Big Interview Xtra: Jaime Carbó, CEO, ADVEO

Exclusive online content from OPI's June 2016 Big Interview with ADVEO CEO Jaime Carbó.

(The interview was conducted before the news broke that IT distributor Westcoast is acquiring certain assets of ADVEO’s legacy Adimpo EOS business)

OPI: [In relation to ADVEO’s integration problems with Adimpo] Did you have these issues in other markets apart from Spain?

JC: In Germany, yes, it was the same. In France, I don’t know if it was by luck or design, but we didn’t merge the two organisations and, in fact, they are still separate today – the people, warehouses, systems, everything is separate. That’s why we haven’t suffered so much in France in that business.

OPI: Your business plan has got four key parts to it. We’ve already touched upon the IT [see the main Big Interview]; there’s also the logistics infrastructure. Can you say a little bit more about that and what the plans are there?

JC: We could be very arrogant and say that we are a service company, and to some extent we are. But we essentially move goods from one place to another, so that means our logistics have to be, not necessarily state-of-the-art, but efficient. We have to find the right balance between automatisation and manual processes; we have to find the right model where investment, cost, return and service all function because you may have the best warehouse in the world but the cost of operation could be so big that you are becoming inefficient.

Finding that model will be a key priority for us over the next year. We will have to spend some money because our warehouses have not been very well invested in during the past few years. We need to catch up.

OPI: Is this in terms of your distribution footprint or your warehouse technology?

JC: The warehouses acquired from the Spicers have technology designed for the late 1990s. As you are very well aware, what has happened in our world in the past 20 years is huge, not only in terms of technology but also in terms of what is required. Every day our stock picking needs to be much more detailed, more into a small number of lines, final delivery to the end user and so on. Before it was more a wholesaler-to-reseller model and now we do a lot of business with end consumers, so that requires different picking and delivery systems.

OPI: Do you think you can be successful with just a pure wholesaler model, or could you be looking at a kind of hybrid wholesaler/reseller model?

JC: I don’t know any example that is not hybrid. Most of our vendors use a hybrid model. We have to understand that the world is changing very fast, and being monochannel is going to be impossible. The key is how you handle the conflict of channels, and that ultimately comes down to how you develop your pricing strategy to avoid, or at least minimise, this conflict.

OPI: Looking at your business plan, the projections don’t appear to show a great change in expanding the product portfolio over the next few years. Am I correct?

JC: As you said earlier, it’s not so much a strategic plan, but a business plan. The investments we are making now relate to a very operational, efficiency-focused project; the cake as opposed to the cream. We will more explicit at a later date about the strategic direction we will take.

OPI: When you look at your resellers and the way they do business online, or not as it may be, how key is e-commerce to their survival?

JC: E-commerce. That’s a word that means thousands of things and we tend to simplify it a lot. Any transaction done today involves e-commerce, whether you are talking about sending an invoice or a delivery note; it’s not just about buying a book on Amazon.

As far as B2C retail is concerned, I believe that any bricks-and-mortar retailer has to have a face online. That face can be transactional, but not necessarily. In physical retail we talk about ‘location, location, location’. In e-commerce, how can everyone have the best location on the first page of the search engines? They can’t. The challenge is how to remain relevant in order to reach your consumers, and you should not become obsessed with online, because not everyone will become a big player in e-commerce. There is still a good business you can develop offline.

OPI: How do you see your role in helping your dealers become more successful online?

JC: It is very important. We have an e-commerce tool, but this will be upgraded with the new ADVEO 2.0 platform going live very shortly. When we implement the new ERP system there will be a new e-commerce technology that will be much faster and more flexible. It’s part of our duty to our clients.

OPI: How do you view Amazon? A competitor, a potential partner, a platform for doing business on, or all of these in some way or another?

JC: Well, first of all it’s a client, so when you say the name we stand up and we say ‘thank you’! Secondly, is it a competitor? Yes, of course, but that’s OK; there is always competition.

How will Amazon develop its strategy in our category? That will probably depend on the kind of return it makes long term in this family of products. If they see that it fuels growth and margin, they will stay. If they see that that only gives them volume, volume, volume, then they will assess that.

Amazon, of course, is here to stay. In principle, we will continue working with them because we are a partner of theirs. But using their platform… probably not.