Web works for distributors
Traditional catalogue distributors are seeing strong sales growth as the market emerged from the problems of 2009.
But the power tool of this segment of the component distribution business is no longer the catalogue, it is the internet.
This week Digi-Key, which has recently become a web-only distributor, said its sales in Europe in the second quarter of the year jumped by 22% year-on-year.
Digi-Key has transacted the vast majority of its business in Europe via its websites for some time.
So it came as no surprise that during this business quarter it announced it was ending distribution of the print catalogue and focusing sales activities on its websites.
And the internet is also rapidly becoming the main sales channel at the other big catalogue houses – RS, Farnell and Mouser.
Although none of them has yet said it will follow Digi-Key and scrap their catalogues.
Yet the growing dominance of internet sales in this market means it can only be a matter of time before one or all of them do likewise.
RS saw sales increase by 21% in 2010/11 and pre-tax profit jumped by 50%.
RS does more than half is business via the internet and web sales are growing at a rate of 37% a year.
Premier Farnell has reported sales growth in the first three months of the year up on both the last quarter as well as the first quarter of 2010.
Its online business grew by 30.2% year-on-year which means that e-commerce now accounts for 53.7% of sales
Last year, the Glenn Smith CEO of Mouser told me that over 74% of all new customers and 61% of all lines shipped are as a result of web activity.
Mouser is growing its relatively new European business rapidly, and last year it grew by more than 200%.
The guys that run the industry’s biggest catalogue distribution companies have come to realise that web works for them.
The big question is how long will it be before other areas of the distribution market become dependent on the internet as the most effective sales tool?
As I have written before, this could be the biggest challenge for the rest of the distribution sector in the next few years.