D&H Distributing Says It Grew Sales 17% In FY19

‘We are not winning based on price. We were winning based on value and our service levels. Our partners clearly identify with D&H’s differentiated level of service in aligning with us,’ co-president Dan Schwab tells CRN.

D&H Distributing’s sales grew 17 percent during its latest fiscal year as its cloud solutions, ProAV and network security systems businesses all saw big gains, company co-president Dan Schwab told CRN.

“We anticipated this year to be a growth year, but we beat our growth by well over 10 percent,” he said of fiscal year 2019, which ended April 30. “We budgeted single-digits, and to grow by 17 percent we would never have imagined that year over year. It was rewarding for us to see that – you know we’re a private company. We are not winning based on price. We were winning based on value and our service levels. Our partners clearly identify with D&H’s differentiated level of service in aligning with us.”

D&H is a privately held company and declined to provide its full financial results.

The Harrisburg, Pa.-based distributor said cloud solutions -- which includes Microsoft Office 365, Azure, Dropbox, ESET, and Axcient, among others – grew 107 percent, and were among the company’s fastest growing lines. Schwab attributes this growth to a “heavy lift” of helping late-adopter MSPs switch to a recurring revenue model, as well as targeting end-users who were not yet using cloud products.

“I think our focus this year, staring with Microsoft Office 365 and expanding from there, was really to identify partners who had not made the migration and targeting end users within their customer base, that had not migrated to the cloud,” he said. “These are typically small businesses, 10 to 100 employees, that they have one server on premise … so we spent a large part of this year training our resellers on how to sell their end users and how to make money with a cloud business practice, how to change your business model to a recurring revenue business model, starting with cloud and migrating to Device as a Service, which is a big focus of ours this year and that’s really a heavy lift.”

In February, D&H brought in former Ingram Micro executive Jason Bystrak to oversee the company’s cloud business unit and expects even higher growth – 145 percent – in this category next year as small businesses increasingly demand “innovative, next-generation connectivity projects,” the company said.

The company’s ProAV business grew at the sharpest rate with 111-percent growth year over year, which Schwab said was driven by spends in the small business environment where VARs are installing digital signage in collaboration spaces.

Schwab said premium notebook sales grew 32-percent last year. He said the devices deliver more efficient capabilities to the SMB marketplace through Windows 10, Intel®’s powerful vPro™ processors, as well as offering the Office 365 hosted subscription service. The advantages of as all-day battery life, superior security, and speeds that are more than twice as fast as Windows 7-based notebooks are being noticed by end users, but only after partners change the conversation to talk about use, rather than price.

“We really try and turn that around and try to talk more about the usage model,” he said. “What is this being used for? What is the end users business type? How often do they refresh their products? And spending more time to try and sell more advanced technology. Its win for the reseller. It’s a win for ourselves, it’s a win for the manufacturers, and most importantly it’s a win for the end user.”

He said while printer sales came in with 11-percent growth last year, the company expects it to grow 25-percent in 2020. Schwab said D&H is wooing its partners by adding training and support to get in on managed print as vendors have added more margin to those sales.

“We identified this as an area we could and should be able to grow,” he said. “We’ve developed some strategic partnerships with some of the printer manufacturers to help them gain share in the small business marketplace. We’ve put together aggressive plans for our resellers … a lot of the manufacturers have worked really hard – Lexmark, Ricoh, KonicaMinolta – have worked really hard to put margin back in those sales. They can effectively make money on the consumables. The other distributors are chasing the enterprise as it relates to print and D&H, our DNA is that base of the pyramid.”