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Distributor & Supplier Focus windsof chanGe


Change that initially appeared to be evolutionary has suddenly become revolutionary


ByMark Larson, Digi-Key


Electronic component distribution is going through a period of unprecedented change. The Internet has proven to be a truly disruptive technology. It is a game changer, but the change is being driven by something farmore fundamental than the Internet. It is being driven by a significantly greater force: the needs of design engineers and professional purchasers. The Internet is not the driver of the change; it ismerely the facilitator of the change.


Change that initially appeared to be evolutionary has suddenly


become revolutionary. In a very real sense, the winds of change that were once a gentle breeze have reached gale force velocity. The balance of power has been permanently altered. The Internet has empowered the design engineer and the professional purchaser. They now have unfettered access to components, product data, application notes, and on-line chats at their convenience. Their dependence on traditional distribution has been broken.


Distributionmodels developed decades ago are reeling.


Infrastructure that seemed vital in the 1980s and 1990s is seen as far less relevant and often totally irrelevant to a growing number of customers. In some cases, engineers and professional purchases actually view the historic infrastructure of traditional electronic distributors as an impediment to achieving themost cost effective and time effectivemeans to conduct business.


It’s interesting to note that although the economicmeltdown


traumatized almost all sectors of our industry and caused a sharp drop in sales, several basic industry trends continued unabated. In fact, the “hostile”market conditions that inflicted the industry in late 2008 andmost of 2009 served as a catalyst in driving them forward. There is every reason to believe that three of themost prominent trends will continue to reshape distribution over the next few years:


1 Relationshipmarketing continues to be sharply challenged by performancemarketing.


2 Speed and efficiency are increasingly important in design and procurement.


3 Electronic component sourcing is rapidly becomingmore globalized.


Digi-Key is aggressively responding to these powerful trends. As


evidence, I cite the fact that our unique businessmodel is clearly propelling rates of sales growth that far exceed those of the industry. In fact, I believe that any objective observer would agree that we aremore than just responding to these trends.


There is a widely held belief that Digi-Key is both tactically and strategically fueling these trends.


Let’s look at the numbers.


• Digi-Key’s worldwide sales January through September of 2010 are upmore than 73% over the same time period last year.


• Digi-Key’s sales for all of Europe January through September of 2010 are up 138% over the same time period last year.


• Digi-Key’s sales for Asia-Pacific January through September 2010 are up 148% over the same time period last year.


Design engineers and professional purchasers vote with their


dollars, pounds, euros, yen. etc. Digi-Key’s superior growth rates have not occurred by accident. We have thoughtfully developed a businessmodel that anticipates the customer’s needs and wants in “new age” distribution.


That is what has driven Digi-Key to become the 4th Largest


Distributor of Electronic Components in North America and the 6th largest distributor of electronic components worldwide.


Design engineers and professional purchasers of electronic


components are the drivers of these trends. They are the people that define our business.


Howis Digi-Key doing? Let’s “followthemoney:” In 2009, one of


theworst business years in our industry, Digi-Key saleswere down a mere 5.7%. During this same time period, our competitors on a worldwide scalewere typically down two to three times this rate. Nowin 2010, the industry has experienced a sharp rebound in sales. All distributors are enjoying excellent sales growth, but preliminary numbers showDigi-Key is sharply outperforming themarketwith rates of sales growthmore than 1.7 times that of the industry.


The Internet has empowered the design engineer and the


professional purchaser. Digi-Key’s unique businessmodel significantly strengthens their ability to exercise this power.


Mark Larson is president of Thief River Falls,Minn.-based catalog distributor Digi-Key Corp.


www.digikey.com Annual Edition 2011 | 55 Digi-Key’sMark Larson GaLe force


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