Digi-Key eyes the IoT market

Digi-Key is considering widening the range of products it sells from its websites to take advantage of the growing market in design of devices and systems for the internet of things (IoT).

The online distributor, which has been strategically focused on semiconductors, is looking at adding electromechanical products to its linecard.

“The IoT has got us thinking that maybe it is time to broaden our product offering, in the area of electromechanical parts for example,” said Mark Larson, vice chairman , Digi-Key.

An example of the type of electromechanical product Larson is looking is actuators used in control devices connected to the internet. “Maybe we will make a start with a few product types and see where it leads,” said Larson.

Another market Larson is looking at is the so-called maker communities, which start as hobbyists but which can quickly become designers of commercial products, through the use of crowd-funding websites.

“Makers aren’t hobbyists, they expert to monetise their project at some point,” said Larson.

Larson does not yet see the market as huge business opportunity. “But it has grown to a nice scale and it feeds the funnel for commercial activity,” said Larson.

But Larson insisted that it was important not to lose the distributor’s focus on the professional design engineering market.

Larson believes “Amazon-like” online buying is becoming ever more important to a larger portion of the engineering market.

Digi-Key, which does 87% of its business over the internet, is seeing its relatively new business supplying manufacturers, rather than just design engineers, growing.

Because supplying manufacturers with parts usually results in larger order sizes, this production side of the business now represents 45% of all Digi-Key sales.

“That is has grown to this scale in a short space of time has surprised me,” said Larson.

“But I do not mind if the production business becomes biggest part of the business, as long as the design engineers side of the business is also growing,” said Larson.

“We do not want to forget that it was engineers buying components in small volumes who brought us to the party. Engineering comes first and it is critical to maintain that flow,” said Larson.

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