Ralf Bühler, CEO von Conrad: Vom B2C-Händler zum B2B Powerhouse

Okay, hello Karo, I'm very pleased to be here with you today for this conversation. What can I say about Ralf Bühler? I'm a Munich native, not just by choice but actually from Munich, who has traveled a bit around the world and spent his life in electronics, mainly at electronics companies, semiconductor manufacturers and the like. I've lived abroad for a few years, London and Hong Kong were some of the stops, among others. I also lived in Hamburg, I don't know if that counts as abroad, but as a Munich native we sometimes say that. Married, three children, and truly an enthusiastic electronics enthusiast at heart.

Yes, the path was a long or a broad one for me. I went through the stations in the semiconductor industry, was a classic sales person. And Conrad is actually the first German company I work for. Throughout my career, I mainly worked for Anglo-Saxon companies, Americans, British. And so, quite far along my path, this exciting task at Conrad came up – this transformation of a company that many of us know, that many of us associate with some image, and this company wanted to change. My B2B background fit well, and so I landed at Conrad a little over 5 years ago, and for almost four years now I have been leading the company as CEO.

So the most expensive thing we currently have would be a very special drone that costs somewhere around 15,000 euros. There are also a few robots in a similar price range.

That fluctuates a bit between power tools and measuring devices. It always depends on the season, but of course with our focus on craftsmen and companies that manufacture, those are the two big categories we work in.

Well, now we are exactly at the point where many will say: Conrad, I know, they have computers, laptops, I can get my telecommunications equipment, iPhones and so on. But what few people know is what our entire assortment is. Let me put it simply: on one side, we sell the smallest components that exist, that go into large electrical appliances – resistors, we're talking millimeter-sized components. And on the other side, we stop at what I just described: very complex systems, a robot (a cobot) or an industrial drone that costs several tens of thousands of euros. In between, we cover the entire spectrum of electronics: from components, measurement technology, tools, power tools, to laptops, computers, to full systems. So everything you need to run your company with technology. And we do all this – and this is perhaps a bit typical for where Conrad comes from, atypical for a traditional B2B retailer – we do this to a large extent digitally, either via what we all know as a website or what is called eProcurement, i.e. digital procurement.

So we have 100 years – we haven't said that yet, but Conrad has been around for 100 years. For 100 years, or 95 years, we were very strongly focused on consumers. And during that time, we always sold electronics in terms of assortment, that's what we're known for. We went through all the stages of retail: we started as a repair workshop, then started selling kits, then brick-and-mortar retail, then mail order, then online retail. That's how Conrad developed. And when we oriented ourselves towards B2B, the big question was: what role does brick-and-mortar retail play in this segment, the business customer segment? It was clear that the traditional stores we had – you mentioned Hamburg Altona, one could also say Munich Tal as an institution – we realized that this type of store is no longer needed for our B2B customer segment. So we decided, with a heavy heart but economically fully understandable, to close these stores. That means we designed our B2B customer business mainly for digital commerce. Nevertheless, we still have a sales team and we are testing stationary formats where we can serve B2B customers because immediate availability matters, regional proximity matters. We currently have four stores in a completely different format, much smaller, with much less assortment, which we are testing.

So let's start from the very beginning. Even after 100 years, we are a family business. We are a family business in the fourth generation. I'm not a family member, but I'm adopted, I'll just say that, and part of the big Conrad family. So still a family business. Today we still generate over a billion euros in revenue. That may sound unspectacular because if you've observed Conrad a bit, you know okay, the one billion has been said for a while. But what you need to know is that within about 5 years, we shifted revenue from 80% B2C to 80% B2B. So we still make a billion euros in revenue, but underneath we completely restructured the entire structure. We are at heart a European company. Of course, we were founded in Germany, but we are a European company. We are active in 17 markets in Europe and have around 2,500 employees today.

