The Self-Service Revolution
By Diane Trommer

As service providers, electronic component distributors’ value proposition is typically defined by their ability to not just meet, but also exceed customer expectations. Sales representatives or field application engineers who are willing to go the extra mile are rewarded with both business and customer loyalty. In today’s fast food, have-it-your-way world, however, distributors are finding that a best-in-class, customer service experience is not just a byproduct of physical efforts on behalf of the customer. These days, superior customer service is also defined by a distributor’s ability to help customers help themselves with Web-based tools and services.

This is a somewhat revolutionary approach for broadline distributors, said Beth Ely, senior vice president and director of new channel development for Avnet Electronics Marketing Americas, Phoenix. As middlemen in the supply chain, distributors are understandably wary of anything that might distance them from their customers. At first glance, both the Web and the concept of customer self-service seem to represent potential threats to the distributor’s share of the supply chain pie. Yet, as the pressure to shrink development costs and lead times mounts, customers are increasingly turning to distributor partners for easy access to do-it-yourself online tools and information. “Our experience has shown that tools which enable customers to perform certain tasks at their own convenience without the need for outside intervention actually strengthen the bond between Avnet and our customers,” said Ely.

Though the Web has hardly been an overnight sensation that many predicted it would become in terms of pure e-commerce, the impact of its slow but steady infiltration of the electronic supply chain should not be underestimated, according to Robin Gray, executive vice president of the National Electronics Distributors Association, Alpharetta, Ga. “It has taken time for the distribution sector as a whole to find the best ways to use the Internet. But as they continue to refine the functionality, there is increasing benefit and value out there for the design engineering community.”

Distributors that reap this benefit are able to translate the value that defines the company offline into the online experience. “Any site can take you to a part, but what is most important is assuring that the part is the optimal choice, that it can be supported through the development and production of the customer’s end product,” Ely said. “My goal is to harness the richness of information that differentiates Avnet and bring that online.”

Avnet offers a range of online resources to customers including component user guides, schematics and test files, as well as on-demand Web seminars and e-newsletters featuring the latest products and services available. Avnet also recently updated its PartBuilder parametric search tool to provide detailed product data for nearly two million parts that are now accessible through the distributor’s Web site. PartBuilder enables users to search the Avnet database using a part description versus a specific part number. When a search is performed, the data returned includes the technical specifications and other relevant information like whether the part is stocked and if it is a top seller.

Going forward, Ely plans to further refine the search capability to enable even more intelligence in the search results. This will include more informational offerings on parts and services related to the original search topic. If a customer searches for a particular FPGA, the results will include links to information such as evaluation boards for the device and related seminars. “This will allow online customers to benefit from the same kind of value add recommendations that they would receive offline from our technical specialists,” said Ely.

For catalog distributors, the self-service concept has long been a part of the business model. The Web now enables these distributors to go beyond pure product selection and offer a greater scope of value add services. For example, Digi-Key Inc. of Thief River Falls, Minn., has established a library of on-demand product training modules. The modules offer engineers around-the-clock access to in-depth training on some of the industry’s latest and most innovative products, according to Digi-Key President Mark Larson.

Digi-Key has also updated its static online catalog with a new interactive version that features clickable part numbers, as well as links to detailed product data sheets and photos. “For our customers, the e-commerce model is very convenient because real-time pricing, availability and product comparisons are just a few clicks away,” Larson said. “This allows users to not only research components, but also purchase them from anywhere at anytime of the day or night.”

While component sales are the ultimate goal for all distributors, the full scope of the impact and value the Web has had on the electronics supply chain is difficult to quantify. “A lot of people use distributors’ sites for a wide range of tactical and value added information, but not all (customers) buy online,” said Ely. “If we continue to measure strictly by percentage of revenue, we will miss the fact of how revolutionary the change in the way customers conduct business has been.”

Five Web Site Features most important to Distribution Customers

Five Web Site Features most important to Distribution Customers

Users' Wish List

Five Web Site Features Most Important to Distribution Customers

• Up-to-date content
• Availability of technical specifications
• Pricing information
• Product images
• Online catalog searchable by specifications

Distribution Insider Magazine

Sales-Chains eBenefits in Outsourcing Infrastructure, study finds...

