Tech Data
Careers at Tech Data
Mission
Tech Data’s mission is to be the IT distributor of choice for its customers and business partners, thus enabling its shareholders to prosper.
Business segments
Tech Data is a distributor of information technology products and services. The company operates five reportable business segments:
- Broadline - Includes desktops, tablets, notebooks, printers, printer supplies, and components. Accounts for 46% of net sales.
- Data Center – Includes proprietary servers, industry-standard servers, storage, and networking. Accounts for 22% of net sales.
- Software – Includes cloud, virtualization, desktop, and security applications, as well as utilities software and operating systems. Accounts for 18% of net sales.
- Mobility – Includes mobile phones and related accessories. Accounts for 11% of net sales.
- Consumer Electronics – Includes digital displays, television sets, consumer audio-visual devices, and network-attached consumer devices. Accounts for 3% of net sales.
History
Tech Data was founded in Florida in 1974 by entrepreneur Edward Raymund. He established the company with the goal of directly marketing computer supplies to large institutional customers, mostly government agencies and hospitals. Primarily consisting of data processing supplies such as tapes and disk packs, his products were used by clients for their mainframe and mini computers.
The company was successful, and was making revenues of $2 million by the early 1980s. Around this time, Edward’s son Steven became an employee. Over time he took on more responsibilities, eventually being promoted to Operations Manager. This situation did not sit well with the sales force, which hoped to buy out Tech Data in the future. Steven’s rise made that less likely.
A month after his promotion, key members of the sales staff left the firm, taking major clients with them. This had a severe impact, causing monthly sales to drop by over 50% and leading to losses. Edward considered shutting down the firm to focus on another one. Instead, he changed strategy. He beefed up the telemarketing staff and began aggressively marketing to dealers instead of end users.
The move paid off – by the middle of 1983, the firm was making money again. In 1984, it withdrew from the end user market completely, becoming a wholesale distributor. That year, Steve was promoted to Chief Operating Officer, and the year after he became Tech Data’s CEO. In 1986, Tech Data went public. The firm made $37 million that year, mostly through sales to value-added resellers.
Business model of Tech Data
Customer Segments
Tech Data has a niche market business model, with a specialized customer segment. The company distributes products to value-added resellers, retailers, direct marketers, and corporate resellers.
Value Proposition
Tech Data offers three primary value propositions: accessibility, convenience, and brand/status.
The company creates accessibility by offering a wide variety of options. Over the last 20 years, it has acquired over 18 firms, including ParityPlus, Softmart International, 2000 AG, Azlan Group, Scribona, and Signature Technology Group. These additions have enabled it to add several new capabilities to its portfolio, increasing offerings for clients.
The company offers convenience by making life easier for clients. It provides fully-integrated supply chain support for various channels. It also provides technical support directly to clients’ customers so clients can save time and money. Lastly, it maintains a full-cycle, in-house marketing team that can handle promotional needs for clients, ranging from website design to outbound marketing.
The company has established a strong brand due to its success. It is one of the largest wholesale distributors of technology products, solutions, and services in the world, generating $26.4 billion in 2015. It serves over 105,000 resellers in over 100 countries, and distributes products from over 1,200 tech vendors, including prominent firms such as Apple, HP, Cisco, and Microsoft. It completes 50,000 transactions daily and has sold over 150,000 IT products. Lastly, it has won many honors, including recognition as one of the world’s top cloud service providers by Talkin‘ Cloud for two years in a row and as one of the "World's Most Admired Companies" by Fortune for seven years in a row.
Channels
Tech Data’s main channel is its direct sales team, which includes field sales and inside telemarketing sales professionals. It also acquires customers through its website. The company promotes its offering through its social media pages, trade shows, and conferences.
Customer Relationships
Tech Data’s customer relationship is primarily of a personal assistance nature. The company provides training and certification services to its reseller customers in order to help them configure, install, finance, and sell products. That said, there is also a self-service component. The company’s website provides answers to common questions and access to an online client account.
Key Activities
Tech Data’s business model entails distributing products to its reseller clients.
Key Partners
Tech Data partners with several of its tech vendors to provide the aforementioned training and certification services to its clients. These partners are Cisco, Microsoft, Symantec, VMware, CompTIA, and Red Hat.
Key Resources
Tech Data’s main resources are its physical resources. They include 30 logistics centers located worldwide where it stocks and fulfills orders for its various markets. The company also maintains a “Solutions Center” at its Clearwater, FL campus. The 6,000-square foot facility is a proof-of-concept lab where resellers can explore a wide range of IT solutions and receive product training.
Cost Structure
Tech Data has a value-driven cost structure, aiming to provide a premium proposition through significant personal service. Its biggest cost driver is cost of products sold, a variable expense. Other major drivers are in the areas of sales/marketing and administration, both fixed costs.
Revenue Streams
Tech Data has two revenue streams:
Product Revenues – Revenues generated from sales of the products the company distributes to resellers
Service Revenues – Revenues generated from fees for various services, including configuration, training, and fulfillment
