Catalog Distributors Use Accessibility, Information To Get Ahead

Catalog distributors—those companies known for offering quick delivery on just about any electronic component a customer could ask for, all at the click of a mouse or a quick phone or fax order—have grown considerably in recent years, harnessing the power of the Internet to expand their reach around the world. In the process, many have encountered a host of new challenges, such as keeping up with technology, dealing with new cultures, and expanding customer support options.

Many catalog distributors say their greatest challenge will be identifying key industry trends and responding to them in a way that fully leverages today’s rapidly changing technology. Consider how many distributors are embracing social media to provide customers with new product information. Is there a better way to keep customers up to date on your latest offerings than by delivering that information straight to their desktop, smart phone, or tablet?

Catalog distributors say their newfound size and scope has not changed their ultimate mission to provide electronic design engineers quick delivery on the widest possible range of products. Rather, it simply has expanded that mission to a much wider audience of design engineering customers.

“Large catalog distributors offer customers a breadth of product that [they] can’t get elsewhere,” says Mark Larson, president and chief operating officer of Digi-Key, a catalog distributor that offers more than 2 million electronic components on its Web site.

“Customers want to have instant access to all of the latest and hottest components, and [they] expect that their orders will consistently be shipped the same day,” Larson says. “That is what we do. [We] ship millions of orders each year to hundreds of thousands of customers around the world—and 99.8% of the orders are shipped the same day they are received.”

Scott McLendon, vice president of product management and marketing for Allied Electronics, has similar sentiments, emphasizing accessibility as a key attribute of catalog houses.

“I think our biggest advantage can be summed up in one word: access,” McLendon explains, pointing to Allied’s offering in particular. “Access to technical and commercial information 24/7/365, access to an unparalleled breadth of inventory (not just the ‘A’ movers), and access to tools that help not only design engineers but purchasing professionals be more efficient.”

McLendon agrees that the Internet has played and will continue to play an important role in the growth and success of electronic components distributors in general. He says the Internet has helped Allied engage the market on a much wider scope, for one.

Through search engine and online marketing, Allied Electronics is driving more than 2 million visits per month to its Web site, and many of those are first-time visitors. The increased traffic helped the company nearly double its online sales in 2010.

From a sales perspective, McLendon says the “Internet explosion” is helping drive demand for electronic designs that are smarter and faster, with better power management and lower production costs.

“In 2012, it’s forecasted that over 2 billion people will have Internet access, and the number and types of devices that will be connected via the Web are exploding,” McLendon adds.

Catalog distributors are challenged to keep up with the growth on both fronts, and it’s causing many of them to reach out to customers in new and different ways, particularly when it comes to providing customer support. Customized Web sites, technical support, and innovative communication strategies are just a few of the ways companies are addressing these challenges.

Supporting Growth

All distributors are looking for new and better ways to support their expanding customer base. For most catalog distributors, that means doing so without the help of outside sales representatives or field application engineers.

Many distributors have approached this by developing customized Web sites for different parts of the world that allow customers to interact with them in their local language and currency. Digi-Key, for example, has 81 country-specific Web sites.

Mouser Electronics has 42 country-specific Web sites where customers can access all of the distributor’s information in their local language and purchase products and services in their local currency. Additionally, Mouser combines its online presence with physical sales branches in 14 locations around the world (with seven more coming this year).

Although Mouser does not offer design support, it does provide technical support for sourcing, bill of materials, and technical questions through the company’s numerous customer service locations strategically placed to provide local, personalized support to design engineers and buyers. Inside sales representatives provide an additional layer of service.

“We really want to be the preferred source for design engineers and small production buyers,” explains Kevin Hess, vice president of technical marketing for Mouser Electronics. “That means giving them all the information they need to source products, any time they need it—online or by calling our sales branches.”

Hess says such efforts are crucial in today’s fast-paced marketplace.

“Design engineers don’t have the same amount of time they used to have to complete a project,” he adds. “There is a much shorter time-to-market. They also don’t have the time to go out and research several different manufacturers’ Web sites to find what they need. The have to find everything they need in one location and be able to buy it there.”

Hess says many design engineers are also being asked to do much more work than they have in the past—producing more, sourcing their own products, and sometimes even working on a part of the board they are not familiar with. All of these issues cry out for information and support, he says.

“We are all about getting information out—technical data, spec sheets, product guides,” he says. “It’s also important to let design engineers know about the lifecycle status of a part, because the lack of this critical component can cost them a time-to-market advantage and additional cost due to redesign.”

Mouser is also using new and innovative communications strategies to stay in front of customers and make it easier for them to do their jobs. For instance, the distributor’s mobile Web site, MouserMobile, lets customers access Mouser’s full range of products and services from anywhere in the world via wireless phone or tablet. MouserMobile is available in 16 languages and 16 currencies.

“You can be anywhere and fulfill your bill of materials,” Hess explains. “And that makes their job easier.”

Newark Electronics is making similar inroads with its element14 initiative. Owned by British distribution giant Premier Farnell, Newark Electronics offers customers around the world access to information, design support, and online ordering through element14, a technology portal and online community for design engineers.

Premier Farnell has gone so far as to rebrand all its Asia-Pacific business as element14, wrapping its physical offerings—including sales offices and distribution centers—into the element14 brand.

A One-Stop Shop

When it comes to service, a catalog distributor’s trump card is one-stop shopping. The goal is for customers to fill their entire bill of materials—in whatever quantity they want—from one source, shipped from one location the same day.

“We invest in inventory and have it on the shelf for the engineer,” Hess explains, noting the importance of looking ahead to the next hot product—anticipating what engineers will want and making sure it’s available.

“They always want to know what new technology is coming out. So we allow them to read about it, look at spec sheets and so on, and in a click or a phone call have it in their hands and be ready to work with it,” Hess says.

Allied’s McLendon agrees, pointing to the importance of flexibility as well.

“I think we’re attractive because we offer products (in large and small quantities) and services at a fair price that are highly valued,” he says. “We love small and medium-sized customers, and we try to be flexible and easy to do business with. However, I think ultimately our customers value our outstanding breadth and depth of inventory that is available to ship the same day when an order is placed as late as 9 p.m.”

In today’s world where non-authorized distributors are selling “who knows what,” distributors also emphasize the importance of buying from a trusted source.

“Customers need to get that product from an authorized source and have that product in their hand the very next day,” Hess says.

Looking Ahead

Like most electronics distributors, catalog companies are optimistic about business conditions in 2011. Digi-Key’s Larson says that while he does not expect the company to sustain the spectacular growth levels of 2010, when the distributor grew sales by 64% to hit $1.5 billion, his outlook is for strong growth of 15% to 17% this year.

At Allied, McLendon says he expects a “relatively robust 2011” to follow last year’s stellar industry performance.

“Although the comparisons will be much tougher in 2011 and the resulting growth rates will be lower, the net result should be another good year for our industry,” he says.

Mouser’s Hess is equally optimistic and says it helps to be focused on the design engineering community rather than on higher-volume production work, as is the case with most traditional catalog distributors.

“When you focus on the design engineer, there’s always activity going on,” Hess explains. “Manufacturers are always going to produce new products. As long as they are coming up with some of the newest technology to help with power management, cost savings, and so on, then there will always be new design activity.”

Hess points to advances in alternative energy and solid-state lighting as well as innovations in wireless technology and embedded systems as key growth opportunities for distributors.