The Covid-19 pandemic and its resulting disruption forced almost every global company to re-evaluate their business models and transform their businesses to radically-changed customer expectations.
Rectron, one of South Africa’s leading IT distributors, was no different.
And leading the company through this transformation, CEO Spencer Chen, has not only introduced new product ranges and portfolios, but also ensured it continues to prosper. With revenues of R2-billion in 2019, in its latest financial year Rectron – part of the Mustek group – reported revenues of more than R3-billion.
Traditionally renowned as a components and PC distributor, Chen says that the company is now expanding rapidly into other areas of business, most notably server infrastructure and cloud solutions; power solutions; point-of-sale (POS) systems; and, in the consumer electronic arena, drones.
“Rectron is well known for its component and PC products, but my key message to the market is that Rectron has evolved – and we will continue to evolve,” Chen says. “Over the past couple of years, we have been looking at various verticals and we’re starting to see traction in these. We don’t want the company to rely exclusively on components and PCs for its revenue.”
And proof that the diversification into new business sectors is already bearing fruit, he adds, is that PCs and components currently account for about 60% of total business. The remainder is made up by the new verticals.
One of the new business pillars currently thriving – not unexpectedly given Eskom’s woes and the local load shedding situation – is power solutions. But Chen says that even he has been surprised by the success of the division.
“We started investing in power solutions in 2012 and we’ve literally seen an explosion of growth,” he says. “We can supply everything from UPS systems, power backup, and batteries, through to fully-fledged home and industrial solar systems.
“And we will continue to look for new products to bolster what has become a key sector,” he adds.
The pandemic saw a rapid uptake of cloud computing throughout the world as the work from home (WFH) phenomenon was expedited, e-commerce exploded, and “e-everything” became the norm. It was a fast-developing trend that didn’t go unnoticed at Rectron.
“We used to run server infrastructure and cloud solutions as two separate entities,” Chen explains. “But the two have become so intertwined that we decided to combine both into one division. We brought the necessary skills on-board, secured the right products for the right solutions and can now offer customers solutions to suit their every need – from on-premise, to private, public or hybrid cloud.
“I have every confidence that our team will meet any customer’s specific requirements when it comes to server infrastructure or a cloud solution,” he says.
Mention point-of-sale (POS) to anyone and the automatic response will usually be around a barcode, a scanner and a till. But, just as the IT industry has rapidly evolved over the past few years, so has POS. And Chen says it will be a key business sector not only for Rectron, but also its reseller partners.
“When you talk about POS today, it is not the old-fashioned POS that most people associate it with,” says Chen. “Zebra is one of our key products in this category and is regarded as the number one brand in the world. They’ve established their reputation by developing systems in a variety of diverse industries – from retail, health and medicine through to logistics, ports and harbours – in anything that uses barcodes.
“We are seeing a lot of interest in POS from our partners,” he continues. “People see barcodes in their local shops, but there’s a lot more behind it – and that’s where the opportunity is. There are huge opportunities in POS for resellers.”
When Rectron started on its new strategic course, Chen says the company renewed its mission statement to reflect this. Basically, this new vision for Rectron was to bring to market “products that would make people’s lives better.”
A case in point, while not a category within Rectron on its own, is drones.
“We started supplying drones to the market around 2018, aimed mainly at gamers and enthusiasts,” Chen explains. “But this market has evolved dramatically from those days. DJI is our main partner in this category and, as everyone probably knows, drones have got a lot bigger, can carry more than one camera, and can actually collect data that, before, couldn’t be done manually.
“Take Eskom, for example, they can use temperature-sensitive cameras to see where problems may be on power lines,” he says. “Then there’s the monitoring of gas lines, oil pipelines, project management – if you’re building a shopping mall, you can use drones to monitor progress on the construction.
“There are all these scenarios – and many more – security, policing, entertainment,” he adds. “There’s lots of potential in this sector and it is a margin-rich product line for resellers.”
Bearing in mind the birth of drones among “hobbyists” and the continuing evolution of this technology, Chen says Rectron is always on the lookout for new products that have the potential to create new markets. And, of course, which make people’s lives easier.
And he thinks he may have found one.
“In the consumer electronics category we are always looking for the latest and greatest that people can play with,” he says. “And in Cricut – which allows you to create your own patterns and designs, motifs and cut-outs – we might have something. It’s doing very well, especially in retail and hobby outlets.
“We’re always looking for something new, fun and interesting, and who knows what the ‘next big thing’ might be,” he says.
That “next big thing”, however, might well be Rectron itself if it continues on its current growth curve and its new strategic evolution. And that’s exactly what Chen and his team are striving toward.
“Our team vision is that we want to grow Rectron into a sizeable business – much bigger than what we are now,” he says. “But our focus will be more on the solutions side – and not just IT – but any solution that can add value to our customers. Box moving will never go away – that we know – but we want to add more solutions.
“Solutions which our resellers can take to market and know they don’t have to compete against big mass retailers, who they know they can’t compete on price with,” Chen says.
Message from the Group CEO
“We’re proud to have Rectron as a 100% owned subsidiary of the Mustek Limited Group.
The two companies reflect the collaboration and collective thinking of the two companies – presenting a united and sizeable force in the marketplace.
As the Group CEO, I have utmost confidence in the management structure of the company to continue to strategically lead the company to ensure shareholder value is created.
They continue to play a vital role in partnering and supplying the reseller channel, creating a sustainable value chain for the South African market.”
- Hein Engelbrecht, Group CEO of Mustek