The web is changing the cost model of component distribution for ever,
If there was any doubt about the impact of the web on the distribution business all discussion has ended as the economic downturn puts the squeeze on margins.
Distributors both large and small are under pressure.
One of the bigger ones, Premier Farnell has made it clear that the web was vital for plans to bring costs into line with a post-2008 market.
The move to more and more online business is now realising significant cost savings.
In Farnell's case that amounts to £16m or 2% on the bottomline over the next two years.
The catalogue business has already been changed irrevocably. The culture of Internet buying, fostered in the consumer market with sites like eBay and Amazon, has seen to that.
Web leaders, Digi-Key and Mouser both have very active catalogues, but both see between 50% and 75% of orders coming through their websites.
For Farnell and RS the figure is below 40%, but it is growing and the move to web may be accelerating in the economic downturn.
Farnell saw web sales jump by nearly 13% in Q4 of 2008. This means for the first time it now gets over half its European sales via its many websites.
The online channel is more cost-effective for the buyer as well as the seller.
It also means the distributor can expand its business into emerging markets, like China, eastern Europe and India, more easily
But no one is killing the catalogue. Mouser prints a million a year.
It is just that the web has turned the time-to-market and cost models of the catalogue business on their heads.
As Mark Burr-Lonnon, European v-p at Mouser told me recently: "I actually believe that without the growth of the web the catalogue business would have died."
But catalogues don't have knowledgable people that you can discuss applications with. While catalogues can sell it cheap, is there no value to technical support and opinion?
Fair point Simon, but I don't think the catalogue firms would say there is no place for face-to-face selling and support. Isn't it just that they see web and print working together in their businesses.