“We outpaced the two tier distribution average by a considerable multiple,” said Greg Tobin, general manager at D&H Distribution. “We had a really solid year.” It was not, however, out of line with recent D&H performance in Canada, although it is a couple of points above that recent average.
“The strong growth in 2016 was partly because of our extension of an incremental $80 million in credit in May,” Tobin said. “We really got rewarded for that. We also doubled down on evangelizing manufacturers’ messaging, enabling them with credit and programs.”
Tobin also emphasized that these sales numbers do not reflect low margin, low profit sales, and that the growth numbers are exceeded by profitability.
“When we communicate growth, it is always on the sales amount,” he said. “In terms of profitability, there’s always a downward pressure on the market, but our rate of growth of the bottom line exceeds the rate of growth in the top line. If I have 26 growth rate, the growth of profit will be more than that. Hardware still represents the lion’s sale of our business. Services are still a relatively small part. So we can’t drop our margins. We have to be prudent and grow the bottom line quicker than the top line.”
Tobin said that the strong growth was pretty much across the board, that it wasn’t just one or two things doing well.
Computers, including both notebooks and desktops, posted 58 per cent growth, although Tobin indicated the growth was coming from the notebooks.
“Desktops were much lower than notebooks,” he said. “Unlike last year, when desktops were in negative territory, this year they were back into positive, but it was still pretty flat.
System components, at 33 per cent, were another huge winner for the distributor, with video cards, cases and power supplies, processors, memory, motherboards and gaming-related products all doing well.
“From the perspective of the console business, gaming isn’t that robust, but in the PC business, it is still growing,” Tobin said. “Things like bigger screens and a more immersive experience enhance the experience. Resellers buy our product, take our feeds and use them to populate their ecommerce websites. So do smaller walk-in retail organizations.”
“Monitors were really solid, at 17 per cent,” Tobin said.
Tobin indicated that no segment really fell off from the previous year. Their poor performing segments, like point and shoot cameras and standalone GPS systems, are ones which have been undermined by technology advances, and have not done well for years.
Tobin also noted that they averaged about 40-60 new resellers every month, a slight drop from the year before, but still impressive. The number who exit is much small, typically in the single digits to low double digits each month.
“Many of these new resellers appear because when vendors like BlackBerry in the Knowledge Belt lay people off, some of them set up shop as resellers,” he indicated. “We want to make sure we are there for those people. We don’t charge them to set up a new account, while some of our competitors do.”