Consumables: Easy Money

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ConsumablesEasy Money?
Peter Delagaye Manager Marketing SalesDespec
Belgium Brussels, June 15th 2004
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Agenda

• What are supplies?
• Why sell supplies?
• How sell supplies?
• Despec Solutions

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What are supplies?

• Consumables.
• to consume.
• To take in as food eat or drink up.
• To expend use up engines that consume less
  fuel a project that consumed most of my time and
  energy.
• To purchase (goods or services) for direct use or
  ownership.
• Products that will be used up after a certain
  period of time.
• Products that the user more or less continuously
  needs in order to benefit from the use of another
  product (eg. fuel, batteries, ink, paper,
  staples, tapes, ...).

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What are supplies?

• B2B supplies.
• IT-supplies.
• Printer supplies.
• Ink, toner, drums, etc.
• Paper.
• Storage supplies.
• CD, DVD, opticals, etc.
• Tape products.
• Office supplies.
• pens.
• batteries.
• staples....

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Why sell supplies?

• FACTS.

• The Paperless Office is as likely to happen as
  the paperless toilet.

People spread paper over their desks, not
because they are too lazy to file it, but because
it is a physical representation of what is going
on in their heads.(source The Economist).
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Why sell supplies?

• FACTS.

• The Paperless Office is as likely to happen as
  the paperless toilet

• Supplies are big business.
• on average 5x the value of the printer over the
  next 3 years.
• Big 5 achieved 170M in sales over last 5 years.

• Printer manufacturers benefit from
  supplies(source CharisCo Printer Labs).
• HP consistent growth 17 year-on-year.
• Lexmark supplies growth 33 97 to 54 03.

• Dell has launched printers supplies(source
  CharisCo Printer Labs).
• 2,000K units sold since launch Q2 Q4 2003.
• poor after sales support (BBCs Watchdog
  consumer program).

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Why sell supplies?

• Benefits.
• Low maintenance product.
• Fall-out rate inkjet cartridges HP lt0.5.
• No expensive technical service needed.
• Long term customer relations.
• Printer supplies 5x value/printer in lifecycle.
• Huge ROI in B2C environment.
• 2.500 euro stock can generate up to 7.500 euro
  (!!).
• On-the-spot buying.
• Emergency, failure.
• Cross-selling opportunities.

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Why sell supplies?

• Pitfalls.
• Customer is looking for easy solution.
• knowledge and support.
• single point of purchase.
• timely delivery.
• Assortment.
• Despec has 80 vendors in EOS.
• 90 of business still covers 1.000 skus.
• Service level is critical issue.
• stock.
• not only runners.

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Why sell supplies?

• Case Study 1 Potential
• Regular IT Reseller
• Total turnover 500.000 euro
• Revenue split
• Services (30) 150.000 euro
• Material (70) 350.000 euro
• HW (PC, LAN, etc) 60 210.000 euro
• SW (MS, etc) 25 87.500 euro
• PRN 10 35.000 euro
• Supplies 5 17.500 euro
• Potential PRN Supplies
• 35.000 x 5 175.000 / 3 58.000 euro per year

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How to sell supplies?

• Traditional Cost Model (per year)
• Purchasing
• 1 hour per day (0.125 FTE) 4.187 euro
• Logistics
• Warehouse (0.5 FTE) 16.750 euro
• Transport (0.5 FTE) 16.750 euro
• Rolling Material (1 small van) 6.000 euro
• Total 43.687 euro
• ROI
• Revenues
• 174.750 euro at 25 GPM
• 218.437 euro at 20 GPM
• 291.250 euro at 15 GPM
• ROI
• need 83.740 euro of purchases _at_ 5 discount to
  set off purchase cost
• cost per shipment (7 / day) is 25.64 euro

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How to sell supplies
Case Study 2 Profitability
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How to sell supplies (II)
Case Study 3
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How to sell supplies?

• When you are doing it yourself, you focus on
  running things.
• When you outsource, you focus on managing
  results.
• The Despec Dealer Station Wisdom

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How to sell supplies?

• Distribution channel

Functions

• Purchasing
• Logistics
• Sales
• Transport

• Administration
• Marketing
• ICT

Dealer Station

• Purchasing
• Logistics
• Sales
• Transport

• Administration
• Marketing
• ICT

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How to sell supplies?

• Despec business solutions
• Normal channel process
• Next day delivery at reseller warehouse
• Drop shipment
• Next day delivery at Point-of-Need
• Stockless
• Next day delivery at Point-of-Need
• On line order tool (Web shop, interfacing)
• Database content, pricing
• Despec assortment reseller assortment

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How to sell supplies?

• Despec business solutions (2)
• Full Service
• Next day delivery at Point-of-Need
• On line order tool (Web shop, interfacing)
• Database content, pricing
• Despec assortment reseller assortment
• Stock management Despec warehouse
• Despec assortment reseller assortment
• Options
• link between Despec ERP reseller ERP
• marketing support
• training

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How to sell supplies?

• Back Office benefits with Despec
• Purchasing
• Eliminate over- double stock (financial
  advantage gt interest-space risk)
• Less suppliers
• Less administration
• Less overhead costs
• Less mistakes (to err is human)
• Access to complete Despec assortment more
  sales
• Increase stock rotation
• Logistical
• Customer specific deliveries
• Belux coverage
• next day delivery

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How to sell supplies?

• Back office benefits with Despec
• IT
• Update database time consuming (Despec 1 FTE)
• Images available
• Multi-distri available (not limited to Despec
  only)
• Front office benefits with Despec
• Sales
• 100 focus on sales
• 100 access to Despec assortment (15.000 refs)
• category management
• marketing support

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Despec guarantees

• Deliveries
• A assortment (on stock runners) 98
• B assortment (on stock slow movers) 95
• C assortment (service product) 90-92
• Price
• stable pricing (official distributor)
• competitive pricing
• Content
• in house knowledge
• specialist
• extended product range

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Questions?