CEO Richard Baxendale has set huge targets to double the existing size of the online mobile retail giant
“We’re the mobile industry’s best-kept secret,” exclaims recently appointed Mobile Phones Direct (MPD) CEO Richard Baxendale. Walking out from a rare interview with the company, you can understand his argument.
This might seem surprising as the Berkshire-based online mobile phone retailer isn’t a new entrant into the market – far from it. In fact, it celebrates its 25th birthday this year having been established in 1992 and working with some of the most high-profile companies in the industry.
MPD was formed by owner Carl Borges and started life as a bricks and mortar retailer. He ran a Vodafone Centre in nearby Newbury and claims to be one of the first of the operator’s franchisees.
The business grew to be an independent dealer with a number of stores across the Midlands to the point that when once-industry behemoth Nokia was at its peak, the Finnish manufacturing moved onto the high street and partnered with MPD to run its retail stores.
However according to Baxendale (pictured main), with the demise of Nokia, coupled with the continued growth of Carphone Warehouse and the networks expanding their own retail chains, a number of independent retailers pulled away from the sector and decided to focus on B2B as a means to grow.
MPD was of the same mindset but instead of competing for business customers, it saw e-commerce as a means to grow as smartphone adoption grew and more customers started to shop online, which ultimately led to its debut as an online business in 2011.
It’s a decision that has proved to be the best it will possibly ever make, with the business going from a relatively small mobile phone firm to one that will achieve turnover of £100 million in the financial year ending March 31, 2017 – up by more than 25 per cent from the previous period (£79 million).
Distribution to retail
Baxendale himself only joined the business in January, replacing Ben Branson as CEO, who left after five-and-a-half years.
The newly-appointed executive is an experienced industry head with 20 years of experience on his CV but his move into online retail came as a surprise considering he had spent the majority of his career at leading hardware distributors and latterly, in several leadership positions within them.
He began life at now defunct European Telecom and after four years moved to 20:20 Mobile where he held several business and sales director roles over a six year period.
A move to Brightstar Europe then beckoned in 2007, where he was UK and Ireland managing director and managing director of sales in Europe for five years, before heading to Tech Data to take up the role of vice president of services. He left there after three years in 2015.
Baxendale explains his decision to move into online retailing, revealing that conversations with Borges had been ongoing over a number of months, who had convinced him of the solid position of the company and its excellent potential for growth.
He claims that the 20 years of experience he had amassed in the industry, the growth of online retail and MPD’s growing leadership position convinced him it wasn’t such a big risk after all.
He also points to a large amount of analytical work MPD had conducted recently, which revealed that 48 per cent of customers would buy from its competitors using a mobile device compared to 60 per cent for MPD.
Future is digital
“The easy decision would have been to return to the industry and work for another distributor but it was a deliberate decision to move into another part of the industry, but still maintain the knowledge and contacts I had built up over the years,” said Baxendale.
“Having the opportunity to sit at the other end of the table and work with the manufacturers, operators and distributors as a customer rather than a supplier was really appealing.
“In general, if you look at how the retail and consumer markets are going, e-commerce and digital is very much the future. The opportunity to lead a business that is really at the forefront of driving that was too good to turn down.
“I see the fact that I haven’t run an online retailer before as being a strength because I’m coming into this with a fresh pair of eyes.
“One of the things I have found coming into this business is looking at what we do today and come in with some new ideas or perspectives as to what we can do differently to grow or move into other areas that are untapped and growing in the market.”
It’s clear Baxendale has already been mightily impressed by what he has seen and despite only being CEO for a matter of weeks, he already has huge plans for MPD.
In addition to revealing that it is on course to hit the £100 million turnover milestone in its most recent financial year, he wants to “double the size of the business” over the coming years, and believes the platform is firmly in place to achieve that.
MPD offers handsets from all leading manufacturers, including Apple, Samsung, Huawei, Nokia, Sony, LG, HTC, BlackBerry and Motorola across pay monthly contracts, as well as SIM-free and refurbished device options.
It also has operator partnerships with Vodafone (it is only one of two major consumer partners for the operator alongside Carphone Warehouse in the UK), EE, Three and Vodafone-run MVNO Talk Mobile for mobile connectivity, with Baxendale also open to adding O2 to its stable if the right opportunity presented itself.
The online retailer also offers a number of gifting incentives alongside mobile deals for customers, with products such as 40-inch flatscreen HD televisions from Samsung and LG, Sony PlayStation 4 and Xbox One video game consoles, Acer laptops, tablets and e-readers from Apple, Samsung and Amazon, and the Apple Watch, as well as headphones, earphones and speakers.
