© beatricee Electronics Production | November 10, 2015

"You can be too successful in distribution, but never successful enough"

Let me be frank; I've never truly understood why equipment manufacturers choose to add one more step for their customers by adding a third party distributor. However, I do understand when my lack of knowledge and insight makes an apology necessary.
Altus is a capital equipment distributor by its own description. I would like to call them an equipment manufacturers third arm. Covering the UK and Irish market for SMT, capital equipment for more or less every process, peripheral equipment, spares and consumables as well as service and support, it sound a bit more than “just” a distributor to me.

© Altus Group
In a conversation with Altus Group CEO, Richard Booth, I fired away my first stupid question; Why are you needed, can't equipment manufacturers take care of themselves? Yes, I asked that. You can probably see how I was squirming when listening back to it. But, on the other end of the line, Richard took my question seriously and answered rather upfront.

“We're used by the manufacturer as an extension of their sales force for a number of reasons; contacts, after sales service and support and some companies just don't want the expense of expanding their in-house sales force.”

He went on to explain something that should have been clear as day; “You can be too successful in distribution, but never successful enough.” The business of distribution can be a pricey one, and adding market shares is not only time consuming but also costly.

The company has been doing rather well over the last few years, growing consistently since 2012; both – together with their suppliers, but also on their own. Currently, Altus Group consists of two companies; Altus – which covers the UK and Irish market – and Danutek (with offices in Hungary and Romania) which is taking care of two countries, as well as Bulgaria.

Do you have any plans for geographical expansions in the near future?

“Poland is an interesting market for us. We had an opportunity to buy a small company in Poland with nice lines and the lot. But it did not feel right at the time.”

Mr. Booth tells me that the company currently employs twelve people in the UK. There is a connection between the number of employees and the company's turnover. So with more people you can expect an increase in the turnover, and profit as well.

“The company's model is focused heavily towards after sales services, eight out of our twelve people in the UK are focused on after sales support as we have found that this set-up fits us the best.”

Danutek is primarily taking care of corporate accounts, mainly German multinational companies. So – being a third arm for equipment manufacturers – seems to involve quite a deal of account management.

The amount of customers that Altus Group has on a yearly basis amounts to about 200, out of which ten are the company's key costumers, the remaining 190 buy 'bits and pieces'.

How is it that Altus have been doing so well for a number of years now?

“A good deal of luck. A lot of our success is down to one supplier, which for us has been Koh Young. There is nothing better for a distributor than having a tier three supplier that becomes a tier one supplier by its own efforts, or joint efforts.”

“We signed with Koh Young in 2003/4 when they had something like two machines operating in Europe. Now they have something around a 40% market share in SPI. Koh Young has recently developed, and are now very successful, with a new 3D AOI system. This product is following the same trajectory, as we say, with their now very well established 3D SPI system."

How much of that market share can be credited to Altus?

“Well, a reasonable amount I would say. I mean, the key for Koh Young was winning Bosch and Continental, and as a consequence they saw Flextronics and Jabil knocking on their door; and so on. Somehow they blew all the competition away. But as we were able to grow with them, they also won a number of accounts they would not have been able to get without us, so its turned out to become a successful relationship.”

Mr. Booth tells me that once you manage to get into a company such as Bosch, other companies – other suppliers – are rather interested in you too. Its kind of a stamp of approval.

“We've been around long enough to be viewed as trustworthy. And we work really hard to never loose a customer once we got them. To be honest, its a lot more expensive getting a new customer than it is retaining an old one.”
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