| CASE STUDY >
Paper, pencils and steady profits
Written by: Klára Smolová
Photo by: Jan Vágner
Martin Leitgeb & Arnošt Brož |
You will see
its trucks with their blue, dignified logo anywhere in the Czech
Republic. This is the company's tenth year of fluid development,
crowned by the construction of its own office and warehouse center
in Letňany.
THE HISTORY OF ACTIVA, a distributor of office
supplies, began in tragedy. Its founders perished in a traffic
accident at the same time that the first delivery of goods was
on the road. Their friends Martin Leitgeb (at that time a student
at the Charles University Law School), Arnošt Brož and Ondřej Holý
were the only people who knew anything about the business, so they
took care of the tasks at hand. They sold the goods and repaid
the start-up loan. "We were thinking about what to do after
school, and importing writing and office supplies looked interesting.
There was great demand for them at that time," says the forty-year-old
Leitgeb, recalling the beginnings in 1991 and 1992.
First they sold imported goods to wholesalers, but most of them
were still state controlled, so problems arose. "Some of them
couldn't buy from private firms. They didn't know the products,
so that made our work difficult. They claimed that the products
were too expensive and couldn't be sold. At that time there simply
weren't any private wholesalers," Leitgeb says. So about a
year later they decided to offer their goods directly to retailers.
After they began to run into the same problems, this time with
the retailers, they began selling directly to end users in 1995.
Today sales to end users account for 85% of the firm's turnover,
with 10% going to hypermarkets and only 5% to small, specialized
stores.
The
customer is always right
As time passed and customers got used to the idea that they didn't
have to go to a stationers for every envelope or pencil, that they
could have office supplies delivered right to their headquarters,
Activa - like other firms in the field - began to focus mainly
on services. Delivering ordered goods within 24 hours became a
matter of course, the way goods were delivered was constantly being
simplified, and above-standard services were added, such as computer
technology deliveries with ensured service, free removal of office
waste (packaging for goods purchased), etc.
| |
Benchmark
- offers a wide assortment of goods
- seeks out market niches and tries to fill them quickly
- adjusts readily to customer needs
- stands out from competitors through added-value services |
For Activa to be able to meet the rising demand, it had to also
alter its internal structure and the way the work was organized. "We
all used to do everything. After 1996 we made a change and broke
the firm down into sections. Now staff responsibilities are clearly
delineated," Leitgeb explains. The firm gradually built up
a network of seven branches throughout the Czech Republic, with
each branch comprising not only an office but also a warehouse
and vehicle fleet. All of the branches are hooked together on line,
which allows the provision of up-dated information to all employees
so they can flexibly react to customers' requirements. "We
have 6,500 items in our catalog, along with another 5,000 available
for order, so we can substitute one product with another at any
time," Leitgeb says, boasting of the firm's assortment.
According to Leitgeb, it isn't possible to mark any milestones
in Activa's development, as it has grown quite steadily. At first
there were four employees, in 1995 there were thirty, and today
there are nearly three hundred. Over the years the vehicle fleet
has grown to 150, and the company's turnover, which amounted to
less than CZK 2 million in the first year, reached CZK 790 million
in 2002. The Slovak branch, which employs 20 and has been in operation
for three years, last year accounted for SKK 90 million in sales. "Bratislava
is one of our priorities, but we don't want to expand into any
other countries," Leitgeb says. At summer's end Activa moved
into a new headquarters in Letňany in Prague 9, which was built
by the developer Gudrun, the owner of the land and the building
that Activa has leased for ten years. Activa invested CZK 15 million
of its own money in services and equipment. The company now has
at its disposal 2,500 m2 of modern offices and 7,000 m2 of warehouse
space.
| IT cuts
costs
In 2000 Activa purchased all new hardware and software
that made it possible for the entire firm, including its
branches, to be interconnected on line. "The new system
allows complete flexibility," says Martin Leitgeb, one
of Activa's owners. It has also made ordering goods much
simpler, as it can now be done over the internet - which
is how 20% of all orders are placed. Activa is a great proponent
of electronic orders, because it means money is more effectively
spent. "This ordering method results in lower prices,
because the order is processed automatically, which reduces
human labor," Leitgeb explains. The computer prints
out the order directly to the warehouse worker, so it doesn't
have to go through a customer center operator. If the ordered
goods aren't in stock, the employee in charge of internet
orders takes over, often calling the customer and offering
an alternate suggestion. Next year Activa will invest over
CZK 5 million to replace their current software with one
called Navision. "We've exceeded our current capacity," says
Leitgeb.
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| Bearing
gifts
Martin Leitgeb, a co-owner of Activa, acknowledges that
the company doesn't spend much on advertising. "We try
to put more money into printed promotional materials," he
says. Once a year Activa prints about 30,000 copies of its
main catalog and a separate catalog for calendars and diaries.
Catalogs with special offers come out about three times a
year. Short-term promotional offers can be seen mainly on
the internet throughout the year. Of course, the company
also promotes itself as an office supplies merchant with
advertising items such as diaries, umbrellas, and pens, but
Leitgeb admits that he doesn't like such gifts. "It
doesn't seem like a good idea to me to give pens to customers
as gifts if we sell them," he says. He prefers giving
the money to charities, such as Kapka naděje (Drop of Hope)
and Fond ohrožených dětí (Fund for Threatened Children),
because he says they are as trustworthy as the Red Cross.
Additionally, the company also sponsors Naděje (Hope). which
helps the homeless, because as Leitgeb notes, "its focus
is on an entirely different group of people, and it isn't
a frequent subject of interest to firms." Although the
company donated CZK 500,000 to charity last year, Leitgeb
claims it isn't a classic marketing tool, as the firm does
not use it to increase its visibility. |
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