Consumables: Easy Money? Peter Delagaye Manager Marketing & Sales Despec Belgium Brussels, June 15th 2004

Agenda What are supplies? Why sell supplies? How sell supplies? Despec Solutions

What are supplies? Consumables. ‘to consume.’ To take in as food; eat or drink up. To expend; use up: engines that consume less fuel; a project that consumed most of my time and energy. To purchase (goods or services) for direct use or ownership. Products that will be used up after a certain period of time. Products that the user more or less continuously needs in order to benefit from the use of another product (eg. fuel, batteries, ink, paper, staples, tapes,...).

What are supplies? B2B supplies. IT-supplies. Printer supplies. Ink, toner, drums, etc. Paper. Storage supplies. CD, DVD, opticals, etc. Tape products. Office supplies. pens. batteries. staples....

Why sell supplies? FACTS. “People spread paper over their desks, not because they are too lazy to file it, but because it is a physical representation of what is going on in their heads.” (source: The Economist). “The Paperless Office is as likely to happen as the paperless toilet.”

Why sell supplies? FACTS. “The Paperless Office is as likely to happen as the paperless toilet” Supplies are big business. on average 5x the value of the printer over the next 3 years. Big 5 achieved €170M in sales over last 5 years. Printer manufacturers benefit from supplies (source: CharisCo Printer Labs). HP: consistent growth 17% year-on-year. Lexmark: supplies growth 33% ’97 to 54% ’03. Dell has launched printers & supplies (source: CharisCo Printer Labs). 2,000K units sold since launch Q2 – Q poor after sales support (BBC’s Watchdog consumer program).

Why sell supplies? Benefits. Low maintenance product. Fall-out rate inkjet cartridges HP <0.5%. No expensive technical service needed. Long term customer relations. Printer supplies: 5x value/printer in lifecycle. Huge ROI in B2C environment euro stock can generate up to euro (!!). On-the-spot buying. Emergency, failure. Cross-selling opportunities.

Why sell supplies? Pitfalls. Customer is looking for “easy solution.” knowledge and support. single point of purchase. timely delivery. Assortment. Despec has 80+ vendors in EOS. 90% of business still covers skus. Service level is critical issue. stock. not only runners.

Why sell supplies? Case Study 1: Potential Regular IT Reseller Total turnover: euro Revenue split: Services (30%) euro Material (70%) euro HW (PC, LAN, etc)60% euro SW (MS, etc)25% euro PRN10% euro Supplies 5% euro Potential PRN Supplies: x 5 = / 3 = euro per year

How to sell supplies? Traditional Cost Model (per year) Purchasing 1 hour per day(0.125 FTE) euro Logistics Warehouse (0.5 FTE) euro Transport (0.5 FTE) euro Rolling Material (1 small van) euro Total euro ROI Revenues euro at 25% GPM euro at 20% GPM euro at 15% GPM ROI need euro of 5% discount to set off purchase cost cost per shipment (7 / day) is euro

How to sell supplies Case Study 2: Profitability

How to sell supplies (II) Case Study 3

When you are doing it yourself, you focus on running things. When you outsource, you focus on managing results. The Despec Dealer Station ‘Wisdom’ How to sell supplies?

Dealer Station Purchasing Logistics Sales Transport Purchasing Logistics Sales Transport Administration Marketing ICT Administration Marketing ICT Purchasing Logistics Sales Transport Purchasing Logistics Sales Transport Administration Marketing ICT Administration Marketing ICT Functions End users Dealers Despec Vendor How to sell supplies? Distribution channel

How to sell supplies? Despec business solutions: Normal channel process Next day delivery at reseller warehouse Drop shipment Next day delivery at Point-of-Need Stockless Next day delivery at Point-of-Need On line order tool (Web shop, interfacing) Database content, pricing Despec assortment = reseller assortment

How to sell supplies? Despec business solutions (2): Full Service Next day delivery at Point-of-Need On line order tool (Web shop, interfacing) Database content, pricing Despec assortment = reseller assortment Stock management Despec warehouse Despec assortment + reseller assortment Options link between Despec ERP & reseller ERP marketing support training

Back Office benefits with Despec Purchasing Eliminate over- & double stock (financial advantage > interest-space risk) Less suppliers = Less administration Less overhead costs Less mistakes (to err is human) Access to complete Despec assortment = more sales Increase stock rotation Logistical Customer specific deliveries Belux coverage next day delivery How to sell supplies?

Back office benefits with Despec IT Update database = time consuming (Despec = 1 FTE) Images available Multi-distri available (not limited to Despec only) Front office benefits with Despec Sales 100% focus on sales 100% access to Despec assortment ( refs) category management marketing support How to sell supplies?

Despec guarantees Deliveries: A assortment (on stock runners): 98% B assortment (on stock slow movers): 95% C assortment (service product) : 90-92% Price: stable pricing (official distributor) competitive pricing Content: in house knowledge specialist extended product range

Questions?