New brands, sizes and markets – growth at Deldo a three-pronged approach
During the first couple of months of 2012 Belgian firm Deldo has, like others active in the European tyre wholesaling scene, observed that this year may be different – more complicated – than the past couple of years. However the Antwerp-based wholesaler is not unduly concerned; during a recent visit, Deldo’s international sales and marketing manager Rutger Veerman discussed the company’s growth plans for 2012 and beyond.
“This year will be a ‘special’ year,” Veerman predicts. “People are being more careful, even with summer orders. They are placing smaller orders, such as 500 pieces and then repeating this ten times, rather than making one single order of 5,000 pieces. People don’t seem to be ready to take large amounts of tyres at the one time – the opposite of what we saw a year ago.” Yet in spite of such market caution, the Belgian company reports positive developments are occurring on all fronts at present. The sales and marketing manager says sales have boomed over the past decade and continue to be strong. “Our sales are only limited by physical capacity. Now we ask ourselves – how can we grow?”
One means of growth, he elucidates, is to reduce dependence on physical warehouse space. “We are doing this by increasingly dealing in direct shipments from factories in China to our European and global customers. We started with this system two or three years ago but its uptake has been increasing in the last year. Direct shipments are an added value service we offer our larger customers; there is a price advantage in direct shipments from the factory. Through our growing use of direct shipments, the warehouse here is becoming more dedicated to specialist and just in time deliveries.
“Orders coming into the Antwerp warehouse are decreasing and this trend will continue over the next two to three years,” Veerman continues. “The trend is that our bigger customers make large pre-orders that are supplied direct from the factory, and we take care of all support, communication and invoicing, and then orders made during the season are supplied directly and speedily from our stock in Antwerp. We offer a mix – the best conditions and prices offered by the two systems.”
Direct shipments are organised by Deldo’s own sales office in China. The operation employs eight staff who, in addition to this role, also serve as a means of daily communication with the factories that supplies the wholesaler’s private brands; furthermore, the Chinese office has its own sales markets, such as South Africa, Australia and Japan.
New options through additional private brands
While Deldo, like all tyre wholesalers, also deals in premium products, its strength lies in its private brands, which account for almost half the company’s unit sales. European consumers may already be familiar with the Belgian firm’s five established brands – Wanli, Fortuna, Minerva, Roadstone and Rockstone – and last year Deldo introduced a sixth private brand.
“Our new brand, Imperial, is a passenger car and light truck range,” the sales and marketing manager shares. “Production started in the third quarter of 2011 with winter tyres and now we are continuing with a full summer range. We have a lot of ambition with this brand. We offer regional and national exclusivities – with our existing private brands, most regions are already taken, therefore we needed an extra brand in order to grow. An extra brand gives us a further option to make agreements with more companies.” Rutger Veerman also confirmed to Tyres & Accessories that a seventh private brand will soon enter the Deldo product portfolio: “We are working on another private label – Atlas. This will cover car and light truck sizes in both summer and winter patterns and come out in 2012/13.”
Further additions will be made to the existing Imperial range at a later date; Veerman notes that the sizes currently on offer are just a starting range. “We are growing to seven full-range budget brands. This is quite unique for a wholesaler. We like to offer a good range. For example, the Minerva passenger car summer line-up includes 106 sizes and next winter we will have more than 100 winter sizes. Nobody else in the world offers this sort of range in budget. Why do we do it? We think there is a market for this and we want to distinguish ourselves amongst others. When you offer a size that nobody has, you can make a good profit on this size. And the more profit out dealers can make, the better it is for us.”
Tyres – without the headaches
Access to private brands with 100 per cent territory exclusivity is just one reason Veerman believes customers like dealing with Deldo. Another is the added services the wholesaler offers. “It seems easy to buy one or two containers directly from a Chinese manufacturer, there are a lot of brokers and traders offering deals on tyres. But it isn’t so simple to offer the right service, loading mix, invoicing, payment conditions and aftersales service – that’s where we come in. We offer a full service and receive good feedback from our customers.”
The sales and marketing manager shares that logistics are very important for Deldo, and the company looks after this for customers regardless of whether they receive tyres from Antwerp or direct factory shipments. “When dealing with many companies, logistics is a big question mark,” he points out. “We take care of all shipments and all paperwork. Our large volumes ensure fantastic freight rates and we don’t make a profit on freight. Tyres are our business. After experiencing direct imports from China, many express satisfaction with our full service, as through us they receive their tyres on time, and aspects such as loading, payment conditions and documentation are all taken care of.
In addition to expanding existing ranges with further sizes and introducing new private brands, Deldo intends to grow by entering into new markets and increasing its activities in others, such as Poland, Hungary, the Czech Republic and Turkey; in the last of these Deldo deals through a local agent. “We are having more and more success in Turkey and have made many contacts. Demand for imported Chinese tyres is increasing as 18 months ago the import duties for passenger car and light truck tyres were dropped there. Things are going well there even though there is a lot of competition in Turkey and the local market is still quite well protected.”
Increased activities in various markets have necessitated an expansion of Deldo’s sales department. Recently the company hired new staff for its CIS and German departments and now has a total of some 40 sales people working in ten regional teams. All sales staff speak the target market’s native language and teams attend local trade shows and visit customers in the market. Rutger Veerman says this contact is important, even though more and more people are using Deldo’s online webshop to order. The webshop, incidentally, was revamped in January and now includes improved search functions; Veerman shares that the webshop accounts for more than 30 per cent of sales, and Deldo foresees this figure rising to 50 per cent within the next three years.
A common topic amongst the wholesalers interviewed for this feature was the European tyre label. Rutger Veerman says Deldo views the label as a positive move, even though it has reservations about the label’s direct comparison of premium and budget tyres, products that come from two distinct price categories. Commenting on the effect the label may have, Veerman believes “there is overkill on the market with budget products. We believe the label will cause a clearing out of some brands in the European market.” However Deldo is confident about its own products’ ability to hold their own come November: “We have worked closely with the factories on this, working on product development and arranging independent testing with outfits such as TÜV. We are pushing the factories – the label is an important thing for Deldo, especially as we are selling more and more budget products.”
In closing, Veerman shared that Deldo is confident about its future in both the budget and premium segments. “Budget tyres are increasingly attractive in crisis times as the end market is more focused on cheaper products. At the same time, the quality of Chinese tyres is increasing and therefore their acceptance is rising. People are taking them more seriously. Budget is approximately 15 per cent of the European market, and this is growing. We see that there is a good future for budget.” At the same time Deldo is increasingly cooperating with premium manufacturers. “Today they see Deldo as an interesting sales channel as we can deliver to people and companies that manufacturers can’t easily reach. We place good orders and are on very good terms with most manufacturers. This is something that is going really well and we are happy about this trend.”