The sector in which Electrocomponents’ subsidiary RS Components competes – high service – has become more complex over the years. Originally comprising so called catalogue distributors, the sector now has four highly competitive organisations competing for the attention of design engineers and purchasers around the world. RS, for one, listed its stock in six catalogues, updated quarterly. It was a simple world; you looked up the product you wanted, ordered it and waited for it to arrive. Now, it’s all about getting parts to people almost before they know they need them.
While the four high service rivals have different business models, they all revolve around broad portfolios and the latest products, supported by a wealth of technical information. And the more the high service rivals try to differentiate themselves, the more complicated the business becomes – or so it seems.
The days of the catalogue have been superseded by the web and the high service distributors now live or die by their websites. They face a double edged sword; packing all that information into a format that is readily accessed by users. And Ruth says the RS website needs to respond to users in less than 2s to hold their attention.
The interesting question for the big four is ‘where next?’. Digi-Key has started supplying low volumes of components into the manufacturing sector. Mouser is focusing on getting the latest products onto its shelves and its website. Farnell and RS have started to develop communities.
RS is now trying to differentiate itself – and grow revenues – by refocusing on its ‘own brand’ products. It has sold products under its own name since the 1930s, but the focus moved as its distribution business became the strategic priority.
These products are still good business – according to the company, sales of these so called private label products generate £162million a year. But the sales come from tools and instruments, not from electronic components.
High service distributors are very different beasts to the ‘box shifters’ of the past. While they play an increasingly central role in the electronics industry, the growing complexity of their operations appears to be in stark contrast to Ruth’s assertion that distribution isn’t a complicated business.
