From Reseller To Distributor: 'It's Been A Great Ride'

Tech Data actually was a reseller of computer supplies and custom forms for the first nine years of its business life and didn't switch to wholesale distribution until 1983.

"It was a little $2 million business we had," recalled Raymund, chairman and CEO of Tech Data, Clearwater, Fla. "We were selling printer ribbons, diskettes, custom forms that were used in dot-matrix printers to produce multiple copies. Those had to be custom-designed and printed up. We even warehoused for an end user."

In 1982, however, the company placed magazine ads inviting dealer inquiries for wholesale business, and the rest is history.

"We saw the economic advantage of selling diskettes or ribbons in case quantities. Margins were lower, but the volume was much greater. We very quickly gave up selling to end users," Raymund said.

Steve's father Ed Raymund put him in charge of that budding wholesale business, which has since turned into a $17.4 billion company. Raymund admits that until that time he wasn't sure he would stay on.

"I don't have an M.B.A., and my father was a manufacturer's rep. We didn't really have a clear business model in mind or specific goals to achieve in a certain time frame. It was more ad-hoc, and any opportunities we had we would make up as we went along," Raymund said.

But business turned out to be so brisk that eventually they didn't have time to worry about anything except keeping up with orders on the wholesale side.

"The community of VARs and resellers was growing in leaps and bounds. There was a huge opportunity for any new entrant in the wholesale space. We could sell everything we could buy. It was just a question of training more salespeople who could recruit more and more resellers. It was so obvious to us that growing our business in a wholesale model was easy, attractive, profitable, and we decided to focus our energies around that space."

Business Computer Resources, a Clearwater-based solution provider, was located about six blocks from Tech Data's original warehouse. John Simmons, president of the company, remembers the chaotic energy fueling Tech Data's growth.

"They were excited about what they were doing. There was a certain urgency, an opportunity you could feel. They were all running around trying to get things going," said Simmons, whose company is Tech Data's oldest active customer, with a relationship dating back to 1982.

Tech Data cemented its future in 1986 when it signed IBM as a vendor and went public. At the time, distributors primarily focused on either hardware or software, so the IBM addition was key to Tech Data's growth even though it was late to the PC party behind then-titans Micro D, SoftSel and Microamerica, Raymund said.

"Our goal initially was to sell to a VAR base that at the time was unserved by the aggregators—Inacom, MicroAge and ComputerLand. Subsequently, IBM and Compaq moved away from regulated distribution, the Medallion model, into a free-market model and that foreshadowed the demise of aggregators, who were unable to transition to the new environments," he said.

Tech Data, on the other hand, made the transition and will celebrate its 30th anniversary next month, a milestone most of its competitors never saw.

"It's been a great ride," Raymund said. "I've met a lot of brilliant, famous, wonderful people. It's incredibly rewarding to be a part of this when you look at where we started and where we are today. It's made possible through human capital, which walks out the door every day. They make things happen."