PrintIT Reseller caught up with Jamie Brothwell, Print General Manager at Exertis
PrintIT Reseller (PITR): Can you briefly explain how Exertis’ print arm is structured and a little bit about your role within the business?
Jamie Brothwell (JB): Exertis is owned by DCC Technology and within the group, we have a number of technology pillars – IT, consumer, enterprise, mobile and supplies. I work in the IT pillar which is the traditional Micro-P business – the first technology company DCC acquired.
Our journey really started in 1984, with Micro-P, the first technology that we sold was print. If we fast forward to 2014, which is when I joined the business, our print business had kind of lost its way and we were struggling to make any money, to effectively justify why we were in print distribution. I was at Samsung at the time, and prior to Samsung I had worked at Midwich for eleven years and a lot of my work there was print-centric. Exertis spoke to me and said ‘we need to shake up our printing business, would you be interested in joining?’ and I joined as General Manager in 2014.
The first year was really just about understanding how the land lay and what the best way forward was. The plan was that when we got to the end of the first year, we would work out a three-year plan to move the print business forward.
We do operate on slim margins in distribution, but ultimately we have to pay the staff and make a small profit. My philosophy is very much ‘well we don’t want to get rich, but we need to keep the lights on’. Essentially, we turned a small profit in the first year that I was here.
PITR: What was the strategy to move the business forward?
JB: We had a very established retail business which still exists today, we’ve maintained that and even grown it in a challenging market. We had an IT business which was transactional print, but to drive the business forward we wanted to move into A3, into the OA market with brands such as Samsung, Lexmark and more recently Epson, with what they call their RIP business.
Selling products through our general sales floor wasn’t getting the traction that we required so we decided to set-up a specialist sales team, dedicated to selling to the traditional copier dealers who understood, lived and breathed OA.
Today we have four sales people in that team and five brand specialists – product sales specialists that align to brands, and they’re all customer facing. And then we have a ten-strong product management team supporting them.
Two years ago, we added three new members to the team, people I had worked with previously. And that really then ramped up the focus and really redefined our business to a point where we set up a satellite office in Norfolk. We’ve now got 14 people working out of that office. In February this year, we moved into a new purpose-built site which has capacity for about 30 people. We do have plans to expand further and I think we’ll have 18 people based there by the end of this year.
PITR: What was the impact of the HP/Samsung acquisition on your distribution agreement with Samsung?
JB: We don’t have the ability to buy HP products, but we continue to supply the Samsung branded products we always distributed, but we now buy them via HP. We are the only distributor of the original three that remain. I believe that Samsung branded printers will continue to be available for the rest of this calendar year but beyond that, they won’t.
PITR: The market landscape has changed dramatically in recent years. What sort of growth have you seen within the print division?
JB: The landscape has changed a lot over the years but we see it as an area we can still continue to grow in. We achieved 104 per cent growth in hardware in the two years (2015-2017) and are expecting to record a further 17 per cent this year. And that’s within a market which is somewhere within the region of five to 10 per cent down.
PITR: Where have you seen the most success?
JB: We have had a huge amount of success with the A3 business, we also inherited our Epson wide format printer business from sister company Computers Unlimited. We looked at that at a senior level within the business and we moved distribution of the Epson large format printers, ink and media business to the dedicated print team in Norfolk at the beginning of last financial year. That proved to be hugely successful for us and is an area we’re looking to develop further in terms of our service offering and wrap-around added value.
That kind of leads nicely into print services – we can offer an array of services including asset tagging, PDI, collection and disposal of legacy equipment, hard drive destruction, as well as basic network set-up, training. We also have 38 engineers nationwide.
PITR: Can you explain more about your print services offering?
JB: As an organisation we have a broad spectrum of customers. We have around 4,000 IT resellers through our IT division, we then have enterprise for example, as well as mobile, supplies and consumer. Ultimately within each pillar, a customer will have a daily contact and an account manager.