He refuses to go into detail on distribution partners, adding that it works with all of the major industry players, and works with a third party logistics provider located just outside London to provide next day delivery to customers.
It also purchases its own devices for direct contact with most of the manufacturers it works with, with devices also sourced through distribution.
Baxendale claims MPD’s financial performance over the past few years back up his ambitions to double the size of the business over the coming years.
In April 2016, it ranked 11th in The Sunday Times Profit Track 100, an annual report that ranks Britain’s 100 private companies with the fastest growing profits over their most recent three years.
In the 12 months ending March 31, 2015, this had grown 112.24 per cent to £5.187 million.
Similarly, it came in at 35th in The Sunday Times Fast Track 100 in December, which ranks Britain’s 100 private companies with the fastest growing sales over its most recent three years. This had grown 85.15 per cent to £79.235 million in the year ending March 31, 2016.
Baxendale knows that it will need to significantly increase staff numbers to achieve its target but isn’t convinced these need to necessarily double to around 220 as a result.
MPD also has the opportunity to increase its office space to accommodate these growing numbers, as it currently sub-lets one other unit to another company on the site.
“It’s a broad statement to say we are planning on doubling the size of the business but if I look at our results over the last year, it is certainly achievable,” he claims.
“The company already has a strong track record of growth, and going forward, there are a number of key initiatives that we are looking at.
“It’s not just saying we want to double the size of the turnover; we have a very clear plan and set of building blocks to be able to get there.”
Baxendale claims MPD’s recent success has been a result of the relationships it has developed with these network partners, and looking at new areas of the industry they can work together on, although he remains tight-lipped on these plans.
He reckons the organisation is in a unique position as it is the only purely digital business when compared to its closest competitors, meaning it can operate with much lower overheads and maintain a steady financial position.
“The business is performing really well and we have some very exciting plans in the pipeline,” he says. “We’re looking at how we can double the size of the business.
“From a top line perspective, we have been really focused on working with our network partners on how we can drive the business and move into new areas with them. From a bottom line perspective, we try to run a very lean ship and efficient business.
“If you look at the UK market today, we are pretty much the only player that is driving volume that is purely digital. Our other major competitors have bricks and mortar retail stores as well and an online presence, whereas we are a purely digital company. That means we can afford to run at much lower overheads than our competitors
“We have 110 employees based at our head office in Berkshire but what that does mean is we can be incredibly efficient in what we do, ensuring we can grow volumes whilst maintaining a good level of profit.”
Customer service focus
Perhaps the major driver in these growth plans and one that has seen them elevated to the lofty position they find themselves in now is the high level of service they are able to provide customers with, tens of thousands of which have given them the thumbs up.
According to Trustpilot.com, a global firm which publishes reviews for online businesses, MPD is ranked 19th out of 117 in the ‘Mobile Phones’ category in the UK and above those it considers to be its closest rivals.
At the time of writing, it had received an average score of 8.7 out of 10 from 12,505 reviews, with 78.4 per cent of those (9,801) awarding it the full five stars.
Below MPD, buymobiles.net is ranked 32nd with an average score of 8.4 of which 67 per cent of the 7,248 reviews awarded it five stars, with Carphone Warehouse ranked 56th scoring an average of 7.6, of which 61.6 per cent of the 12,129 reviewers handed it full marks.
Baxendale feels its high focus on customer service puts it one step ahead of its rivals, as well as the product and service choice it can offer consumers, hinting at an unspecified large-scale launch in the first half of 2018 that he labels a “game-changer”.
“In most consumer retail segments, you are in the sharp end so it is a very competitive market place,” he says. “It is the type of industry where you have to be really on top of your pricing and offers not by a day-by-day basis, but more a hour-by-hour market.
“We are different as we have a huge focus on service. A lot of our network partners are very focused on net promoter scores as a way of looking at the service we deliver to customers, and we are certainly the same.
“We have 17,500 reviews across Trust Pilot and Review Centre, and we are regularly getting four-and-a-half or five stars.
“We certainly rank above our competitors there and lead the online mobile market in terms of our profile and customer reviews, but equally one of the things that I’m very passionate about is ensuring we raise that bar and excel at that.
“Another way is the choice that we can bring to the consumer. There is some confidential stuff that we can’t share that will be out in the market in the first half of 2018 that will be a game-changer and allow us to provide a lot more value to our customers over and beyond just providing a new mobile phone and contract.”
