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 m²of modern offices and 7,000 m² of warehouse space.

IT cuts costsIn 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.

Bearing giftsMartin 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.