New UK dealer services company nectere says it is looking to establish 20 delivery hubs across the country by the end of 2015.
Speaking to OPI at last week’s Spicers EFTOS event in Coventry, nectere’s founder and Managing Director Paul Musgrove (pictured) said he hoped to have as many as 150 partner members by that time.
Musgrove came up with the nectere concept in 2007, his ‘eureka moment’ coming on a Spanish beach during a family holiday. It took about three years for the idea to become a reality, largely because the technology to underpin the model did not exist at the time.
The group has now been fully up and running for about a year and already has 19 partner dealers with more set to join in the coming weeks. Musgrove has set a target to double that to around 40 partners by the end of 2012.
Nectere actually employs over 20 staff – six of whom are handling partners’ customer service – at its main offices in Birmingham. That sounds like a hefty payroll, but Musgrove insists that the business is already profitable.
The hub initiative is part of nectere’s overall mission to pool and consequently lower dealers’ costs. Partners in Edinburgh and Birmingham have already combined their delivery operations and discussions are currently under way to create hubs in the Glasgow and Bristol areas.
The two existing hubs rely on using one of the partner’s own distribution facilities, but Musgrove said he was also considering establishing nectere-owned warehousing in order to take further costs out for the group’s partners and improve the end-customer experience.
Nectere’s model is aimed at smaller dealers with annual sales in the £0.5-1.5 million range, very often started by entrepreneurs who, according to Musgrove, aren’t spending as much time on selling as they should – or would like to – be.
That’s where nectere comes in with its model that aims to significantly reduce a dealer’s administrative burden. Services include handling all purchasing and invoicing, providing a back-office system (a version of ECi’s Progress), customer service, updating product files, and group catalogues. ECi’s Acsellerate is also offered as part of the package.
Musgrove admitted that it can be challenging to persuade a dealer to handover purchasing responsibilities to a third party, but pointed to the advantages that the dealer gets in return. These include better purchasing terms with wholesalers (nectere is aligned to Spicers) and vendors and – interestingly – just a single invoice for dealers each month.
In fact, nectere not only handles purchasing from suppliers, but customer invoicing too. Nectere then consolidates payments directly into a dealer’s account.
Becoming a nectere partner does require total buy-in from the dealer; it’s not a question of just cherry-picking certain services. This commitment also includes rebranding the business to nectere’s colour scheme and livery, although a dealer’s name and independence are still maintained.
The ongoing stagnation of the UK economy has made the nectere model an attractive one for smaller dealers that may be experiencing credit and cash flow issues, says Musgrove. He noted that several members are now on a much sounder financial footing than they were 12 months ago, meaning they are in a position to actually grow the business rather than tread water.
Nectere has also helped dealers with exit strategies with partners already successfully selling their business both outside of the Nectere group and within.
Helping partners to grow is obviously in nectere’s interests because its own fees are directly linked to its members’ top-line performance.
Vendors like the concept as well, notes Musgrove. Nectere has signed several agreements with manufacturers and there is then a commitment by the group’s partners to push those brands.
Musgrove is still the owner of Birmingham-based dealer PS Office, although he is no longer involved in the day-to-day running of the business. PS, itself a nectere partner, often acts as a ‘guinea pig’ for nectere initiatives before they are rolled out across the group. The latest project that PS is piloting is a print brokerage system that will allow partners to offer instant quotes for custom print jobs.
The combined sales of nectere’s partners are around £10 million, so the operation is still a relatively small player in the grand scheme of things.
Nevertheless, it’s an interesting concept that is looking to safeguard the future of what is often considered to be a dying breed of small local dealers.
However, it’s a question of survival of the fittest, not necessarily survival of the biggest. If nectere can help these businesses reduce overheads, improve margins and be more competitive at the same time, then perhaps Musgrove and his team are onto something.