D&H Canada head Greg Tobin reviews what worked well for the distributor in 2017, and offers some previews for the year ahead.
D&H Canada has announced another year of strong growth. The small business-focused distributor has announced it posted growth of 21 per cent in their 2018 Fiscal Year, which ended April 30, 2018. D&H also sees positive signs in the tea leaves for the year ahead.
D&H has always built their business on smaller resellers – many of them are very small, even down to one-man shops – for whom the larger broadliners have seldom shown much enthusiasm.
“We still have a lot of net-new customers coming on board,” said Greg Tobin, D&H Canada’s general manager. “We want to be the Ellis Island of distributors, where we welcome all the new arrivals, not drive them away.”
D&H’s business model focuses on a more limited selection than the broadliners, but which has stronger applicability to the small business market. They also design programs specifically for smaller businesses, rather than do larger deals at low margins where smaller businesses get a less attractive price.
“Smaller resellers usually only buy from the larger distributors when they are running a great deal,” Tobin said. “Customers want to be loved and taken care of, and we are much better at that, which is why we get their regular business.”
D&H Canada’s 2018 growth numbers actually dropped from their 2017 level – which was 25 per cent.
“We took a bit of a dip in our second quarter, but annualized it was 21 per cent,” Tobin said. “We are currently running well above that this month, in the new fiscal year, and are back over 25 per cent. But we also know that one month doesn’t make a year. We had actually set our budget based on 18 per cent growth for 2018 and we beat that comfortably.”
Tobin emphasized that D&H’s expansion of their warehouse operations into Vancouver last year has positioned the distributor for stronger growth going forward
“We made those investments in the west coast, because we were very underpenetrated there, and we now serve 1000 resellers out of Vancouver,” Tobin said. “We had originally planned for 500. We are also significantly expanding the amount of business that individual resellers there do with us. Before we built that facility, we dd sell to the west coast, but it was mainly in rollouts, where we did well. Where we did not do well was ordering ancillary product that VARs would need for installations, because without the local warehouse, it would have taken 4-5 days to get them that product. Having the Vancouver warehouse has just catapulted that business.”
Tobin also stressed that even at ‘only’ 21 per cent growth in a sector where single digit growth is the norm, D&H posted growth in many industry categories that are far above average as measured by NPD.
“Server products were up 190 per cent,” he said. “Last year we brought on Roy Rivers, who focused on advanced solutions for us, and that led to a big increase. We also brought on HPE Enterprises. Servers for us are a two-hit wonder – HPE and Lenovo.
PC gaming solutions, accessories, and components was another category that showed hypergrowth at 170 per cent, continuing its rebound as more resellers add these products because the margins are higher.
“We have done very well with brands like MSI, ASUS, and Corsair,” Tobin said. “There is good disposable income there.” High-end graphics cards have also done very well [80 per cent], perhaps in part because of the bitcoin craze.
Monitors did well too, posting a 38 per cent growth rate.
One area showing slippage in 2018 was notebooks – even as desktops rose 35 per cent.
“Notebooks are starting to decelerate,” Tobin indicated. “The numbers were still positive, but they were down. We need to start a campaign educating resellers on the cost of doing nothing by not encouraging customers to move to Windows 10. Among other things, Windows 10 is simply better for security. That will be our next campaign.”
Tobin also said to look for more activity by D&H Canada in Quebec in the year ahead.
“We will be putting more emphasis on Quebec to increase our penetration there,” he said.
Overall, Tobin stressed that the year ahead will also focus on getting more out of their existing vendor base, rather than making major enhancements to it.
“In terms of vendors, we are where we need to be,” he said. “It’s all about optimizing what we have, to be able to take on more business and more customers.”