Wholesale changes

Martin Smith says leaving Office Choice was like leaving one of his children. But focusing on WCP Group Services will finally allow him to nurture the growth of his own baby – the consolidated warehouse

Martin Smith may still use the same desk and telephone that he has used for the last ten years, but since resigning from his position as CEO of Australian dealer group Office Choice in March to focus on his other role as CEO of WCP Group Services, his working life has taken an entirely new direction.

The main premise of his new venture, he says, is to build a service marketing organisation with a logistics warehouse at the back end to support independent dealers. This organisation is Buying Group Services, which is now part of WCP Group Services, and acts as a service provision company to the Office Choice group.

Plans

"The rationale is that, through Buying Group Services, we can offer all of the sales, marketing and service tools that an independent dealer group provides, as well as what we call a ‘consolidation in wholesale’ warehouse, which tries to take the cost out of the supply chain for both the dealer and the supplier." This, he says confidently, should enable his company to avoid the glass ceiling that so many dealer groups and franchise organisations around the world reach in terms of membership numbers.

The Appaloosa Wholesale warehouse in Sydney is the lynchpin of the plan. "Until this point, there was no centralised warehouse in Australia for independents where you could bring products in," says Smith. "For a dealer, transferring direct purchasing from manufacturers or suppliers into a consolidation warehouse like Appaloosa, allows them to buy a consolidated shipment on one pallet rather than have to order from 65 different suppliers – and free up time and costs in their business as a result. It is also better for the suppliers, because they can deliver one shipment to a major warehouse and we do the distribution to the dealers."

The idea of a national wholesaler in Australia is still a novel one. There have been no national wholesalers in the country – like Spicers in the UK and United Stationers in the US – since the early 1990s, largely because in Australia the suppliers are often subsidiaries of major multinational companies, and power players such as Corporate Express Australia have their own warehouses.

Already ten months down the line, the ever-upbeat Smith says he is "pretty pleased" with Appaloosa’s progress from a logistics point of view. The warehouse already has next-day delivery to Brisbane, Sydney, Melbourne and country centres in between. In its first 12 months, it is forecast to achieve revenues of around A$14 million ($10.6 million) to A$15 million. WCP Group Services, meanwhile, is expected to have a turnover of A$20 million.

It was in part Smith’s quasi-obsessive drive towards the consolidation warehouse that pushed him to leave Office Choice in the first place. "We struck reaction – probably a lot of negative reaction," he says. "Other dealer groups have been very sceptical about what we’re trying to do, because it does require a fair mindset change in how an independent dealer runs his business."

Decisions

A ridiculous workload was another reason. "I had basically been running both WCP Group Services and Office Choice for the last ten months. You can’t devote 100 per cent attention to one because the other is going to suffer."

Smith has also been managing director of Buying Group Services for three years. But he has been in the OP industry since 1990, when he moved across from the grocery/pharmaceutical sector to join Faber-Castell Australia as national sales and marketing manager. In 1995, he joined Office Choice as general manager, before moving to Blue Star, part of US Office Products (USOP) – one of the fast developing channel players in the US at the time – which had a very strong share of the Australian and New Zealand market. In his two years there, Smith was responsible for acquiring independent dealers for USOP and Blue Star. But when the former got into trouble and was acquired by Boise Cascade, he returned to Office Choice as managing director.

After such a long spell at the helm of the dealer group, he admits the decision to leave was tough. "I’ve been at Office Choice on and off for probably nine out of its 12 years of existence, so I have a strong emotional attachment to the 90 Office Choice members – I’ve seen their businesses grow and develop. To walk away from that to some degree is like walking away from one of your children."

But he consoles himself that it’s a win-win situation. "It’s a decision that means Office Choice can now – and has already – put in place a general manager who is probably more focused on customer relationships and can devote time to communicating with the members and feeding their concerns and opportunities back to WCP Group Services."

Smith has an enormous passion for and dedication to the OP industry. "My 15 years in the industry have been the most satisfying of my life. The industry is evolving into a similar level of professionalism as what I experienced in the grocery/pharmaceutical industry, and we’re now seeing the same sort of concentration of purchasing power with globalisation beginning to happen. It is exciting to be part of a dynamic environment. I love change – adapting to change, forecasting change and looking for the opportunities that are going to come out of it."

Push

His dedication – and knowledge – have allowed Smith to etch out a clear vision of the Australian dealer community going forward. For starters, he expects groups to work more closely together. "WCP Group Services, Office National and Office Products Depot would make a good association," he predicts.

And for his own company, his focus is clear. "We already have our infrastructure in place, so the next stage for us is a sales and marketing push to sell the services that we’ve got already, which include customer relationship management, internet technology, software and catalogues. And we believe that it is in these intellectual property services where you lock people into the warehouse system.

"We’re hoping that the warehouse will not only attract the 90 Office Choice members, 14 WC Penfold stores and 12 Office Connection dealers, but also some of the smaller independents in the country, and even Office National dealers. Selling the vision is our main focus going forward."

He is also working on building a franchise model over the next two to three years around the WC Penfold brand – now owned by WCP Group Services – in which the independent dealer buys into a franchise and trades under that name. There would be controls and restrictions in range and store layout, which is predetermined as it is in a fully fledge franchise operation such as Office 1, but the stores are basically run independently because they’re privately owned.

"This means that the guy that runs and owns the store is responsible for profit and is going to drive the business pretty hard," says Smith. "This would also allow independent dealers or private operators outside the industry to buy into a franchise as they would with a Krispy Kreme Doughnuts or a McDonald’s. That opportunity has not ever been available in the office products industry."

The grand plans do not stop there. Once Smith has got as many independents as possible buying through the warehouse, he intends to look at opportunities for direct import. "Moving forward, if we were going to take advantage of market trends and enhance opportunity, we have to have a warehouse where we can begin to look at direct sourcing out of south-east Asia."

But despite all these plans, he is still unable to shake off the legacy of Office Choice. "I don’t intend to walk away – hopefully I will have some involvement with the Office Choice group in the future. But right at the moment, we just need to concentrate an amount of time getting WCP Group services to where we need it to be."