As a new dawn breaks in Kiwi distribution, what’s next for Dicker Data?

As a new dawn breaks in Kiwi distribution, what’s next for Dicker Data?

Distribution giant favouring familiarity over flamboyance following landmark A$68 million acquisition of Exeed, embarking on integration plans with a strong sense of déjà vu.

David Dicker (Dicker Data)

David Dicker (Dicker Data)

Credit: Dicker Data

The new-look Dicker Data will operate aligned to tried and tested metrics of success in New Zealand, mirroring the model of growth in Australia with a strong focus on people, localisation and execution.

As the ink dries on a landmark A$68 million acquisition of Exeed -- first revealed by Reseller News -- the distribution giant is favouring familiarity over flamboyance in the months ahead, embarking on integration plans with a strong sense of déjà vu.

Shaped by the successful buyout of Express Data -- finalised for a similar price tag of A$65.5 million in April 2014 -- there will be no grandiose claims of market domination post-transaction, rather a quiet confidence that the proof will be in the process.

The blockbuster move will result in Dicker Data assuming second spot within an increasingly competitive and consolidated Kiwi supply chain, armed with the platform to “rival the largest distributor” -- Ingram Micro -- in the market.

Yet for David Dicker -- chairman and CEO of Dicker Data -- that is where the competition stops.

“We’ve never attacked Ingram and we wouldn’t be stupid enough to even try,” confirmed Dicker, when speaking exclusively to Reseller News. “But we’ve certainly weathered numerous price wars with them.

“Now this is going back to before most of the industry was even born but I remember the first year we had Compaq, we didn't make a dollar during the first nine months. We had to fight them head-on in a price war but those days are over and everyone is a little more sensible.”

In stepping away from competitive predictions, Dicker said the creation of a second ranked distribution platform guarantees nothing in the way of market share. Instead, energy will focus on executing a strategy centred around running the combined business in New Zealand aligned to the same metrics and set-up as Australia, underpinned by standout personnel in both companies.

“Our team is up for it which is the main thing,” he said. ‘We’ll just do our best and see where everything falls, like we always do because I don’t care about chasing number one.

“What I like about business compared to sport is that in sport, if you don’t win then you lose. Whereas in business, you don’t have that concept, you don’t actually have to win to get a satisfying outcome and I find that a much more attractive philosophy.”

The concept of ‘targeting Ingram’ -- as perhaps the media would like to phrase it -- is simply a non-starter for Dicker.

“If in due course we pull ahead of Ingram then that’ll be nice but it’s not really a focus,” he added. “Our focus is to run the company how we run the company, service our customers and vendors and execute correctly. That’s what is important.”

In taking control of Auckland-based Exeed -- viewed by many as a model of channel success in the Kiwi supply chain -- Dicker has combined the capabilities of local powerhouses on both sides of the Tasman, squaring up against global competitors in the process.

As a locally owned and operated distributor in New Zealand, Dicker acknowledged that Exeed shares many cultural similarities with the Sydney-based business he founded in 1978, specifically the distributor’s ability to “outpace all foreign rivals”.

The acquisition once again draws focus to the local vs. global dynamic playing out in the Kiwi market. In the local corner, Exeed, Duo -- acquired by Sektor in mid-2019 -- Soft Solutions, Chillisoft and Telegistics, plus Australian-owned Dicker Data, Rhipe -- snapped by Crayon in July -- and Nextgen. In the opposite corner, global heavyweights Ingram Micro, Westcon-Comstor, Synnex, Arrow, Exclusive Networks and Tech Data.

“To be honest, I don’t even know how they operate because I’ve obviously never worked for any of the global players or a big company,” Dicker stated. “Even people who have joined us from Ingram, it’s never something that we have even discussed.

“My approach has always been to formulate a strategy and structure, then execute against that and see where you land. That is a better approach that seeing what your competitor is doing and trying to figure out what to do from that.”

As history shows, Dicker is an entrepreneur at heart who has built a distribution empire on original thinking and simplified problem solving. No organisation can survive -- never mind thrive -- for more than 40 years by looking over the competitive fence.

“I have no idea how Ingram operates,” he confirmed. “I guess they would probably have more of a rigid reporting structure with all strings pulled from the global office -- that is a gigantic mistake in my opinion because you can run a big company without having to be that way. But I actually don’t know.”

Why Exeed?

Ask any New Zealander to cite the only certainties in life and chances are, the top three would rank as death, taxes and the All Blacks taking home the Bledisloe Cup.

Transfer such line of questioning to distribution and Dicker Data acquiring Exeed would no doubt generate a similar response given the relentless pursuit from Dicker and his team -- “after many attempts, over more years than I can count, we have finally got a deal done to acquire Exeed.”

With Dicker making no secret of his desire to engineer such a deal, this acquisition has always been on the table. Subject to years of industry speculation -- sometimes credible, other times nothing more than misinformed rumours -- completion of this transaction was a case of when, rather than if.

“We’ve always considered Exeed as too expensive in the past,” Dicker acknowledged. “Even though the valuation then was much less dollars than what we have paid, it was a much smaller company and we never found the value proposition justifiable at the time.

“But I guess Tony Butler decided that now was the time to do it. None of us are getting any younger and sometimes you get to the stage when you eventually think that you might as well take the money and leave the game.”

Founded in 2002, Exeed currently operates as the second largest distributor in New Zealand, with revenues of approximately NZD $380 million and full-year normalised EBITDA earnings expected to total roughly $15 million in FY21. In addition to NZD $310 million of revenue in the Kiwi market, the acquisition will also provide access to $70 million revenue in Australia.

Going forward, Justin Tye will be at the helm of the combined entity which houses an expanded arsenal of market-leading vendors which includes Apple, HP, Hewlett Packard Enterprise and Microsoft across commercial and retail sectors, plus exclusive local distributorships with Motorola, Ruckus and Webroot among others.

Specific to HP -- cited as the most coveted of vendors -- patience has paid off for Dicker in New Zealand, more than six years on from when the distributor officially kicked Kiwi operations into gear post-acquisition of Express Data.

“We don’t have HP here and that isn’t great given HP is our biggest customer in Australia,” said Dicker, when speaking to Reseller News from Auckland headquarters in May 2015. “We should have HP in New Zealand but we don’t… we’ll have to work on that and it’s a long process.”

Fast forward to 2021 and Dicker finally has HP -- recognised as a key contributing factor in finalising the acquisition.

“Nothing has changed in terms of ‘why Exeed?’ but I think it has in detail,” Dicker explained. “They’ve obviously gotten much larger as a business which is always attractive.

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