I believe it's a personal conviction: it's always worth moving towards something and not running away from something. And that's a bit of the truth anchored in us. As a company, I think Conrad is characterized by three things: foresight, courage, and perseverance. When you combine these three things, you always look at how things can continue. Many companies do that. And when you realize that the path that brought you here has to change because competitive pressure is high and the opportunity elsewhere is much greater, then you need the courage to say: I'm leaving my established paths and I dare to do this. I think that's the most important thing. Why did it work at Conrad? Because we have that courage. Many have foresight, but courage is harder. And we had that courage. We recognized that the old business model might not enable us to continue acting independently as we want. So the path to B2B was the right one. The market is large. Many of our strengths from B2C – like delivering to many small customers – play an extremely important role in the B2B environment, because we ultimately serve people in companies, not just anonymous warehouses. That strength from B2C helped us. And we bring this digital background, and especially in B2B, digitalization is far from complete. Especially in Germany, we are in a digital diaspora when it comes to digital procurement for unplanned needs, which we cover. With this insight and courage, we set out. Then comes perseverance, because success doesn't happen overnight. It's not a quarter-to-quarter thing. We've come a good way, but we're not at our goal yet. We want to grow even bigger. And that's where the family business's perseverance comes in – the ability to say, even when things aren't going well, this is our path and we'll stick to it. That's the Conrad way. That's why I'm so proud and happy to be here, because I believe we have everything in our hands to occupy this B2B digital procurement topic in a way that no other German company can right now.

Yes, that's also presumptuous. Let me put it differently: in such a transformation, when you're done, it's easy to explain everything and draw it nicely. The reality is that every change involves a lot of hard daily work, because the old patterns don't suddenly disappear. And we wouldn't be against serving B2C customers as long as they buy assortments that we have for our B2B customers anyway and that take place on our website. It's just that there's no more brick-and-mortar retail, if you will. Online, with the assortments we have, we are happy to serve B2C customers. So yes, there is always a temptation to say, 'Oh, we can still take that along' or 'we can add more there.' And we do catch ourselves taking some things along because we can. But I think the charm of this transformation is that it's not dogmatic. We've been very pragmatic and set a focus. We've committed to an assortment, we've chosen the channels we want to be active in, and if B2C customers are there too, we're happy about every customer who wants to buy at Conrad and expresses their sympathy through a purchase.

There is always a plan, and the question is how well-founded or deep it really is. B2B was not new territory for Conrad. Let's start with that: we already had 30% B2B customers back then. And it was obvious that digital procurement via websites and eProcurement systems would grow, and we already had a starting point. So I'd say the test had already proven that we could be successful there, otherwise you wouldn't make 30% of your revenue in that business. That's the foundation part. Then comes the part where courage, gut feeling, and entrepreneurial spirit come in and reinforce it. If you had talked to someone in Germany 7 years ago about building a marketplace, most would have said okay, marketplace I understand. But if you had talked about building a B2B marketplace, most would have looked at you and said, 'B2B marketplace, who needs that and why?' I think that's where the foundation meets the courage to say: if we go into B2B, we'll also try to build a B2B marketplace. And I think we've managed to get the best of both worlds: on one hand, not just intuition, on the other hand, reinforced by intuition, going into the right market.

All of the above. The B2B environment is even more inhomogeneous than B2C. Why do I say that? On one hand, we have micro-enterprises, sole proprietors, individual people running a business, craftsmen. On the other hand, we have DAX-listed corporations or other listed companies. In between is the spectrum we operate in. At Conrad, we serve all company sizes, from the smallest sole proprietorship to the largest DAX corporation. We do it in different ways. That's why your question is very justified. For small and micro-enterprises, the website is our transaction world. There we present our marketplace, we make our portfolio available to customers. In this structure, we still have a classic sales force, because when you work with a DAX corporation, you need to understand what that corporation specifically needs in terms of connections, what that medium-sized company needs in terms of solutions. So we also have a classic sales force, but even on the large customer side, we try to handle everything digitally. That's what I call eProcurement – all the words ending in 'i' like API, OCI, EDI, all these transaction forms are the media we work with for large corporations. And yes, we also go to trade fairs because that's where we find these large customers. We go to conferences to stay in contact with these companies. On the other hand, we have the classic online e-commerce marketing forms, from newsletters to Google, which we all use to reach the broad mass of customers.

