Asbis ME to strengthen private label business
Distributor moves to reduce dependence on traditional IT components business
Regional distributor Asbis Middle East has revealed that it is further developing its private label business, a move the company says will lessen its reliance of the traditional IT components and PC hardware business.
The distributor, which already has two private label branded product lines in Canyon and Prestigio, said the company is investing in this business because the IT components segment is highly commoditised and characterised by high volumes and low gross profit margins.
Hesham Tantawi, vice president, Asbis Middle East, Turkey and Africa (META) region, said currently, the Canyon and Prestigio product lines are manufactured by leading original equipment manufacturers (OEM) in Taiwan and China, based on designs developed by the company and selected on the basis of their quality and potential for achieving high profit margins in the market.
Tantawi said Asbis believes that increasing sales of the private label products will have a positive impact on the overall profitability, as these products deliver a higher profit margin, compared to some commoditised finished products from multinational vendors distributed by the company.
"We are delighted with the progress and growth that the Canyon and Presitigio business has witnessed in all the markets we are present in. This is a result of the company's investments made early enough in the fast growing segments of tablets, smartphones and accessories. We are expecting further growth in the next couple of years in the three business lines hence the company wants to cement the portfolio offerings," he said.
Tantawi pointed out that because margins on the traditional IT components and hardware business have continued to decline just like the PC segment, Asbis has decreased its engagement in the two sectors.
He explained that Asbis has benefited from this strategy and the company has continued its efforts to rebuild its product portfolio by adding more finished goods in the smartphone, tablet and PC accessory liness in order to improve the overall gross profit margin.
"We aim to continue expanding the range of our private label products and strengthening their promotion in all markets where Asbis currently has presence in and we expect that this will have a positive impact on our revenues and overall profitability," he added.
Tantawi reiterated that the company will continue with this business strategy to increase its overall gross profit margin in 2014 and beyond.