UK dealer group Superstat has launched an initiative aimed at promoting the growth of independent dealers. Called Cadabra, the concept involves Superstat handling dealers’ back-office functions, including order processing, invoicing, sales and purchase ledgers, marketing, lead generation, online ordering, customer service and (optionally) delivery, leaving the dealer to focus on customer relationships and sales.
Reading the above, does the word ‘nectere’ spring to mind? It is certainly easy to see the similarities between Supertstat’s aims and those of the nectere group set up by Paul Musgrove in 2010.
OPI spoke to Superstat’s Managing Director Chris Collinson shortly after the news of Cadabra broke and he admitted that he was finding the comparisons to nectere “annoying”
“I have the greatest respect for Paul and what he has done – in fact, it’s so good that we are going to do something similar,” he told OPI. “But while I can’t hide the fact that the basic principles are the same, the concept is completely different.”
Collinson’s argument is that nectere has taken on “failing dealers” and has given them a “rescue package”. While Musgrove didn’t want to get into a war of words over this, he clearly rejected that this is what underpins the nectere model.
“The early adopters were struggling,” he admitted to OPI, “but this was because nobody else believed in our concept at the time and nobody thought it would work. Since then, we have evolved and grown, proved that the model does work, and now everyone is all over the idea.”
Musgrove also pointed to new partners that had joined nectere mainly as a vehicle to drive acquisitions.
Superstat wants to attract “vibrant” businesses to Cadabra, according to Collinson; those entrepreneurs that have reached a certain level, but are struggling to make a breakthrough because of all the extra systems and investments required.
“With our IT expertise and logistical set-up we can take away the traditional headaches an OP dealer has and leave them to grow sales,” Collinson stated.
The IT expertise he is referring to is the group’s SupermarketOnline platform that was developed to help dealers compete in the online space. That technology has been adapted for Cadabra, although Collinson was quick to point out that this didn’t mean an end to Supermarket.
“Cadabra is not intended to replace SupermarketOnline,” he stated. “They are completely separate businesses, although there is a relationship as SupermarketOnline is a member of Cadabra.” What this means is that Cadabra partners in a vacant SupermarketOnline zone will take on the SupermarketOnline business for that area.
The Cadabra initiative has been set up in partnership with Spicers as part of a five-year supply agreement in what Superstat called “an unprecedented collaboration” between a wholesaler and a dealer group. Quite what the word “unprecedented” refers to is not clear.
When nectere was set up, it had a supply relationship with Spicers but has since signed a five-year agreement with rival wholesaler VOW. Collinson declined to reveal the commercial details of the deal with Spicers, although he did confirm that the wholesaler does not have a shareholding in Cadabra.
“The agreement is the fruit of a 20-year relationship with Spicers and both parties are extremely comfortable with what’s on the table,” he said. “Both Superstat and Spicers have a shared vision of where the dealer community needs to grow.”
Having said that, Musgrove himself had a relationship with Spicers exceeding 20 years before moving to VOW in April, and it is questionable whether this Cadabra/Spicers agreement would have come about had nectere not changed wholesalers. Unfortunately, OPI wasn’t able to speak with Spicers’ CEO Alan Ball on this topic before this issue of OPI went to press.
Turning back to the functions that Cadabra will undertake for dealers, Collinson said that while lead generation was a component, no actual selling would be done on behalf of the dealer. The rest of the Cadabra offer is basically a take-it-or-leave-it all-in-one package, with one notable exception: delivery. Collinson recognises that this is a highly emotive issue for a lot of dealers and, although he believes that Cadabra will provide a more efficient system, partners can choose their own delivery solution if they want to.
Part of Collinson’s sales pitch for Cadabra is that it is essentially free to move across to the platform. Again, he wouldn’t discuss commercially sensitive information, but he said that pricing was not based on a fixed monthly fee.
Perhaps this is all wrapped up in the “unprecedented” part of the deal with Spicers.
While smaller dealers under £1 million ($1.6 million) will obviously be an important target group for Cadabra, Collinson believes there is something in it for dealers of all sizes. “We will provide additional resources to a small dealer and additional sales to a big dealer,” he said. Although whether larger dealers would be willing to hand over the running of their back-office functions is another matter.
Reaction from the UK dealer group community invariably included a comparison with nectere and queries as to the exact nature of the relationship with Spicers.
“The industry is undergoing massive change at the moment and the removal of costs from dealers’ businesses is a key focus with a number of similar developments coming to market,” XPD’s Managing Director David Langdown told OPI. “In my view there will be better solutions available and my advice to dealers would be to hold fire until they have had a look at them.”
Steve Harrop, Managing Director, Office Friendly, said: “There are a number of the smaller players who will be looking at this as a potential exit route or business-saving opportunity. Whilst Superstat state it’s a ‘model for all sizes’, I wonder who will be the ultimate takers.”
One must also question just how many “vibrant” dealers there are in the UK market at the moment, certainly at the smaller end of the spectrum. Might Cadabra find itself in the same boat as nectere when it started out?
Collinson says that there are already a number of leads in the pipeline and that he would be “pleased” with ten dealers on board by the end of the year. With an estimated 3,000 dealers in the UK, there would appear to be plenty of fish in the sea.
OPI understands that at least two other UK dealer groups are planning to introduce similar initiatives in the near future and it is certainly an interesting time in the UK and possibly in other markets too. In fact, so interesting that we’ll be covering this topic in more depth in November OPI.