You’ve heard it once, you’ve heard it a thousand times – the only thing that stays the same is change. Many in the industry know or have heard of Supplies Network, the imaging supplies and equipment-focused wholesale distributor. Many also know there has been much change in the business printing industry over the past few years. What most people might not know is that there are plenty of changes underway for this highly efficient, well-run organisation as it not only adapts, but transforms and thrives in this challenging environment.
Well known in office products industry circles, Supplies Network specialises in IT supplies, equipment and data storage media and offers a national distribution footprint with distribution centres in St Louis (MO), Carlyle (PA), Dallas (TX) and Fresno (CA). The company has long demonstrated expertise in the category, pioneered innovation in the channel, and is often recognised as a leader in the industry.
Earlier this year, it announced an organisational realignment whereby Supplies Network’s parent company Distribution Management (DM) would be formally recognised and marketed broadly. Additionally, a sister company – DM Fulfillment – was established as a value-add fulfilment and distribution services provider to small and medium-sized manufacturers and marketers of products.
“The industry is changing, and fortunately we’re lean and agile,” says President Greg Welchans. “While we remain bullish about our imaging business and the market opportunity, we recognise there is significant consolidation.
“We feel we are well poised to continue to grow our Supplies Network business in a relatively flat market, and we are looking at adjacent opportunities in additional markets. We’ve recently restructured our organisation to support future growth and expansion.”
The company reports that its new sales division is thriving, currently well ahead of its established year-to-date sales goals. It seems the distributor entered new territory relying on its national distribution footprint and drop-ship expertise, but quickly expanded its capabilities into multichannel fulfilment. It is targeting businesses both within and outside the office products industry with the new division.
“DM has built a highly effective and efficient fulfilment and distribution company,” states CEO Sean Fleming. “We intend to leverage the decades of work and evolution in developing highly effective technologies, operations and a national distribution footprint.
“DM is positioned to capitalise on and continue to add value to the print and office products industry, but also provide a launchpad to many new ventures. DM, as our front and centre brand moving forward, represents a commitment to the markets we are in today through Supplies Network and DM Fulfillment, while also signalling a commitment to expand into new markets and channels.”
Welchans adds: “Today product marketers have many avenues through which they sell their products, but more and more they often begin with a direct-to-consumer, e-commerce sales motion.
“That direct-to-consumer model is a perfect fit for our existing infrastructure and the value-adds we offer. Next, as the product penetrates the market and sales expand, it may get picked up by a major retailer for its online store and if successful there, the retailer may then bring it into its physical stores. Those marketers need a fulfilment and distribution partner that can cover all aspects and meet the many fulfilment requirements of those major retailers.”
Likewise, Supplies Network is thriving and achieving revenue expectations. Like the broader organisation, the company is focused on growth within its core supplies business and product expansion through its current reseller base. It has long marketed its uniqueness as an imaging supplies wholesaler, but in recent years has focused on the managed print services (MPS) space and expansion into hardware and other product lines, leading to many successes.
The company indicates that its MPS business is well ahead of revenue forecasts and hardware sales are up significantly. It is also extending into new categories with products like coffee, seeking to diversify its product mix and capitalise on its reseller relationships in the OP space.
DM continues to invest heavily in people and technology, to not only increase efficiency, but also to improve the overall customer experience for both its reseller partners and their end-user customers. Recent projects include the development of a new website designed to simplify and improve sourcing for resellers, and changes to its sales organisation with the goal of improving on an already high service level.
The company is pleased with the new website and is getting positive feedback from its customers. The next phase, currently underway, includes improving the site’s marketing assets and developing new reseller marketing tools to help resellers grow their sales. Similarly, some of the fine-tuning of the sales structure is also deemed to be successful and is supporting growth into new reseller segments.
As mentioned before, DM remains bullish about its core business. Supplies Network continues to be recognised by the industry on many fronts – being named 2014 Distributor of the Year by TriMega’s INTEC Group, receiving the CompTIA Managed Print Trustmark and winning the 2013 Managed Print Services Association award for best infrastructure provider, to name just a few accolades. It remains committed to delivering on its value proposition to drive sales.
It is clear, given Supplies Network’s focus, that there are tremendous resources available to fuel reseller success in the imaging category. OPI interviewed David Concors, VP of Sales, and Monte White, VP of Product Marketing, to gain a better understanding of what they are observing in the marketplace and how they’re enabling dealer success.
OPI: How’s business?
