The electronics distribution model is in disarray. Industry leaders are positioning to find secure footing and focus continues to shift for some as control of the electronics supply chain is changing. The dominant business model remains to be seen.
From our perspective combined with discussions with distribution insiders it appears electronics distributor Avnet is seeing retraction in penetration despite recent financial reporting; Arrow is seeing moderate (single digit) increases, Mouser and Digi-Key both are experiencing double-digit growth and so is TTI.
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Premier Farnell (acquired by Avnet) is becoming an anchor for Avnet, having still not figured out what to do with Premier and as one insider says, “Premier is pulling Avnet deeper into the pool.”
Allied Electronics, a leading distributor of industrial automation and control products, electronic components and electromechanical components, is showing double-digit, strong growth. The same with Master Electronics.
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Then there’s Samtec, a leader in the electronics interconnects industry and manufacturer of connectors, cables, optics and RF systems with channel systems support from IC to PCB and beyond and, TE Connectivity, which designs and manufactures connectivity and sensor products for harsh environments in industries like automotive and industrial are also seeing healthy growth selling directly to OEMs, and doing so quickly with innovative platforms and transaction execution.
None of this is surprising given the growth VentureOutsource.com is seeing in the number of electronics OEM inquiries for contract electronics solutions in the industrial, robotics and automation markets.
Add to this there is continued consolidation and related activity such as distributor America II Electronics being acquired by private equity Wynnchurch Capital.
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Furthermore, non-competing, non-OEM components manufacturers like Texas Instruments are partnering up leaving distributors with near zero influence on the supply chain compared to years ago.
Distributors moving boxes
Not to be left out of the conversation, Amazon has thrown their hat into the ring helping push inventory for distributors like Future Electronics, currently with no less than 40,000 SKUs. Looking at Amazon’s history of disrupting industries know this is only the beginning of Amazon-distributor partnerships as distributors scramble to compete and gain a wider audience of buyers and replace buyers they are losing to more innovative distribtion competitors. Electronics distributors are being reduced to buildings moving boxes driven by the fast and free mentality of buyers.
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Buyers want ‘click-to-cart-to-door’ and they want it now. Most electronics distributors cannot get it out fast enough and nearly all electronics distributors have been slow to adapt.
As non-OEM components manufacturers place more and more pressure on distributors for picking, packing and shipping, the control of electronics components in the supply chain shifts more and more toward the non-OEM components manufacturer while the grip distributors once held slips more and more.
Distribution squeeze hits contract electronics
As electronics distributors re-direct blood flow to the major organs in order to survive contract electronics (EMS providers) are also feeling pain. For years EMS providers have been receiving tips on lead activity coming through distributors.
But as distributors move to more innovative business models in terms of staffing [and move more online] they have smaller armies of boots on the ground gathering information for sharing business dialogue with EMS providers.
Get a list of EMS manufacturers matching your program needs (Its free)
Venture Outsource has the largest, global database of contract electronics capabilities. Get a free list of contract EMS manufacturing companies matching your program needs.
“Was able to very quickly find details on the important elements of setting up EMS and ODM partnerships, talked with an advisor for personalized info on quality providers matching our requirements while getting up to speed quickly about the industry and connect with key staff from like-minded companies and potential partners. Great resource.”
— Jeff Treuhaft, Sr. Vice President, Fusion-IO
Advisors have access to detailed information on listings in our global database and can help you compare provider service capabilities to better match your program needs. Speak with a Provider Advisor. This free service is for electronic professionals working in OEM brand companies.