Of course, you're right. The idea of a digital connection is naturally the most sustainable way a business relationship can arise. But here too, I'm a friend of the idea that if you sit on a chair, it needs at least three legs, otherwise you fall over. And I think this digital procurement has three elements that make it really stable. The first is that we try to ensure visibility and supply security for our customers through this digital procurement. Because again, we are not the ones who deliver to production lines. We are always there when the need was not foreseeable, when something broke, when something was forgotten to be ordered, when operating supplies are needed. That works best for the customer if they don't have to search but find the solution in their own system. So that's one aspect: supply security, making it easier. The second aspect why it's sustainable is that we try to also utilize products that are already available in the market through these connections. We talk about sustainability; our approach is to look for goods somewhere in the world instead of buying new goods, and try to show them to the customer in time through this digital visibility. That's the second. And the third part, which is underestimated, is that we live in an incredibly fast world with ever more limited resources in terms of people. The people who are there have to focus on the important things. I said we do C-parts procurement, and digital procurement is the ideal relief for personnel. Now comes the last aspect, which goes back to my connection to B2C: I always said that companies consist of people. Why does only one buyer have to procure in a company? That becomes a bottleneck. Why can't the people in the company procure these products in a controlled cycle that a buyer manages? That's eProcurement. We enable buyers to make all their people in the company buyers, while still keeping an eye on supply security, quality, and price. So yes, it's a lock-in, and no, if a purchasing manager changes, it doesn't automatically mean the connection is cut and we start from scratch.

I'll start at the end of your question or at the beginning. The answer is yes, this supply security can only be represented by offering a broad assortment, because it doesn't help the customer if only five products are made visible digitally. It only helps if this one-stop shop also has a broad technical assortment. Now to the other side: the marketplace now accounts for a three-digit million amount. Since we are a family business, please forgive me for not being exact, but it's a very high three-digit million share. And if we talk about the number of products, you mentioned 9 million – we are at just under 10 million. About 9 million product offers are marketplace and about 1 million product offers are Conrad's own, if you will. So the ratio is clearly in favor of the marketplace. But we do that precisely because we want to – why did people used to come to Conrad stores? They came because they knew they would find the battery they couldn't find anywhere else, the light bulb that no one else had. That's also our approach in the end-customer business: we don't want our B2B customers to have to search; we want them to come to Conrad digitally and find the product they are looking for. For that, we need this product spectrum: marketplace 9 million, Conrad 1 million.

I don't know if 'copying' is the right word, but I'll say it: everyone learns. Everyone looks at what models out there work or don't work. And I think what you can really learn from Amazon is this customer-first approach, this absolute focus on the customer, and then in the chain, covering the needs of that customer. How to make a transaction as smooth as possible, how to create visibility – all that can be learned. What we cannot learn, and here comes the break from B2C to B2B, is that in B2B, needs are covered that are required to solve a clear problem. No one comes to be inspired to find a new product; they need a product because a machine is down, because there's no more paper. There is a clear need. And this need in B2B is even more important: it must be clearly identifiable in many cases, where the goods come from, what the quality is. That's why on the vendor side, we have a completely different system. I always use the word 'curated'. Even if we have 10 million products, those 10 million products are not created by 10 million sellers. We have chosen quality partners, manufacturers, authorized distributors who sell their products with good service and good product quality. That means we strongly restrict seller access or we very carefully select which sellers we work with. Therefore, we have a different seller management than Amazon, because simply put, there are 500,000 to 600,000 sellers on Amazon. On the Conrad platform, we are talking about about 1,200 sellers in Europe. That shows the difference: 600,000 vs. 1,200, yet we still have 9 million products. That means an average seller on our platform brings many more products than on Amazon. So yes, we learn and look at what they do well, but no, because of our B2B focus, we can only partially orient ourselves on the seller assortment side.

Yes and no. Why do I say yes and no? I'm describing a world that consists of two parts. One part is the public world, what happens on the website. The other part is what happens in customer systems. In customer systems, there is no retail media because simply put, customers have better things to do than to let marketing measures into their internal systems. So on that side, it plays no role at all. On the website, we test approaches to do retail media for B2B from time to time. But we find that the maturity of the seller partners really shows. Some who sell products closer to consumer, like Apple, understand everything that happens. On the other hand, if you have a specialist for components, they have never had anything to do with retail media because they are not active in classic B2C channels. So you have a very mixed picture. We test again and again, but for us today, given our product spectrum and customer base, it is unfortunately not yet a revenue stream that excites us.