David Concors: Business is good. Overall we’re on track to meet sales goals as well as most of the KPIs we set earlier this year. We feel confident that we’ll have a good year despite a challenging and competitive marketplace. We’re fortunate to have an experienced sales team with deep product knowledge combined with the most comprehensive imaging supplies offering in the industry. We’re highly focused on delivering value in this competitive climate and our sales results reflect that commitment.
OPI: How would you summarise that value?
DC: A highly strategic focus on the imaging category and the subject matter expertise we offer to our resellers. We specialise in drop-ship and stocking programmes that drive down costs, secure customer acquisition and enable customer retention. Our national footprint provides regional and national distribution with a highly predictable and consistent, best-in-class customer experience and the most knowledgeable sales force to assist our partners.
OPI: You mentioned it’s a challenging marketplace. What challenges are you experiencing?
DC: We’re basically in a mature market – organic growth is more difficult and most industry sources indicate it’s a flat market at best. Furthermore, industry consolidation creates a highly competitive environment. On top of that, HP’s changes limiting the number of ‘authorised’ resellers impact Supplies Network and many in the industry.
OPI: How has the HP change impacted Supplies Network specifically?
Monte White: Simply put, the biggest change is that we can no longer sell HP to resellers that are not ‘authorised’. While we’re not alone in this transformation, we do feel others have reaped greater benefits. This change has also put some demand on internal resources to manage the process, which of course has some opportunity cost.
But, as David said, we remain highly optimistic. We will continue to partner with HP as we always have in support of our mutual customers. For those resellers HP hasn’t approved or disqualifies in the future, we will support them every way possible with the balance of our other 70+ product lines.
OPI: What current initiatives are you working on?
DC: Our efforts are based around numerous initiatives. There are a few I can highlight. The first is channel diversification. We recognise the need to expand our reseller community. Strategies are in play to expand within our existing customer channels and well beyond who we do business with today.
Second is product expansion. Breaking out of the wake with new products is proving rewarding and educational. We are expanding SKU count and resources in several categories including printers and parts. Many still view Supplies Network as a supplies-only partner and we are beginning to make significant progress in these new markets.
Third and last is MPS expansion. We’ve continued investing in our MPS infrastructure and resources aimed at operating a best-in-class MPS model. Resellers benefit from the ability to source an all-inclusive, no-risk, wholesale CPI page and the option to pick and choose from an à-la-carte menu of services to support an existing programme. MPS is well outpacing our traditional transactional business and we intend to continue scaling at a rapid pace.
MW: On the marketing side of the business, we’ve been on a multiyear journey to improve our website. We’ve developed a new website from the ground up, focusing on the ease with which resellers can search and cross-reference compatibility for supplies, parts and other related items. Our main goal was to improve the overall user experience.
More recently, we’ve improved our marketing resources, allowing dealers to quickly and easily find all rebates, manufacturer information, programmes and promotions. We plan to continue the development of additional resources and tools for our partners which will be housed within our website.
OPI: You mentioned your MPS team. Any changes there?
DC: We’ve invested heavily in people and technology to build our MPS business and, as a result, our reseller partners are closing more deals and experiencing significant growth. The effort is paying off with MPS revenue up 35% over the prior year.
Furthermore, we’ve recently added a team of Printer Solutions Advisors to expand our value beyond MPS supplies and services. When dealers partner with Supplies Network, they benefit from an entire team dedicated to building their MPS practice, including the solutions advisors, contract support specialists and a full team of operations experts to help with every facet of on-boarding and managing a customer environment.
OPI: You also referred to added hardware resources. Can you elaborate?
MW: Hardware is a growth category for us. We’ve partnered with many major OEMs to be part of their overall programme and enhance our offering to our dealer community. Like MPS, we’re seeing that effort pay off and our sales are up significantly on both the transactional side and within managed environments.
With added staffing to bring a higher level of focus and marketing resources developed specifically to support the sales cycle, we expect this growth trend to continue.
OPI: What technology is changing or creating demand on the equipment side?
MW: We’ve talked for several years about in-office printing volume being flat because of a technology shift, including the internet, the cloud and mobile. From what we’re seeing, those trends are still impacting the industry along with other non-technology-related factors. But, the impact of those trends seems to be stable.
The biggest technology change with equipment is the growth of inkjet technology in office printing – specifically, new page-wide inkjet technology like the HP OfficeJet Pro series of MFPs. This technology offers speed and laser-like quality while significantly reducing the cost-per-page.
OPI: Thank you for the overview and best wishes for continued success.