In 1979, the aim of the distribution network was pretty straightforward: breaking down a manufacturer’s pallets of hundreds of products, down into bulk or singular units for mass consumption, along with all the elements that went into driving that capability to get the product to its destination.
Forty years on, that element still maintains its relevance, but has progressed beyond pushing boxes out of the warehouse to the customer front door, to providing a whole raft of services including financing and credit, professional services, training and support, lifecycle services and freight and logistics.
“I still think the core fundamentals of breaking down boxes and providing just-in-time availability is critical because people want things now, but it has evolved into providing services like finance and lines of credit; basic systems to make the supply chain more efficient; freight solutions to get things at a certain service level matched with a certain cost,” Ingram Micro Australia SVP country chief executive Felix Wong told ARN.
Since its inception in 1979 and through a myriad of acquisitions over the years, Ingram Micro has catapulted into a distribution juggernaut with operations in 52 countries, 125 logistic centres, turning US$50 billion in revenue during the 2018 calendar year.
In Australia, Ingram has about 580 staff with just under 200 in the supply chain facility, with the balance focused on go-to-market.
Wong highlighted the reliance upon having a strong culture and talent pool right across the business as being critical to its success.
“If you have great people that all think and do things differently with a different set of values and so on, you’re just going to have chaos. If you have everyone towing the same line and direction, not necessarily agreeing with each other all the time, but the same value and culture in terms of how they go about doing business and achieving success -- that is the key to being successful and that’s what I drive here,” he said. “We pride ourselves in our ethics and how we do business.”
As technology keeps evolving at a more rapid pace into new areas such as artificial intelligence, machine learning, robotics, cyber security and IoT, this gives way to new business models and areas of specialisation whereby a distributor like Ingram, finds itself right in the middle once more.
With a view to help its network of partners in taking these new technologies to a market that needs to get a grip on these new trends, providing financing, training and guidance throughout the entire sales and support process.
“How do I help my customers to leverage this technology and make some money on the way through. How do I up-skill myself and scale up quickly enough to get this avalanche of new technology coming to my reseller? It’s hard,” Wong said.
"Who’s got the money to invest in technical skills or education? That’s really what Ingram is bringing to the table as the next step. We’re investing globally in technologies like IoT and putting together solutions that we can give to our reseller partners and educate them.
“We’re building cyber security practises around the globe and buying cyber security consulting firms, taking that IP and using it to drive education in the channel and helping our resellers to up-skill to sell those solutions to their customers.”
Wong said the cloud sector has grown into a significant business unit for the distributor, since it launched the Cloud Marketplace over five years ago. The Marketplace acts an ‘app store’ for resellers to purchase as-a-service for their customers, and beyond that, it automates billing and management of the software for the reseller to manage their customer.
“That is a combination of having the products that are the building blocks for those technologies, having something for them to sell and as well as the education, consulting services and capabilities that we can provide them, to talk to their customers,” he said.
“We’re becoming inextricably linked to our partners. It’s a journey that we’re taking by building all these things, and once they start using your financial services or cloud platform, you are much closer linked to their business -- and it becomes more of a partnership.”
Most of Ingram’s investment and focus will remain tightly on selling solutions, particularly in complex areas such as cyber security, networking and data centres.
“When I look at where we’re going to invest, it’s going to be in these key areas of growth, and moving us further down the road of being a solutions distributor as opposed to moving boxes,” he said. “With the leadership team that we have and the people we’ve hired, we’ve got some great people that have fantastic experience and that’s what is driving success in this business.”
At one time, Ingram’s acquisition strategy was firm on other distributors in untapped markets in an effort to build scale and become the biggest technology distribution force.
Undoubtedly that scale has been achieved, and acquisitions in the past few years have been centred on building some sort of IP or capability for instance with the acquisition of Brightpoint came reverse third party logistics (3PL) capabilities and telco relationships; and the 2015 acquisition of Anovo brought about repair services while CloudBlue was central to IT asset disposal.
“Shipwire, DocData are all 3PL, ecommerce solutions and fulfilment partners. DocData is the biggest provider for clothing forward and reverse logistics in Europe. It’s not very IT, but it provides an infrastructure,” Wong said.
“A lot of these acquisitions buy us additional capabilities, which we then link in with our existing capabilities and turn into an additional service that we provide to the channel.”
There’s no doubt of the speed humps the distributor has faced throughout the years with the global financial crisis and challenges faced within its global SAP implementation.
“I think what we faced in Australia was an extreme challenge, but that says something else about Ingram, is that we’re a very committed organisation,” Wong said. “Ingram’s been very committed to the Australian market and we continued to invest to fix it, and get it right until we were right again. That took a number of years, a lot of energy and focus.
“That particular example shows a number of things about Ingram is the courage to continue and persist, but it’s also a responsibility to get it right because we’re a major part of this industry and we’re one of the key legs that keeps the IT industry in Australia going.”
Snapshot of Ingram’s 40 year journey:
- In 1979 husband and wife, Geza Czige and Lorraine Mecca were the duo behind a distribution company they named Micro D based in Southern California. The company achieved US$3.5 million in sales during its first year in business.
- It made its public debut in 1983 where Ingram Industries became a majority shareholder in 1986 after acquiring all the common stock held by its founders followed by the remaining Micro D shares in 1989. The company then merged with Ingram Computer, went private and was renamed as Ingram Micro D creating a billion-dollar computer products wholesale distributor.
- First global expansion was into the European market through the acquisition of Belgium-based SoftEurop in 1989.
- In 1992, the distributor launched its operations in Malaysia and Singapore
- In 1996, it split from the privately held Ingram Industries, and went public once again on the New York Stock Exchange, with revenues soaring more than US$12 billion.
- In 2004, through the acquisition of Tech Pacific, Ingram touched down on Australian shores, making a deeper commitment into significantly increasing its Asia Pacific presence.
- In 2009 the distributor focused on expanding specialist lines of business, buying New Zealand-based DC/POS provider, Vantex Technology
- In 2012 it embarked on its largest acquisition to date through the purchase of mobile device lifecycle services and distributor, BrightPoint.
- 2015 saw the distributor further anchor its Asia Pacific reach with its new Cloud Marketplace expanding into Singapore, New Zealand and Australia.
- In 2016 Ingram was the subject of an acquisition itself, when China-based, Tianjin Tianhai Investment Company, a subsidiary of HNA Group, purchased the distributor US$38.90 per share, placing a US$6 billion equity value on the entire business. This was not long after Ingram bought another distributor, Connector Systems, further building upon its ‘value’ in the market.
- At the turn of 2019, HNA Group has aired its intentions to sell Ingram, after seeking interest from private equity firm Apollo Global, but nothing further has taken place as yet.