Value-added distributor Connector Systems aims for double-digit growth in Australia as a ‘bare minimum’, and looks for acquisitions to strengthen its presence in that market. But that is just one part of the story. Dale Smith, MD of the Kiwi firm talks to Reseller News NZ on how the company keeps ahead of the curve by adding vendors to its portfolio, value to its resellers and solutions for end-user customers.
Q: How does Connector Systems manage its business across New Zealand and Australia?
Dale Smith: We are currently one of the larger value-added distributors (VAD) in NZ, and we recently moved into Australia.
In NZ, the business started in 1978. So we are quite a long serving NZ company. The business has moved predominantly into VAD over the last five years. We have no ambition whatsoever to become a box mover, a large commodity add-no-value distributor.
We are very focused around building solutions and adding value to our customers – that is our resellers – to enable them to take good strong competitive technology offerings to their customers.
There are some technology areas that we are focused in. We have four pillars of excellence. The first is networking and wireless, which we are very strong in.
We do lots of work in education, from tertiary universities right through to primary and secondary schools. Not only that, we also work in the datacentre space. Networking and wireless contributes the biggest portion of revenues to the business.
We have another division that is focused on telco and security products. This involves lots of heavy, carrier grade products and IP security – so firewalls, packet inspection and all those products.
Our third area is in virtualisation and storage, which is where cloud and some of our new opportunities are coming.
Our fourth pillar is our traditional cabling and connectivity end-products. These are industrial, which we do still quite a bit. We make cable assemblies for NZ companies, either procuring them offshore or making them here.
Our sales approach to our resellers is that we have people who are subject-matter experts in our business across the pillars. They form a product management role and our sales people are tasked with managing accounts. When an opportunity presents they will bring through the right knowledge, the right value to make sure that our customers are getting the information that they need
We have got a good diversified business. We have got good strong people in each of those pillars, with good knowledge and good customer relationships, good vendor relationships. The business is well structured, in terms of what we offer to the market.
That’s NZ in a nutshell.
In April 2012, we bought an Australian distributor, Techplus, and we have since grown that two-fold. We are twice the size we were there than we were two years ago, in terms of revenue and people. Profitability is about the same. But we are really investing in that business to get some market share.
In Australia, we have similar pillars of excellence, but a slightly different vendor mix. We often carry vendors on both sides of the Tasman. But we are varying some in NZ and Australia that don’t match.
Networking and wireless continues to be a driver, and we are strong in virtualisation and cloud with Veeam being a good brand of ours in Australia. We are looking to upskill in Veeam so we are mirroring each other across both parts of ANZ.
In terms of size, we are at about 30 people in NZ. We have got 10 in Australia. That about 40 people in the group. We do mainly sales in Australia, and all of our admin and overheads are based in NZ.
Q: Explain your partner network in both countries.
DS: We have about 1200 active resellers in NZ. We trade on a monthly basis with probably 500 of them.
In Australia we have got about 2500 active accounts. The 80-20 rule applies there as well. We are probably transacting with 300 or 400 on a monthly basis.
Our warehouse is in Victoria in Melbourne, which is a really good strength for us. Traditionally distributor warehouses are in Sydney, so we really play on that. We get good support from the Victoria reseller base, with same day deliveries etc.
We split our business into north and south, and our sales team is split along those lines.
Resellers that are focused on always doing everything themselves, and not reaching out to people with knowledge – their days are numbered. I would encourage all resellers to partner with people like us.
Q: What are some of the larger trends that you have been noticing across your four pillars of excellence?
DS: There has been quite a bit of pressure in the reseller market at the moment. Our view is that it is hard to get good business at the moment. Everyone’s margins are under pressure. I would say that most people, including distributors, would be doing twice as much work for the same amount of money.
What we are continually doing, and we do really well, is making sure that we work with the right partners – resellers and customers. We partner and provide them expertise to enable them to position themselves better, in a competitive situation, whether it be in terms of value, technology or price.
Often they leverage our skill sets to take cost out of their businesses. We can do that because we have got the engineering expertise and that’s where our model works really well. The smart resellers - they have really picked up on it. And they are engaging really well with us.