Is Tech Data Getting it Done Overseas?By Chris Gonsalves | Print
Riding a wave of growing revenues and renewed confidence among customers, Tech Data's Bob Dutkowsky tells Channel Insider he'll use the distributor's credit clout, a growing roster of VAR services, and continued global expansion to maintain momentum.
Q. If credit is so integral to the business, do the stark differences in the way credit and financing are handled in Europe and Asia affect Tech Data’s efforts abroad?
BD: Definitely. That’s part of the reason American companies often falter when they jump into the Asian market. If you go into these places and assume that because you’re and American company you can make it be like you are, you will fail.
In Europe payment terms are radically different than they are in the U.S. Here you get paid in 28 days. For the most part, we think like the U.K. We go to the U.K. it usually works well, we go to Australia it works well. Other European countries play by completely different rules. Take Spain or Italy or Portugal. They never wanted to be connected to the U.K. or anything that it stood for. They have a completely different set of rules, including having dinner at 10:30 at night. In some of these places, payment is in 130 or 150 days. By definition. That’s how business works there. So think about how much more turnover we have to have to cover the cost of that capital in those countries. It’s a completely different business.
Q: That said, Tech Data finally seems to be seeing some success in Europe, no?
BD: We finally got Europe figured out, but not without struggling. We stumbled there. We bought multiple companies and that’s the reason we didn’t do so well there for so long. We never integrated them effectively. So we had lots of overheard, lots of inefficiencies. We spent the last two or three years getting it right. We put the businesses together. We consolidated management structures and sales forces, and logistics and infrastructure. We put in a pan-European SAP system. Now all of our businesses there are connected. If you want to buy something in Spain and we don’t have it there, we can tell you that we’ve got it in the UK and we’ll get it to you tomorrow. We’re the only IT distributor that has that kind of pan-European reach and integrated systems there.
And that’s how we’ll continue, with that kind of focus. You may have seen that we have made an offer to buy Scribona in the Nordics. They are about a $1.2 billion a year distributor and we’re buying them. We were just under a billion in the Nordics. We’ll be consolidating our business and our credit lines. It’s the biggest acquisition Tech Data has made in 4-5 years.
All of that together is why you see that over the past 18 months, our European business has improved quarter after quarter after quarter. All of the infrastructure we invested in years ago is finally starting to deliver.
Q: Does that get the credit for the solid revenue numbers you’ve been posting of late?
BD: Much of the improvement you see in Tech Data’s performance is steady solid performance by our business in the Americas. Spectacular growth. I don’t want to make it sound like we’re just sitting still. We’re intent on growing over Ingram and Synnex in the Americas. We’re gaining share. And Solid improvement in our business in Europe. Add those two things together and you start to see Tech Data’s overall performance much better.