Sales-Chains eBenefits in Outsourcing Infrastructure, study finds...

• 75% of the respondents reported improvements in their B2B IT costs
• 55% reported an increase in predictability of B2B IT costs
• 62% reported an increase in customer satisfaction
• 57% reported higher productivity of internal IT Resources

Study was conducted by Technology Forecasters, Inc. (TFI)
www.techforcasters.com

The Self-Service Revolution

By Diane Trommer

As service providers, electronic component distributors’ value proposition is typically defined by their ability to not just meet, but also exceed customer expectations. Sales representatives or field application engineers who are willing to go the extra mile are rewarded with both business and customer loyalty. In today’s fast food, have-it-your-way world, however, distributors are finding that a best-in-class, customer service experience is not just a byproduct of physical efforts on behalf of the customer. These days, superior customer service is also defined by a distributor’s ability to help customers help themselves with Web-based tools and services.

This is a somewhat revolutionary approach for broadline distributors, said Beth Ely, senior vice president and director of new channel development for Avnet Electronics Marketing Americas, Phoenix. As middlemen in the supply chain, distributors are understandably wary of anything that might distance them from their customers. At first glance, both the Web and the concept of customer self-service seem to represent potential threats to the distributor’s share of the supply chain pie. Yet, as the pressure to shrink development costs and lead times mounts, customers are increasingly turning to distributor partners for easy access to do-it-yourself online tools and information. “Our experience has shown that tools which enable customers to perform certain tasks at their own convenience without the need for outside intervention actually strengthen the bond between Avnet and our customers,” said Ely.

Though the Web has hardly been an overnight sensation that many predicted it would become in terms of pure e-commerce, the impact of its slow but steady infiltration of the electronic supply chain should not be underestimated, according to Robin Gray, executive vice president of the National Electronics Distributors Association, Alpharetta, Ga. “It has taken time for the distribution sector as a whole to find the best ways to use the Internet. But as they continue to refine the functionality, there is increasing benefit and value out there for the design engineering community.”

Distributors that reap this benefit are able to translate the value that defines the company offline into the online experience. “Any site can take you to a part, but what is most important is assuring that the part is the optimal choice, that it can be supported through the development and production of the customer’s end product,” Ely said. “My goal is to harness the richness of information that differentiates Avnet and bring that online.”

Avnet offers a range of online resources to customers including component user guides, schematics and test files, as well as on-demand Web seminars and e-newsletters featuring the latest products and services available. Avnet also recently updated its PartBuilder parametric search tool to provide detailed product data for nearly two million parts that are now accessible through the distributor’s Web site. PartBuilder enables users to search the Avnet database using a part description versus a specific part number. When a search is performed, the data returned includes the technical specifications and other relevant information like whether the part is stocked and if it is a top seller.

Going forward, Ely plans to further refine the search capability to enable even more intelligence in the search results. This will include more informational offerings on parts and services related to the original search topic. If a customer searches for a particular FPGA, the results will include links to information such as evaluation boards for the device and related seminars. “This will allow online customers to benefit from the same kind of value add recommendations that they would receive offline from our technical specialists,” said Ely.

For catalog distributors, the self-service concept has long been a part of the business model. The Web now enables these distributors to go beyond pure product selection and offer a greater scope of value add services. For example, Digi-Key Inc. of Thief River Falls, Minn., has established a library of on-demand product training modules. The modules offer engineers around-the-clock access to in-depth training on some of the industry’s latest and most innovative products, according to Digi-Key President Mark Larson.

Digi-Key has also updated its static online catalog with a new interactive version that features clickable part numbers, as well as links to detailed product data sheets and photos. “For our customers, the e-commerce model is very convenient because real-time pricing, availability and product comparisons are just a few clicks away,” Larson said. “This allows users to not only research components, but also purchase them from anywhere at anytime of the day or night.”

While component sales are the ultimate goal for all distributors, the full scope of the impact and value the Web has had on the electronics supply chain is difficult to quantify. “A lot of people use distributors’ sites for a wide range of tactical and value added information, but not all (customers) buy online,” said Ely. “If we continue to measure strictly by percentage of revenue, we will miss the fact of how revolutionary the change in the way customers conduct business has been.”

