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Forging a New Distribution Model for Innovators—from Hobbyists to Manufacturers

June 13, 2017
As new types of customers enter the market, electronics equipment distributors are reaching a crossroads on how to meet demands in this fast-evolving industry.

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By providing essential supplies and support, distributors of technology components and services are the engines that keep business moving for electronics innovators. However, in the past five years, these distributors have not only seen their customers’ needs change, but also experienced an expansion of their market to include new types of buyers. These two factors prompted a shift in buying behavior, which has ricocheted up and down the electronics-component supply chain.

Professional developers and designers are more dialed in than ever before and not afraid to shop around, while at the same time a new generation of makers and hobbyists are demanding more specialized parts and services. In such a competitive marketplace, distributors need to find new ways to serve customers that best suit their needs—a tall order in fast changing times.

A Changing Customer Landscape

Consumer demand for connected devices and miniaturized wearables has driven rapid growth in the Internet of Things (IoT) sector, with professional makers and hobbyists at the cutting edge of this burgeoning market. That’s because IoT is one of the most exciting and accessible opportunities for a broad range of solution designers, opening the possibility to bring profitable new products to the consumer market than ever before.

However, each IoT or wearable designer may approach the market with different needs. In addition to traditional market incumbents and smaller design houses with previous experience in bringing products to market, new customer groups—professional makers and entrepreneurial hobbyists—may be bringing a product to market for the first time. 

Professional designers expect backing from their distributors for high-volume production, which requires careful management of inventory and obsolescence. This sets them apart from traditional hobbyists who find value in broader product lines and have a greater need for technical support. With so many opportunities in these new markets, distributors need to develop a new business model that anticipates the complexity of these differing customers’ needs, with the assurance that meeting these demands will have its rewards.

Going Where No One Has Gone Before

As developers and designers with differing levels of experience tackle new challenges such as IoT and wearables, they may be entering new markets and applying technologies in new ways. This may mean negotiating compliance challenges within heavily regulated industries such as healthcare and automotive, or developing a deeper knowledge of existing technology as it’s applied in different environments, such as in harsh climates or within flexible applications like clothing.

Keeping up with the latest technological developments is important to design engineers. With it comes the need to work with distributors that can support their designs right from the beginning, leveraging research and design expertise as well as broad product portfolios, high-volume distribution, and supply-chain support, logistics, finance programs, and excellent customer service.

Challenges for Distributors

Traditionally, distributors provide competitive advantages by ensuring components are in stock in high volume and at a competitive price. The distributor will manage this stock, ensuring appropriate buffer levels, which allows customers to place purchase orders and have them shipped quickly to anywhere in the world. They make account management simple and easy through an account manager, online systems, or a combination of both these options, and have resources to offer both technical and commercial advice. Reliability and flexibility are therefore two of the big deliverables that identify a distributor as fit for the demands of these emerging markets.

The growth of the professional maker and hobbyist sector puts traditional distributors in a bind. For these customer groups, technical support is the biggest area in which a distributor can provide added value. The IoT boom has meant that more makers and hobbyists, many of which may have limited production knowledge, are getting involved with development projects that demand greater levels of connectivity, flexibility, and customization.

Despite the number of plug-and-play modules now available, makers and hobbyists still require higher levels of technical and product support. This need is addressed in part through investment in distributor-led online forums and communities as well as business groups focused purely on software and design services.

Nevertheless, serving the maker and hobbyist market is still demanding. These customers often favor a distributor that carries a broad number of lines, has items in stock, and offers excellent delivery options, technical support, and customer service.

Bearing all of these factors in mind, in addition to the distinct but overlapping needs of the marketplace, is it possible for a single distributor to keep everybody happy? Or is it necessary for distributors to choose one target customer group and focus on them alone?

A New Breed of Distributor

It’s clear that today’s innovators, whether they are professional designers or hobbyists, need the best of both worlds:  To work with companies at the scale, size, and global reach of a broad-line distributor, while still having access to the technical support and specialized capabilities to serve makers and hobbyists through all stages of the product lifecycle.

Having a single distributor address these two broad market segments would benefit a large group of customers, no matter their level of experience, turnover, or geographical location, and perhaps reset the bar for how distributors approach the electronics components market in the future. Certain distributors are adjusting to meet the changing landscape and needs of today’s innovators, offering extensive global reach as well as specialized, personalized technical support capabilities.

New technology markets and opportunities are expanding fast. Today’s innovators need a new breed of distributor that offers superior support at all stages of product development, from design through to manufacturing and product lifecycle management, providing a seamless service to a broader range of customers.

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