March 30, 2020

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HOME FEATURES › INTERVIEW: Andrzej Przybylo, AB/AT Computers Group

INTERVIEW: Andrzej Przybylo, AB/AT Computers Group

by Stuart Wilson, Wednesday 6 February 2013

AB Group is one of the largest IT and consumer electronics distributors in the central and eastern Europe (CEE) region. The company is one of the oldest distributors in Poland with its roots dating back to 1990. The company is now listed on the Warsaw Stock Exchange and in October 2007 cemented its regional credentials with the acquisition of AT Computers – a leading distributor in the Czech Republic and Slovakia. Channel EMEA interviewed Andrzej Przybyło, chairman of the board at AB/AT Computers Group about the company’s plans for 2013.

Channel EMEA (CE): What have been the major internal developments and milestones at AB in the last year?

Andrzej Przybyło (AP): In 2012, we have continued with a consistent double-digit growth that strengthened our position as un unquestioned leader in Poland, Slovakia and the Czech Republic. We owe it less to single business events than to our growth in all business areas, beginning with the development of our offering by streamlining our logistics process and improving our offering for partners. We are handling more and more transactions with a growing number of trade partners. Last year we recorded a growth of 16% in the number of customers served. Today, our customer base consists of 15,000 loyal trade partners and is the largest in the CEE region.

AB is among the largest distributors in Europe. In spite of the fact that the general economic outlook and the IT distribution market are tough, we still increase our market share. In 2011, turnover of the group exceeded US$1.2 billion and preliminary data for 2012 suggest that it is going to be another year with double-digit growth. Our subsidiary, AT Computers, is doing extremely well. At the time of the acquisition it was in third place in the Czech Republic and sixth place in Slovakia. Now, it has become an unquestioned leader in the Czech market systematically increasing its advantage over competitors, and in Slovakia it is now in third place. This proves we are strengthening our position in every market we operate in. This also confirms the success of synergy effects since the take-over of AT Computers by AB in 2007.

What we do is appreciated by the market, resellers and vendors. This is confirmed, for example, by the many awards we have been given. We have been honoured with the title of distributor of the year by Microsoft for two years in a row – 2011 and 2012 - and by HP in 2012.

Outpacing the market

CE: What changes has AB noticed in terms of market conditions in the countries it operates in?

AP: Despite globalisation processes, each market - even in a small region - should be analysed separately. One of the common traits is stronger position of the leading players and the growth of the gap between them and other players. If we take a look at growth rates the situation is varied. In the Czech Republic, during the last few quarters the market has been quite flat, even with a slight downward trend. Here, AT Computers is one of the few players to record growth. In Poland, the market was growing a few percent a year. In 2012 the Polish IT market grew by 4% according to IDC. In this period, AB recorded growth at least a few times higher, irrespective of the overall market conditions.

The landscape of the distribution market is changing. As we have direct contact with resellers, integrators and vendors we can observe all the ongoing changes. We carefully analyse every investment project and we make conscious decisions on expanding our portfolio with new product groups and services. We bet on those products and services that are potentially most viable – where we expect to see a constantly growing demand.

The company owes its results mostly to distribution of traditional IT equipment. The highest sales growth in the last quarter was recorded in such product groups, as: computer components up 44%, accessories up 49%, servers, mass storage devices up 63% and network devices where sales more than doubled.

CE: How is the role of distributor changing in both the consumer and business channel?

AP: One of the key tasks for a distributor now is to build trust between resellers and vendors. Operating between those entities, we often perform an advisory role, helping vendors to effectively reach the appropriate partner channel. We build our programmes to make them as attractive to resellers as possible. We implement our own ideas. Good relations with resellers allow us to verify their needs and go out of our way to meet them.

Today, the distributor is not only a trade partner, but also a business advisor. As we have contact with the channel and vendors, we are able to carefully monitor trends and changes in the market, which allows us to flexibly respond by adjusting our offering to customer needs. Because of this, the goods turnover is rapid, which translates into profits for both vendors and resellers.

CE: What do you expect to see in terms of distributor consolidation in the next 12 months?

AP: In the current market situation, it is hard to predict future developments and we cannot definitely exclude consolidation. From our point of view, the market has been undergoing a consolidation process for some time now, and the current balance of forces is the outcome. For example, three major players, including AB, are progressively increasing the gap against the other distribution companies, so consolidation is progressing normally.

Despite the fact that the market leaders enjoy similar revenue levels - excluding exports and sales to subsidiaries - AB is strengthening its regional position as the largest IT and consumer electronics distributor, growing at least twice as fast as the market.

Irrespective of the market conditions, we will continue with organic growth, but we do not exclude any acquisitions. Like every leader, we are ready for all scenarios and if an opportunity for consolidation comes up, we might take an active role. We are open to talks with healthy companies that will help us expand our business. We look for partners to join the AB Capital Group, which is strengthening its position not only in the CEE region, but also all over Europe. We are eleventh in Europe according to CONTEXT when it comes to revenue and we are still growing.

Enhancing channel sales

CE: What new services can we expect to see from AB moving forward? What more can you offer to vendors and resellers?