Premier Farnell, RS and Digikey focus in Web Sales

Premier Farnell, RS and Digi-Key focus in web sales

by Richard Wilson

Wednesday 9 April 2008

Premier Farnell has joined fellow catalogue distributors RS and Digi-Key in reporting dramatic growth in its Internet business in all the major markets of the world.

Farnell said last month that its Internet business increased by 49 per cent in American markets in the fourth quarter of the year.

The distributor said the “momentum from the implementation of the new web front end across the business continues to build” with fourth quarter web sales up 38 per cent and total e-commerce sales accounting for 29 per cent of total sales in the fourth quarter.

In Europe during January, Farnell’s online activity accounted for 43 per cent of total sales.

Similarly excited about the online business is RS Components which has said it could be deriving half its sales from the Internet within 12 months.

RS has been selling products through its websites for over 10 years. The volume of online sales has been growing steadily and today accounts for over 42 per cent of the overall business, said Klaus Goeldenbot, UK general manager at RS.

“I can see the online business reaching the 50 per cent mark before the end of the next financial year,” Goeldenbot told EW.

In some parts of the world web sales have already overtaken traditional telephone sales. “Take Japan the figure is over 75 per cent,” said Goeldenbot.

US-based online specialist Digi-Key continues to lead the field in growing its Internet business. It reached the 50 per cent online sales milestone sometime last year.

Mark Larson, president of Digi-Key, has told EW that an online business accounting for 70 per cent of all sales was “achievable.”

Farnell also sees some country markets moving faster to Internet-based buying and already passing the 50 per cent mark. “In some country markets the proportion of online business is already over 50 per cent,” said Harriet Green, CEO at Premier Farnell.

Green conceded that this growth in the online business was changing the way the distributor operates, but she still sees Farnell’s catalogue, telephone sales and direct sales channels as being strategically important.

Likewise, Goeldenbot insisted that growth in the online business this does not mean that the distributor’s print catalogue is becoming less important. “The catalogue is still our most important route to market and our commitment to it is as strong as ever,” said Goeldenbot.

Despite challenging market conditions, Farnell’s full year sales from continuing operations were 3 per cent up on last year. RS, which has been re-focusing on its electronics business for the last 18 months, reported a 7 per cent increase sales in the six month to September.

Catalog distributors draw big imitators

It's no secret that catalog distributors outperform the overall distribution market year after year. Now, large distributors are looking for a piece of the action.

By James Carbone -- Purchasing, 5/17/2007

If imitation is the sincerest form of flattery, then catalog distributors are feeling very admired these days. It's a peril of success.

Large distributors such as Arrow and Avnet have borrowed a page from the catalog distributor's playbook and have opened up their own small-order business units in an effort to imitate the success of catalog distributors.

Catalog distributors sell small quantities of parts often to design engineers working on new products or to companies that have small production runs.

Some say that catalog distributors are recession-proof because most electronics companies are always designing new products and have to buy parts for those designs. If revenue growth of catalog distributors in 2006 is any indication, OEMs must have designed a lot of new products.

While the average overall growth rate for the Top 75 distributors was 9.2%, catalog distributors' growth rate was 21.5% compared to 2005. Mouser, which was acquired several years ago by passives specialist TTI when TTI decided it wanted to benefit from the small order business, grew sales 33% to $184 million in 2006. It was the highest growth rate among the four major catalog distributors.

Mike Scott, vice president of active components for the Mansfield, Texas-based Mouser, expects growth to continue into 2007. 'We are hoping for another banner year. We expect to grow more than the industry average.'

One reason for Mouser's growth is that it is boosting its Web capability, says Scott. 'We put in a lot of effort to make sure we had the entire portfolios of our suppliers loaded up on the Web rather than just a sampling of the products they offer,' he says.

'We aren't looking for suppliers that can second source other suppliers. Instead Mouser is trying to give customers parts for the full bill of materials for a system design,' says Scott.

Scott says Mouser differentiates itself by not requiring minimum orders or charging a handling fee.