Baxendale, despite admitting there is always room for improvement, claims MPD’s ability to provide an increased level of customer service can be attributed to a number of key elements.
Most importantly, everything is processed in-house and not outsourced to external companies or third parties. For example, its 60 seater call centre is located on-site, meaning it can be closely managed. It also has a dedicated social media team to resolve customer enquiries in real time.
MPD also operates seven days a week and is open 12 hours a day from Monday until Friday, whilst it continues to make big investments and introduce new technology to improve the customer journey online.
“We outperform our competition and there are a number of things that we do. Everything with us is done in-house. We have a call centre here of nearly 60 seats and have teams that can proactively contact customers but also for inbound and customer services.
“It is all located on the same site here, meaning we are able to manage that quite closely. We have dedicated people on social media, so if you are a customer, we can respond to their issues in real time within an hour or two.
“We put a lot of focus on the website to make the online journey for customers as simple and intuitive as possible and we are constantly looking at how we can improve that through the website, whether that be from a desktop PC, mobile or tablet. We have made a lot of investment and introduced a lot of new technology to make that journey more seamless.
“We have the longest opening hours of anyone in our sector. We operate seven days a week and are open from 8am-8pm Monday to Friday. As far as I’m aware, we are also the only company in our sector where the customer service element is open on a Sunday.
“A combination of those things and making sure that if things do go wrong, it’s about dealing with those issues and ensuring they are resolved for the customer.”
Baxendale also feels, that although MPD is the “mobile industry’s best-kept secret” and perhaps isn’t a brand widely known to consumers outside of the industry, once again the high service levels help keep its name on the tip of people’s tongues.
Rivals such as A1 Comms have had a long-running deal with Derby County Football Club for its online retail business buymobiles.net to sponsor its football shirts, with the brand regularly being shown off to national television viewers every week.
There are no plans for MPD to follow suit in any fashion, but instead opting to capitalise on its existing base of customers that in turn generates plenty of return business, with a focus on a number of online marketing channels to drive traffic to its website.
“We have been very prominent online for the past six years and what we have is a very sizeable base of existing customers,” he said. “One of the reasons the service ethos is so important is to make sure that then generates returning customers to the business.
“We also do a lot of work around Search Engine Optimisation (SEO) and work with companies like Google around things like pay-per-click (PPC).”
No acquisition strategy
Baxendale also reminisces about how the industry has changed over the past decade since he has been involved at the top, emphasising that there is always plenty of room for growth and innovation as it is still relatively young.
However, he admits that over the last five years, it has “matured” and “grown up a lot”, with consolidation in various market segments ever more prominent.
Despite this, he insists MPD won’t be drawn to making acquisitions as a means to grow, at least in the near future, instead to continue focus on expanding organically.
For example, A1 Comms acquired former distributor Shebang Technology Group’s high street retail business Go Mobile for an undisclosed fee in 2012, providing it with a recognised footprint and presence of around 100 stores. The company was quick to claim the purchase could help it more than double its turnover to £120 million that year.
“The mobile industry has been through an interesting evolution and you have to remember that compared to most other industries, it is still relatively young,” he says. “What you have seen as part of that is that there has been a lot of consolidation between companies in the market place.
“Our plan to double the size of the business is based purely on organic growth and we have a really clear plan on how to achieve that. I would never rule out looking at acquisitions in the future but it isn’t something that features in our immediate plans.”
With that in mind, Baxendale feels MPD is well on course to deliver on its ambitions and strategy over the next 12-24 months and again hints at the introduction of new propositions that will accelerate its growth plans “overnight”.
Baxendale claims the proof is already in the pudding, with one unnamed operator partner recently revealing to him that from both a new connections and upgrades perspective, it is delivering the highest value customers in terms of their monthly spend compared to any other indirect partners.
“Over the next year or two, we will be well into our journey on our growth aspirations.
“This is a very well run and profitable business that has been growing over time. This is really about how we can continue that growth and accelerate it.
“Doubling the size of the business is no small feat to achieve. It isn’t about saying something isn’t working particularly well today and how we can change it. More around how we can improve what we are doing and identify three or four things from that.
“There are some key investments we are making into the business in terms of technology to do with our website.
“We will also look to deliver a better customer journey, so will be making a number of changes and investments.
“We will be introducing new propositions that go above and beyond just building our core business with the networks and manufacturers, some initiatives that will overnight enable us to get a big acceleration on our growth plans.”