AP: We are offering full support to our partners from joint marketing through to opportunities to participate in training courses on varied topics – both technology and soft skills. We keep expanding our competence centre and we are trying to be a partner that encourages resellers to work more efficiently and educate them on how to improve their business even further. We focus on how they can enhance sales, what can be done in terms of logistics and technical support as well as providing assistance for their projects and tender bids.

CE: What sort of market growth do you expect to see in 2013 and how do you expect the margin situation to develop?

AP: According to research companies, CEE still has significant development potential. In my opinion in 2013 we shouldn’t expect such substantial growth as in previous years – at least from a macroeconomic perspective. We need to pursue our own ideas for future growth. This could include expanding the customer channel or our offering. We believe that a consistent strategy will allow us to continue to grow way faster than the market.

Despite the unfavourable pressure on margins, we think the phenomenon will stabilise in the longer term. The landscape of the distribution market is changing. Our insights tell us one thing: only healthy companies will win - those that are systematically developing and generating stable growth.

New distribution centre

CE: What are the biggest challenges and opportunities facing the distribution channel at present?

AP: Currently, the companies operating in the industry - if they want to develop - must seek interesting market niches and diversify their product offering. For most companies it will be important to optimise their operating expenses, allowing them to compensate for decreasing margins. The ratio of sales costs and overheads to revenues in AB Group was 2%, remaining one of the lowest in IT distribution in the CEE region. This cost efficiency is translated into stable profits and systematic growth.

Companies which have developed an excellent logistical background such as a modern central warehouse and implemented IT solutions that support management and sales processes are ready for the challenges ahead. For example, our plans currently focus on the construction of a modern distribution centre – one of the largest in this part of Europe. The execution of this investment in Magnice will allow us to streamline logistics processes even more and sustain the current internal growth pace in AB Group and allow us to develop new services.

Major construction work should commence in the middle of the year. We plan to launch and move to the distribution centre at the end of 2014 or start of 2015. The storage space will more than double to 27,000 square metres, and the cubic volume from the current 60,000 cubic metres to 360,000 cubic metres. Along with the launch of the new distribution centre in Magnice, we plan to broaden the scope of our services with logistical support, but we shall make that announcement at the appropriate time.

CE: How do you see the balance between traditional retail and e-tail changing? What does it mean for AB?

AP: In both cases – traditional retail and e-tail – what counts for the end customer are a few key aspects of the buying process: full knowledge of the product, a trusted seller that guarantees good product plus safe and rapid procedures in terms of delivery, return or warranty claims. In retail, it is easy – the customer goes to the store, takes a look at the physical product, gets support from the shop assistant, pays and leaves. In e-tail, on the other hand, we have the challenge of how to provide the customer with the knowledge about the product, how to quickly deliver the purchased goods to a convenient location, and how to be ultimately responsible for the satisfaction with the purchase.

We see that together with the growth of e-commerce, the emphasis is being put more and more often on e-tail. There is still a strong element of multichannel sales, where we see the online development of tools and communication channels, while the comfort of learning about the products, the actual buying process and the interaction with the shop assistant remain in a physical store.

As a distributor that closely monitors the changes in the market, we flexibly adjust the portfolio of our services to what is needed. We understand the needs of retail customers and we understand the needs of our partners – both vendors and resellers - so we have created a project called AB Partner Stores. It is a flexible tool that fulfils the needs of small and large trade partners allowing them to immediately launch online sales, and a comprehensive services package including logistics, financial services and technical support..

By taking over these processes – from guaranteeing full product descriptions, through to order handling mechanisms and rapid deliveries – we allow our partners to focus on customer support and developing their business. We have also created a platform that is a store dedicated to individual vendors where we also play a back office role for vendors.

As we try to offer comprehensive services, we are also developing an integration interface, which allows our partners to fully automate information exchange about products in AB’s portfolio, their current prices, inventory, order completion status and the many other elements necessary for large-scale sales support.

CE: What else should the channel know about AB?

AP: AB Group is one of the largest and fastest growing IT and CE distributors in the CEE region. The company operates in Poland, Slovakia and the Czech Republic, selling products from the largest global high-technology manufacturers to more than 15,000 trade partners – and that number is still growing. The portfolio includes more than 60,000 products from 700 brands from all over the world.

We recorded over US$1.2 billion of consolidated revenue in 2011. According to our estimates, we recorded over 60% growth in revenues during the last four years. This performance is the result of expansion of our product offering, operating efficiency efforts and close cooperation with resellers. We are known for our effectiveness – both in terms of costs and quality. We operate in a fast manner, in line with agreed conditions and we ensure strong support for our partners. AB is a healthy company that has been developing in a stable fashion for more than 20 years now – we are a reliable partner. Our motto is: ‘We keep our promises’.

DISTREE EMEA 2013

AB is participating at DISTREE EMEA 2013. Top distributors, retailers and e-tailers from across the EMEA region are invited to attend DISTREE EMEA 2013, the premier event for the regional ICT and CE channel, from February 19-22nd 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 2013 will also build on successful initiatives launched at last year’s sold out event including a regional awards ceremony. The ‘EMEA Channel Academy: 2013 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 2013 please contact fhemraj@distree.com quoting code DEMEA13

DISTREE_Events

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