In addition, Mouser comes out with a new catalog every 90 days. 'We try to touch every single page of the catalog,' says Scott. 'The idea is to make sure that obsolete parts or parts that aren't recommended don't get used in new systems,' he says.

'At the end of the day, we have a simple business model: get the newest products into the newest designs and not worry about going after volume and other things that convolute the message,' says Scott.

That is a reference to Digi-Key, a catalog distributor in Thief River Falls, Minn. which in recent years has been pursuing production business as well as small orders. Digi-Key has been successful in developing its production business and now 40% of its revenue is from its volume business, says Mark Larson, Digi-Key president. Larson says he expects that percentage to grow and volume sales should eventually eclipse 50% of Digi-Key's total sales.

That doesn't mean Digi-Key is giving up on its small-order business. 'The engineering side is still our core business. Our goal is to make sure we are strong in each area,' says Larson.

Larson says that while Digi-Key's volume business is growing, it is not the only reason that Digi-Key grew its North American sales 25% in 2006. 'Our growth can be attributed to a combination of things. We maintain high in-stock percentages so products are available off the shelf,' he says. 'We ship the same day we get an order. If there is a problem, we resolve it quickly and fairly,' he says.

Catalog distributors’ revenue growth usually outpaces the growth of the overall electronics distribution industry.

Signing agreements with new suppliers that have in-demand products based on the latest technologies is always important to catalog distributors if they expect to add new customers and win repeat business.

Reaching new customers is a constant priority for Allied Electronics based in Fort Worth, Texas. Allied grew its sales 21% in 2006 and expects double-digit if somewhat slower growth in 2007, says Rob Birse, director of marketing communications for Allied.

He says the sky is the limit when it comes to growing its long-term sales because there are many customers Allied is not yet reaching.

''We've barely scratched the surface,' he says. 'We are doing business with about 60,000 companies on an active basis but we could be doing business with 250,000 so it is a continuing quest,' he says.

While Allied is trying to increase its number of customers and sell more to existing customers, Birse says the efforts by large distributors to go after the small-order business should not hurt Allied's efforts.

He says it is flattering that distributors want to go after small orders.

DeWight Wallace, president of Newark InOne in Chicago, agrees catalog distribution is different than large, broad-line distribution. 'It's a different business model and it may be difficult for large distributors to reconcile it with their broad-line businesses,' he says.

He understands why the large distributors are looking into small orders. Margins are higher and revenue growth is stronger. Newark InOne enjoyed double-digit growth in 2006 as it grew its sales 11% to $607.6 million.

Wallace says Newark InOne grew sales in part because it was able to capitalize on Restriction on Hazardous Substances (RoHS) legislation.

'We took a lead position with RoHS. We positioned ourselves as an information source and a true partner rather than just a distributor,' says Wallace. 'We were first to market with a lot of information. We had a RoHS-specific catalog.'

What is an e-Catalog???

eCatalog

An eCatalog (electronic catalog) is a product management system based on a database. The rapid growth of production and sales activities in recent years has meant that suppliers, distributors and buyers have had to deal with increasing volumes of information. It has therefore become extremely important to present up-to-date and well-structured information on products and their features both on the market and, above all, on the Internet. With the help of eCatalogs, text and detaile, product information can be created and constantly kept current. In many cases, the use of eCatalogs represents a decisive competitive advantage. The advantages of eCatalogs:

• Effective management of company data through the integration of the eCatalog into enterprise resource planning (ERP) and merchandise information systems (MIS).
• It is possible to link eCatalogs to your company’s eShop.
• Because of the convenient and flexible structuring of product information, eCatalogs allow professional buyers to perform an effective search of the company’s products.
• It is possible to classify products according to standard classification systems (e.g. eCl@ss).
• Various data exchange formats (e.g. BMEcat) can be generated.
• Simple and inexpensive creation of CD-ROM and printed catalogs (Single Source Publishing).

Using modern software, we create eCatalogs for our client companies even if product information has not been sufficiently systematized. Our experts sit down with yours, analyze the product/services information and then classify it according to the international eCl@ss system, the standard in eCommerce in Germany. This ensures that the catalogs we create meet all of today’s as well as future eProcurement requirements.