Mark Larson, president of online and catalogue distributor Digi-Key, talks to Electronics Weekly about the growth in online distribution, business conditions in the European market and new product lines.
Will your component distribution business grow this year?
Yes, growth rate is around 8-9%, which is down on previous year’s 14%, but it is still growing. The engineering base is growing dramatically at a rate of around 10-12% and the number of engineers we are selling to is also growing.
Our sales in Europe will grow by almost 40% this year.
We are targeting the engineering market and, particularly in the US, also the 3rd and 4th tier (smaller) contract manufacturers. We continue to address the long tail and we are penetrating a broader range of companies.
How would you characterise your European business?
Our product offering is not distracted by non-electronics products. Around 95% of our business is in electronic components and 90% is in board-level components, that is where we live.
The engineering base business is growing dramatically in Europe. The production business play in the US is also working in Europe where we are targeting small and medium-sized OEMs.
| The A - Z of Q5 interviews The alpha and omega of electronics industry interviews |
| A | ARM chairman, Robin Saxby |
| B | BSI manager, Simon Bircham |
| C | CamSemi CEO, David Baillie |
| D | Design LED, James Gourlay |
| E | Ensilica, Kevin Edwards |
| F | Future MD, Danny Miller |
| G | GSPK Design CEO, P. Marsh |
| I | Icera CEO, Stan Boland |
| J | Jennic CEO, Jim Lindop |
| L | Lumileds, Steve Landau |
| M | Mentor CEO, Walden Rhines |
| N | NI president, J. Truchard |
| O | OLED-T CTO, P.K. Nathan |
| P | ProVision CEO, David Sykes |
| Q | QinetiQ, Stephen Lake |
| R | Rambus CEO, Harold Hughes |
| S | SETsquared, Simon Bond |
| T | TI CEO, Rich Templeton |
| U | University of Southampton |
| W | Wolfson CEO, Dave Shrigley |
| X | XMOS CEO, James Foster |
| Z | Zetex CEO, Hans Rohrer |
| |
But it is less advanced in Europe than in US, which I think comes down to relationship-building and the comfort-level factor. It takes time to build that.Our business in Europe in 2002 was $3.8m and in 2008 it will be around $100m.
Europe is a huge market and we are a small factor in the market. But what is important for us is we are doing it virtually, servicing orders from the US. There are no plans for a European sales hub.
How would you describe the level of design activity in Europe?
Everything we see tells us there is as much design activity as there ever was. For me this is a really good sign.
What is the potential of the Internet to your distribution business?
When we started it was never our goal to be a dot.com business. We were a bricks and mortar company. We are currently doing around 52% of our business through the websites and another 14% through emails. In the UK we take around 80% of orders through the website.
Certainly the online proportion of our sales has been growing. But if you are asking me ‘how high can it go?’ then I think it is approaching a position where it will start to plateau.
I guess the factor looking forward will be the comfort-level people feel when placing larger orders.
As a broadline distributor do you still see opportunities to add new product lines?
Yes. We are looking for niche players, those with unique and cool products. Recent examples have included ZigBee and LED lighting products. Will this include software products? We are pondering this at the moment.
Can it be cost-effective for us right now to carry more software products? I am not sure. Customers are not asking for it.
See also: Q5 - Interviews with electronics industry leaders
Read all the Electronics Weekly Q5 interviews. From ARM's chairman, Sir Robin Saxby, to touchscreen technology firm Zytronic's MD, Mark Cambridge, the business leaders share their particular insights on the UK electronics industry.