Our philosophy from a service perspective is that we can offer additional services to what the reseller provides themself, so at no point are we positioned as a direct operation or as a competitor to the reseller, or the vendor. We just complement their offer.
Our goal is that 20 per cent of our business will come from services by 2020. We’re currently on track for that – last financial year 13 per cent of our business came from services. Everyone talks about the need for services but the challenge is that whilst we have a tangible offering, there’s been a limited uptake. I can probably count on one hand the number of service opportunities we have pending at the moment.
PITR: You said you are looking to achieve 20 per cent of revenue from services across the whole business by 2020, what percentage are you targeting within the print division?
JB: If I do a very quick calculation, probably no more than five per cent this year, because we’re starting from zero, but by 2020 we want to be at 20 per cent or more – we aren’t just going to stop at 20.
PITR: What’s the biggest challenge within print distribution at the moment?
JB: The market has never been more competitive and the margins have never been tighter. Logistics costs are only going up, while margins are going down, so that is one of our biggest challenges.
In the main we operate on a percentage margin of our brand, the margin percentage hasn’t changed in the last 15 years, but the average selling price has significantly declined. The pound note margin available is getting less and less, so we have to diversify. The only way we can get around that is by offering enhanced services – do more than just shipping a box, because otherwise we’ll get to a point where we won’t be able to make any money. I think very much with print it affects us more than other technologies, because of the sheer size of the boxes we’re moving.
PITR: In addition to services, what other areas are you looking at in terms of diversification?
JB: Diversifying our technology offer as well is also key. We’ve had huge success in the OA space, we’re a very ambitious company with very ambitious people, and we’ve seen this fantastic growth over these past two years but I don’t want it to level out. We’re constantly asking ourselves: ‘how do we take this to the next level and offer something new to our customers?’
We offer complementary products such as 3D printers to our dealers, for example. We’ve also recently launched a new brand called Mayku. The Mayku FormBox, a simple to use and powerful desktop vacuum former works with any vacuum cleaner and a wide selection of different materials, enabling moulds to be made in minutes with no software or digital model manipulation needed. It’s an exciting new concept that brings a new dynamic to the market, providing a wide range of creative opportunities for educational establishments in particular. It’s a new talking point and provides the perfect accompaniment to 3D printing.
Then there is obviously scanners, looking at document management, document scanning and how that complements the whole print ecosystem as well. I think scan is the next wave, it complements our business very well.
The one other thing that I will mention that we haven’t touched on is finance and leasing options. We are looking at this the moment, and speaking to our brands about it.
As time has moved on, distribution is changing. If we look at the way people buy their technology, particularly in the OA space, it is customary to buy on lease and finance. Last year, Rik Hubbard joined the business as Commercial and Services Director for the mobile division. He joined from Samsung where he actually set up Samsung finance for copier dealers back in the day, he is supporting me in taking a similar proposition to our brands in the copier space.
PITR: When will that be available?
JB: This is something that we can actually offer today. It’s available now, like all of these things, it’s economies of scale. Essentially there’s nothing we can’t do within reason from a service capability perspective, but really it’s about people having tangible opportunities that we can actually move forward with.
PITR: In an ever-changing market, and continued consolidation what does the future hold?
JB: I think it’s an interesting time, and within this interesting time, I’m most comfortable sitting in a distributor. Distribution is a good place to be in the marketplace at the moment.
I think there are eleven print brands, at the moment and if you look at that versus say in the computing market, there are probably more print brands than there are computing brands, in a market that’s probably a tenth of the size.
My prediction is that we’re going to see much further consolidation. It probably won’t be on such a large scale as the last two deals (HP’s acquisition of Samsung and Apogee) as they’re both pretty much as high-profile as you can get.
I think we’ll see more consolidation of brands, more consolidation of resellers, the interesting thing will be if we see more consolidation of brands and resellers, because in the copier market it’s quite commonplace. But what we’ve yet to see is a brand acquire a reseller within the IT reseller space. That really would put a cat amongst the pigeons, but I could see it happening.