Interview: Why smaller retailers are crucial to Terra

Forget the cars – another German company is aiming for ‘advancement through technology’ in the UK with its line of computers, monitors, workstations and servers. Wortmann AG wants to challenge the top tier 1 vendors with its Terra brand and help out the smaller reseller. To find out how, Dominic Sacco sits down with joint UK MDs Neil Jensen (pictured left) and Gavin Rose (pictured right)…

What sets Terra apart? Why should resellers be interested in a brand which is only two years old in the UK?

Neil Jensen: We are a strict reseller-only company and we never sell directly. That means our reseller loyalty remains high – we have over 10,000 resellers now across all of Europe. We opened the UK office in April 2013 and have gone from having no UK customers to having over 300 customers in the UK so far.

Gavin Rose: Our biggest challenge is to get our brand known in a very competitive marketplace where there’s a lot of aggressive tier 1s. But also that can be an advantage, as when people realise the brand is of good quality, they’re still not going to see it splashed across every etailer, advertised on Google or in every High Street outlet like some of the tier 1s are. So for a lot of the resellers, especially the smaller resellers who are perhaps more our bread and butter, that’s an advantage to them. 

Can you give us a brief insight into Terra and the history of the brand? 

Neil Jensen: Next year Wortmann AG will turn 30 years old. The two founding owners Siegbert Wortmann and Thomas Knicker set up the company in Germany with Siegbert’s wife Gabriele Wortmann, and they’ve built the company step by step. It’s a very family-orientated business – the three kids of Wortmann’s work in the company, it’s built from the ground up and is a very conservative-minded company – it’s not over-aggressive.

The goals of the company when it was set up was to try to make a successful IT business, but obviously not to be greedy or to challenge yourself too much with 50 per cent growth or something stupid like that. But rather, the idea was to try to be healthy. It’s fully privately owned and fully self-financed, so it’s sitting on a very healthy profitable cash-rich company, which is the result of sticking to those goals, and trying to target five to ten per cent growth year-on-year.

Tell us about your partner/reseller strategy…

Neil Jensen: We have two different programs. One is for partners, where we have a tier status. We also have something for our service partners, because if we’re doing on-site service agreements for desktops or servers, we actually work with the reseller to make them our service partner. So resellers have an opportunity to make their own money by selling services and doing them on behalf of us.

Gavin Rose: Where we’re really strong is with the smaller resellers. You know, you have your HPs and Dells focusing on the big deals and the big resellers; we’re targeting the smaller guys who basically haven’t been very well serviced in the UK for a long time. 

2014 was successful for Wortmann, with group turnover of more than one billion euros for the very first time. What was that down to, and can this increase further?

Neil Jensen: This year the company goal is to keep the one billion flat. Last year the Windows XP end of support was very strong for selling desktops. And now with Windows Server 2003 going away, we’ve seen some good server sales because people are swapping their servers now. This was a big influence on our revenue for last year.

Roughly 50 per cent of our revenues are from distribution components and 50 per cent are from branded business. We’re not going to do as many desktops as last year – no one is. Last year was phenomenal in the business desktops segment. 

What are your specific goals and plans for the UK? 

Neil Jensen: It’s a case of us trying to internally benchmark ourselves rather than externally benchmark ourselves. We’re setting ourselves a goal for 2016 to become a £25 million operation in the UK, which is reasonable for a medium-sized company.

If we benchmark ourselves against some of the successful players in the UK, our goal has to be to become a £50 million to £100 million company in the medium to long term. And that’s what we’re doing.

In 2010 about 15 per cent of your revenue was generated outside of Germany. What is that figure now? 

Neil Jensen: Overseas business (outside of Germany) is today about 25 per cent of overall revenue. In the UK it’s about 0.5 per cent or one per cent of the one billion. We’re so new. We’d very much like to grow that substantially.

As far as Wortmann goes, they’re quite conservative going overseas. The French and Swiss subsidiaries have been going for ten years now, so we’re celebrating that too. We also have offices in the Netherlands for Benelux, and Austria, and we’re just starting this year to open a Polish office. We do a lot of overseas business, we sell a lot in Sweden, Poland and Italy. Based on the fact they already have ten years’ experience working overseas in different countries, I think we can accelerate the UK faster than the other ones. 

Is your pricing more attractive than some of the bigger vendors out there like the Dells and HPs?

Gavin Rose: Not always. Some of their pricing can be frankly quite ridiculous. So we’re not always the cheapest, but in most of the cases we can compete and give resellers a similar price and a similar product, or a better product with a similar price. We give them a lot more flexibility too, so they have account managers they can talk to; if they have a problem they can get hold of a director’s number and talk to me or Neil directly. We can support them, give them collateral and demo units. So that’s where we can make a difference.

Which categories are you focusing on?

Neil Jensen: I would say overall we’re very strong in all segments across Europe. We’re building and selling a lot of desktops, workstations and Android and Windows tablets. Our business tablets are doing very well – we’ve just launched a brand new i5-based 11.6-inch tablet that is very much competitive against Microsoft’s Surface Pro 3. Our own LCD monitor range has 24-month advanced replacement warranty as standard.

Then there’s server and storage, not forgetting cloud, military and medical; also thin-client solutions and MultiPoint Server solutions which are ideal for primary education. I think we’re probably one of the top ten Intel server customers worldwide, and our budget for investment is over 18 million to build our own new datacentre cloud system. 

What does your UK operation consist of?

Neil Jensen: Right now we have nine staff and we’re growing organically based on what our needs are. One member of staff is a server centre manager, so we don’t have a warehouse as such – everything is shipped from Germany. But we also have a warehouse in the UK for any service or repair needs. Our office is based in Leamington Spa which is very central. 

Who are your current distribution and buying group partners?

Neil Jensen: We started in 2013 with Brigantia, and now we’re in the process of finishing signing with Network Group in the UK. We don’t use any distributor partners. Any reseller can approach us and we supply them direct.

Where do you see yourself this time next year? What’s next for Terra in the UK?

Gavin Rose: Our own aim is to have good strong healthy growth year-on-year. At the moment, as we’re fairly small, we want to double ourselves as a minimum target year-on-year.

Neil Jensen: The goalposts are very high and flexible because we have a big opportunity and a big green field in front of us to play with. Even with the desktop market going down year-on-year, I think there’s an opportunity for a tier 2 brand like Terra to get in there, because the tier 1 brands aren’t as strong in that market anymore. There are weaknesses we can take advantage of and take market share even in a decreasing market. Our business is only on an uptake, so that’s our big advantage compared to a lot of disties and tier 2s in the UK.

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