Stocking all over the world Brightpoint’s way

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Brightpoint claims to be the world’s biggest mobile phone distributor. In an exclusive interview, president (EMEA) Anurag Gupta tells Michael Garwood about Brightpoint’s global expansion strategy

This has been a prosperous year for global handset distributor Brightpoint. The company’s latest quarterly financial figures, ending September, showed its revenues increased 51 per cent year on year to £837 million, with net profit up 40.7 per cent to £8.2 million.

This latest quarter saw it handle more than 27 million devices across its 50 markets in the Americas, EMEA and Asia–Pacific (see graphic, right).

It expects at least another 33 million devices to pass through its warehouses by the end of Q4, bringing total numbers of devices handled for the year to between 111 million and 114 million, up from 99 million in 2010. That equates to around $14 billion (£8.9 billion) worth of stock.

Brightpoint CEO Robert Laikin said he expects the market to increase by around five per cent in 2012.

In an exclusive and rare interview with the UK press, Brightpoint president of EMEA Anurag Gupta estimates between eight and nine per cent of the 1.2 billion handsets shipped globally in 2010 passed through its warehouses.

He claims that, based on the 50 addressable markets Brightpoint operates in (see image on facing page), in which it employs more than 4,000 staff, its market share for last year was around 15 per cent, making it the global leader. According to Gupta, its nearest competitor – understood to mean Miami-based, privately held distributor Brightstar – shipped between 35 and 40 million.

Gupta claims Brightpoint’s distribution strategy has evolved significantly over the past decade and is now unrecognisable from the one Laikin established in 1989.

Back then, its business model was devoted almost entirely to the buying and selling of handsets, or shifting boxes, which it calls “traditional distribution”. But today, traditional distribution accounts for just 20 per cent of all the handsets that pass through its 22 warehouses.

The remaining 80 per cent (80 million devices) are still owned by its partners –including OEMs, MVNOs, operators, retailers – and go through its “logistics services”, which Gupta describes as the “last mile” for a handset before it hits the shelves.

Partners pay for services including inventory management, end user fulfilment, bespoke packaging, device flashing, software and application installation, reverse logistics, kitting, programming, repairs and refurbishment, and warehousing.

These services account for around 55 per cent of Brightpoint’s bottom line, and Gupta claims its positioning in the global market is “unique” and “unrivalled”.

“Our competitors compete with us purely on distribution business, which is the wholesale buy-and-sell business. None of them can really, in the true sense of the word, claim to compete with us for the supply chain services.

“We have a very robust suite of services that we can offer our partners and we will continue to look at adding more to become even more valuable to them. It’s a valuable machine we have developed and invested heavily in over the years.

“We are the only global player which has this kind of footprint and market share, handling devices as we do. We sit right in the middle of an ecosystem where we are able to interface with carriers, manufacturers and retailers.

“For many of our partners, we are the last mile before they go to market. We offer a cocktail of services which helps our customers be successful and gain market share. The amount of flexibility we have in our process and the customisation part is extensive.

“Every channel is different and each carrier may have a different requirement to the next. We can provide those variants on their behalf.

“We ended up touching $14 billion worth of product last year, which shows how meaningful we are to our customers and vendor partners.”

History and expansion
Brightpoint first began to offer back-end services to US operators in the late ’90s, pitching its abilities to save its customers money.

The move was, and continues to be, a lucrative one. Its role in the US market providing such services remains key to Brightpoint and, in 2010, accounted for 60 million of the 99 million handsets it distributed, the “majority” of those going through its logistics services business.

“We reduce the cost of the supply chain, which is key for our partners to remain competitive at the end-user level,” Gupta explains. Brightpoint claims to have more than 25,000 B2B partners globally, but confidentiality agreements prevent them from being named.

Gupta does say, however, that its partners save a “significant” amount of cash by outsourcing their back-end services through Brightpoint, and the firm is looking to increase this part of the business across its other 49 markets in EMEA, Asia–Pacific and the Americas.

Gupta says Brightpoint is in dialogue with a number of operators, MVNOs and OEMs across Europe.

“We transported a lot of those expertise globally, including to Europe, Middle East, Africa, Asia–pacific. We are now providing these types of services to
manufacturers and MVNOs all over the world.

“Everyone wants things faster and they want them cheaper and fully programmed. Many of the OEMs are now looking at how they can simply manufacture a vanilla generic model, whether it’s from a factory in China or Taiwan or wherever, and simply ship those devices to us to customise it for the market they target.

“A lot of our MVNOs, OEMs and carriers are looking at how they can use our infrastructure to take out the costs of their supply chain. And that’s what we are good at.”

Full article in Mobile News issue 502 (November 21, 2011).

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