry model tablets.

CE: What are the market conditions like in the countries that ABC Data operates in at present? How do you see them developing in 2012

MR: The outlook for the IT distribution market in 2012 in our target region is intimately tied to its macroeconomic situation. We find ourselves in a fairly comfortable position as the countries in question enjoy higher growth rates than the rest of Europe. In 2011 GDP growth in CEE countries was over 4%, compared to approximately 1.6% in the Eurozone according to IMF estimates. This situation should help us further extend our business activities. In fact, our plans for the coming months include regional expansion. Having established a presence in Latvia and Estonia in December 2011 we are now expanding to Bulgaria, Hungary and Slovenia. By the end of 2012 we will be present in countries with a combined population exceeding 100 million individuals. Our target region will comprise 10 distinct cultures, 10 legal systems and 8 currencies. We are also expanding our export profile – ABC Data already ships products to over 30 countries.

Colorovo brand expansion

CE: What are the three biggest issues and challenges impacting ABC Data’s business at present?

MR: In line with our expansion strategy, last year we set in motion a series of business plans which will continue to affect ABC Data in 2012. Following successful entry into the Lithuanian market - where our share is now 15% after a yearlong presence - and into Romania where we are currently the second largest distributor, in December 2011 we established a footprint in Latvia and Estonia. Both countries are highly interesting from a business perspective – Estonia in particular is known for its IT sophistication, its well-developed information society and the highest GDP growth of all CEE states.

Another important business challenge relates to our new proprietary brand named Colorovo. Introduced in mid-2011, it currently spans 300 printer consumables from top manufacturers including Canon, HP, Epson and Brother. Even though it has only been present in the market for several months, Colorovo has already become the top selling alternative brand among all printer consumables distributed by ABC Data. Its success has convinced us to further expand this project, bringing new product categories to the market.

Finally, we may be affected by the ongoing consolidation of IT distributors in the CEE region. We are keenly monitoring this process and picking out potential investment targets. In our view growth by acquisition represents an interesting alternative to organic growth, both in terms of scale and breadth of services.

CE: What is ABC Data’s current customer base? How do you plan to develop this in 2012?

MR: ABC Data is currently the leading distributor of IT hardware, software and consumer electronics in the CEE and South East Europe region. We cooperate with 16,000 resellers. Extending our customer base relies on a two-pronged approach. On the one hand, we continuously refine our portfolio and work to strengthen collaboration with product dealers, while on the other hand we also seek to attract additional vendors – such as Dell, TP-Link and Huawei - whose products are now listed in our catalogue. In 2011 we signed over 2,000 contracts with new clients in Poland alone. Communication with clients is supported by dedicated online tools. In this scope our competitive advantage relies on the InterLink system – currently the most popular business-to-business platform in the IT distribution sector, developed entirely by ABC Data. The system is capable of handling all stages in the transaction pipeline: placing orders, checking inventories, acquiring payment information and monitoring buyer credit lines, processing returns and distributing electronic invoices. It is deployed in all markets in which we’re present, with support for local languages and currencies. Over 90% of all orders placed with ABC Data are now processed by InterLink. Our logistics capability enables us to deliver products in 24 hours and we dispatch over 10,000 deliveries each day.

CE: What are the strategic business objectives for ABC Data business in the next 12 months?

MR: Our focus is on regional expansion and development of proprietary brands. We are also working to quickly strengthen our e-commerce channels. In Western Europe online orders account for approximately 10% of all retail sales, whereas in Poland the corresponding figure is 3%. Clearly, there is much room for growth in this sector.

In the fourth quarter of 2011 we entered into a partnership with Netia, a leading provider of online services in Poland, to set up a common internet sales point. We also license and actively support a suite of tools, which can be used to set up custom internet stores based on the InterLink system. In total, we currently supply products to over 300 such stores.

CE: How do you think the EMEA distribution channel will change and develop in 2012?

MR: We expect that the trends which we have been observing for several quarters will persist. As time goes by, more and more clients will turn to internet stores, which have been growing at a particularly rapid rate. In 2011 the optimal business strategy seemed to involve an online store combined with a network of localised sales points where the ordered products could be picked up. This model should dominate in 2012 as well, requiring distributors to provide full logistics and administrative support for such transactions.

We also expect to witness further consolidation in the IT distribution market, spurred by the continuing economic slowdown. This situation presents unique opportunities for the largest and most agile players, such as ABC Data.

Regional growth

CE: How confident are you about sales growth in 2012 and the sustainability of margins in ABC Data’s distribution business?

MR: Our target region is the fastest growing area of Europe. Analysts predict that the growth rate of the IT sector in CEE countries will exceed the corresponding GDP growth rate by a factor of two, in the short as well as in the long run. Further influx of EU cohesion funds should intensify this process by enabling governments to invest in public IT projects. IT expenditures are forecasted to grow by 7.8% in Poland, 12.7% in Romania and 15% in Bulgaria.

In 2011 there was strong pressure on reducing premiums due to significant imbalance between supply and demand. This situation has since abated and we expect to see higher premiums in 2012 compared to the previous year.

CE: How do you see the overall channel structure developing in your market? Is the role of the distributor changing and if so, how?

MR: The role of distributors is evolving. Vendors and resellers already expect us to do much more than merely ship products. We need to remain flexible and introduce new, cost-effective business solutions.

Not long ago the words ‘IT distributor’ evoked the image of an efficient large-scale box mover. Today, a competitive distributor, such as ABC Data, is – first and foremost – a strategic partner who exploits its extensive network and business expertise to help vendors establish and strengthen their own market presence, providing them with a selection of customized services, which include market analysis, price range placement, advice on marketing and sales strategies, active channel support, PR and marketing and efficient logistics,

We also provide VAD services that require in-depth understanding of technical and functional parameters and the ability to integrate basic products and services into complex solutions for specific clients). There is also a requirement to offer advanced financial and accounting support for vendors and clients - nowadays the distributor often doubles as a banking partner, risk manager and financial intermediary.

We also offer active distribution and sales support through innovative online cloud-based systems such as ABC Data’s Cloudlink - Europe’s first online service and product distribution platform based on Microsoft Windows Azure, developed by ABC Data. The past 20 years have been a period of extraordinary changes in the IT distribution market and the future promises to be even more interesting.


DISTREE EMEA 2012

Top distributors, retailers and e-tailers from across the EMEA region are invited to attend DISTREE EMEA 2012, the premier event for the regional ICT and CE channel, from February 7-10th in Monaco.

DISTREE EMEA gathers hundreds of senior executives from EMEA’s Information Communications Technologies (ICT) & Consumer Electronics (CE) volume distribution channel.

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 2012 will also build on successful initiatives launched at last year’s sold out event including a regional awards ceremony. The ‘EMEA Channel Academy: 2012 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 2012 please contact fhemraj@distree.com

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