Under the hood at Magna Park

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Against a wintry monochrome sky, Magna Park appears like a verdant moonscape as the taxi pulls off the road from Rugby to Lutterworth. “It sets my nerves jangling every time I come here,” says the driver.

Magna Park, in Leicestershire, is Europe’s largest dedicated distribution site; a network of warehouses and logistics centres covering 500 acres and 7.7 million square feet of floor space. Its tenants include Argos, Asda, BT, DHL, Nissan, Toyota, Panasonic and Unipart. It is where Brightstar Europe, the 50/50 joint venture between US mobile phone distributor Brightstar and US IT distributor Tech Data, has made its UK home.

It is the base from which Brightstar will launch, on an epic scale, its futuristic brand of distribution in the UK and Europe next year.

Multi-million investment

Brightstar Europe president Rod Millar (pictured) is not interested in discussing sales targets or projected market share. Fine, because what more does Millar need to say, really, about the corporate ambition of the most hyped entry, ever, into UK handset distribution?

That’s not the question. Everyone knows Brightstar’s intention for the UK (to be the number one handset distributor), and the key contracts it requires to achieve its goal (a Nokia distribution agreement and a couple of headline virtual network supply deals for starters).

Everything else, to a greater or lesser extent, is already in place – Motorola and Sony Ericsson have signed it up, Samsung has put it on trial and is said to be impressed so far, and Tesco is taking at least one supply line from it already.

No, the question of Brightstar is, how will it secure and fulfil those key accounts? The question is, what’s it got under the hood? What’s in the engine room at Magna Park?

Millar is sitting on the answer; in a bare office, still to be filled with administrative paraphernalia, on top of 500,000 square feet of warehouse space.

Brightstar’s distribution centre dwarfs its competitors’ physical resources. As a frame of reference, 20:20 Mobile’s distribution centre is thought to be 100,000 square feet. Unique Distribution, which has just forked out £12.5 million on a spanking new site in Hayes, has around 200,000 square feet of floor space at its disposal.

The warehouse cost Computer 2000, the UK arm of Tech Data, a cool £27 million four-and-a-half years ago, and was built to order. Its IT software system, installed across Tech Data’s entire European footprint, was a staggering £200 million investment.

An estimated £2.4 billion of stock is shipped from the site each year – £1 billion worth remains on these shores and the remainder is trucked abroad. From the point of view of scale, it is about eight times larger than Brightstar’s nearest UK rival.

Of course, none of the initial site development money, nor the outlay on IT infrastructure, was Brightstar’s in the first place, and the joint venture grants it a free pass to use the site and its systems for its European adventure. Millar estimates it would have cost Brightstar £50 million, before it even sold its first handset, to enter the UK distribution market as a green-field operation and set up a facility of comparable size and sophistication.

But instead of a standing start, it has ridden to town on the back of a prize mare; a $23 billion business, ranked number 109 on Forbes’ list of the top 500 US companies.

“Tech Data is probably 20 times bigger than the biggest UK distributor. So it is not ridiculous it would invest 20 times more in its distribution centre,” says Millar. “The thing with IT distribution is it works off much tighter margins, and Tech Data has been around for 30 years. Therefore, it has invested significantly in its processes and efficiencies.”

He adds: “Basically, because of that, we can buy a phone, stick it on the shelf, customise it and ship it out again for less than anyone else in the mobile sector.”

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