We have them, but I would always say we have many offerings that we started when we were still much more B2C-oriented. You just mentioned renting – that's a classic portfolio product from the B2C side. The difficulty we see on the B2B side is that renting only works well for a very limited product spectrum. No one in B2B would think of renting a machine that, I don't know, produces bottles. Those machines, especially when we talk about German customers, are bought as capital goods. So yes, we have service offerings like renting and leasing that we offer in B2B, but I wouldn't see that as a large, fast-growing area today. We test things, or we have more product-near services that we offer in B2B. For example, we do calibration of measuring devices, because if you measure something, the data has to be correct if you produce something. So we focus on product-near services, where we see acceptance in the B2B environment. But the more classic topics like renting, leasing, refurbishment – that is far from the development stage we know from the B2C market. So today, we orient ourselves more towards product services than product-distant services that we all know from our own consumer behavior.

Yes, I would exactly agree with what you just said. We currently see that German industry, which came from an absolute strength with a booming automotive sector and a booming industrial market, is struggling right now. And of course, if you are a strong market and then start to struggle, it looks a bit less strenuous abroad. Nevertheless, I believe that in Europe we are currently seeing a somewhat weaker market than in previous years. But I always warn us not to talk ourselves down too much. We have to see two things. I'm speaking for Conrad now, and then for the overall market. We are neither at the end of digitalization. For Conrad, there is still more non-digitalized demand than digitalized demand. So we can grow simply by driving digitalization further. Also, for Conrad, we are a German company, and we are still disproportionately strong in our home market Germany. We would of course like to achieve a similar market position abroad as we already have in Germany. So I'm not worried. Is it easy? No, of course not. And at the very beginning or at the very end, it is currently more strenuous in Germany than in other European countries.

You've described it well. We have internationalization clearly on our roadmap. As a company founded and dominated in Germany, we have enormous potential in Italy, France, where we are present but not yet with the same opportunity. The second growth potential, connected to the marketplace, is cross-border e-commerce. That may sound unexciting to someone who knows B2C, and actually a bit illogical. As a consumer, you can shop anywhere you want, you're right. But the situation in the B2B market is unfortunately not that simple. We have VAT in the way, we have different regulations in Europe regarding invoicing, and so you cannot simply sell goods from Italy to Germany or from France to Poland via a marketplace. That is our other big growth board we are drilling: how do we make cross-border e-commerce on the Conrad platform so simple that we can sell goods from anywhere in Europe to anywhere in Europe in the B2B environment. Those are the two big ones. And underneath, we have eProcurement again. Not just us, but the entire market is still very much in need of development when it comes to digital procurement, to put it cautiously.

The short answer is no. I could stop there. But I'm always a friend of not pretending that there is no chance that something like that could become competition for us. I've listened to the stories about Amazon over and over again. I sit here in the office of one of the original mail-order and online retailers in Germany. I think 24, 25 years ago, everyone smiled mildly when Amazon came up. And now we look at 2024, and no one is smiling anymore. Everyone has understood that we should have taken it more seriously. That's why I always want to point out our paranoia a bit and say: only the paranoid survive. There's a saying in the semiconductor industry from someone. So today, no competition, but we should keep a close eye on it, because at the end of the day, whether it's fashion or electronics, that remains to be seen. Then the only question is to what extent B2B customers are willing to take the risk of where the goods come from, how functional and quality-oriented they are. That is certainly the barrier to entry for players. But we are well advised to keep an eye on what is happening.

Normally, when people ask me what my job description is, I always say: chief psychologist, chief janitor. And I think in such a transformation, I always say that with a smile and a wink, but the truth is buried there. In this transformation, it's about taking people along, inspiring them, and repeatedly committing them to this new path. That is a task that is fun, costs a lot of energy, and will be one of the big tasks in the next two years. The second topic is a curse and a blessing: everyone knows Conrad, but maybe not the right version of Conrad. So I look forward to sustainably anchoring this new version of Conrad in people's minds. And the third is, of course, I get to be the CEO at the forefront of a company that has become 100 years old. That is something special. And I would of course like to reach the next milestone with the company: to say we have really become this B2B platform, the leading procurement platform in Europe, which we have set as our goal. My shareholders would say in two years, but I say in the next three to five years, that would be our goal.

Thank you, Karo. It was fun too. Happy to do it again.