Top 50 Distributors Report
DISTRIBUTORS’ GROWTH STALLS IN 2012
The North American distribution industry had a tough year in 2012, trying to hold onto the gainsmade during the previous year. The key reasons include slow demand, high inventory levels, and lowmargins, along with economic uncertainty. By Gina Roos
After experiencing tremendous growth in 2010, followed by twomajor natural disasters and economic uncertainty in 2011,which caused a yo yo effect in the supply chain, distributors faced slowdemand, price pressure, and, in some cases, toomuch inventory in the channel in 2012. The resultwas a flat growth year. "Itwas a tough year for themarket," said Lindsley Ruth, executive
vice presidentoffice of the president, Future Electronics, Quebec, Canada. "A lot of it had to dowith political instability, the global economic situation, and declining ASPs. It reallywas those three factors thatweighed into the overall outcome in themarket." "Therewere nomajor issues in terms of supply demand imbalance,"
said Ruth. "Companies slowly reduced their inventories, and lead times continued to fall in 2012. I thinkwe experienced an inventory correction in 2012,which has reversed in quarter one of this year."
Top 50 sales fall 2%in 2012 ($ billions)
distributors posted global revenues of $60.6 billion in 2012, declining four percent, down from$63.1 billion in 2011. The top 50 distributors still derive themajority of their sales fromNorth America at 50.5 percent. As for customer channels, 64 percent of the top distributors' business
comes fromOEMs, and 26 percent derives fromelectronics manufacturing service (EMS) providers and original designmanufacturers (ODMs). The remaining 10 percent is derived from"other" customers includingMRO, government institutions and other distributors. These figures are based on responses from33 of the top 50 distributors. Five of the top ten distributors did not respond to this question so
the numbersmay be skewed, considering that the revenuemarket share of the top ten distributors is 95 percent.
Top ten distributors hold lion's share ofNAmarket (Annual, $/billion)
The top ten distributors continue to hold the lion's share of the North American distribution industrywith 95 percent, or $29.0 billion in revenue for 2012. Source: ESNA
Based on 41 responses,we found that the top distributors garner After experiencing doubledigit growth rate in 2011,
the top 50 distributors lost ground in 2012. Revenues shrank by two percent, tallying $30.6 billion in sales, down from$31.2 billion in 2011. Source: ESNA
Because of these challenges, the total North American revenue for
the top 50 North Americanbased distributors fell nearly two percent in 2012. This compares to 12 percent growth in 2011 and 31 percent growth in 2010. Twentyfour distributors reported sales growthwith six posting doubledigit increases. In comparison to the previous year, 40 distributors recorded growthwith 14 reporting doubledigit increases. Distributors also lost ground globally. The top 50North American
22 |May/June 2013
most of their sales fromindustrial customers (26%), followed by military/aerospace (15%), telecommunications (13%), automotive (8%),mobile communications (7%),medical (6%), computers (6%), and energy (4%). The top distributors also derive a significant portion of their business (15%) from"other"markets. Five of the top ten distributors did not respond to the question.
Looking back While distributors differ on some of the reasons for a challenging year in 2012, they agree that the base issuewas a lack of demand. "Overall, the underlying demand in the industrywas not very
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www.electronics-sourcing.com
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