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Digi-Key attributes revenue growth to its distribution model


Global electronic components distributor Digi-Key Corp. has reported an increase of more than 11% in 2014 North American sales revenue, as compared to the prior year. Amid single digit sales reports across the industry, Digi-Key attributes its success to a spike in innovation driven by emerging technologies and increasing demand for its engineer-centric, fast and efficient product distribution model.

In 2014, Digi-Key noted an especially healthy demand for Internet of Things (IoT) or device-to-device connectivity driven by advances in wireless, embedded, single board computers, sensors and motion control along with demand for cloud-enabled applications. The company also attributes increasing demand for pre-built modules and development kits or “buy versus make” solutions built around single board computers with other embedded technologies.

“This year, we experienced an innovation-fueled demand for emerging technologies to support the development of new applications,” commented Digi-Key’s executive vice-president of sales and supplier management, Chris Beeson. “A spike in new product introduction (NPI) activity lends itself extremely well to our model which is ideal for fast-turn production runs and high-mix, low-volume orders. By constantly adapting to the needs of our customers, we’re one of few distributors able to respond quickly with exactly what they’re asking for – new product availability, design resources and fast delivery.”

Digi-Key’s total 2014 global sales of $1.76-billion reflect a growth rate more than three times the average for the electronics industry. The company credits its strong performance to its hybrid distribution model, built around its promise to offer the broadest selection of in-stock components, a unique competence in high-mix, low-volume orders and ultra-efficient, next-day product delivery.

“It’s an extraordinary time of growth in this industry,” commented Dave Doherty, executive vice-president of operations for Digi-Key. “Particularly here in North America, we’re seeing a combination of market trends driving innovative new products that will literally change how we work and play. Along with breakthrough wireless and embedded technologies, the cost of components continues to drop, high-value EDA tools are now affordable and other game-changers like open source software and crowdfunding resources are breaking down the walls for the design engineer. Fortunately for Digi-Key, these kinds of market drivers all point to the need for a next-generation distribution model that values selection, speed and self-service.”

Digi-Key’s business model is centered on an engineer-centric user experience that streamlines the design process and offers an exceptional online user experience. By supporting the needs of the professional engineer, Digi-Key was the first traditional catalog distributor to evolve its model to support the entire product design process – from prototype to production. Centered on a proven global ecommerce infrastructure, the company broadened its offerings to include personalized sales and support, value add services and supply chain management.

Unique to Digi-Key, design engineers have access to high-value yet affordable product schematic and layout design tools, a library of searchable articles and reference designs, ‘how to’ videos, Google Hangouts on new applications, multimedia-rich supplier marketing centers and multiple online communities for peer-to-peer conversations.

“By listening to our customers, we learned that they care about speed, selection and relevance, supported by knowledgeable professional resources,” adds Paul Dosser, VP of business development for Digi-Key. “Suppliers and customers both place a high value on our proficiency in delivering high-mix, low volume orders. Manufacturers of all sizes are leveraging the flexibility of our model to increase efficiencies, reduce inventory risk and accelerate time-to-market from the design stage all the way through production. They see Digi-Key as a vital partner as they embrace emerging opportunities driven by technology innovation.”

Digi-Key prides itself on offering customers fast and efficient product delivery, guaranteeing that all orders received before 8pm CST are dispatched from its headquarters in Thief River Falls, MN that same day.

Consistently ranked as the most preferred North American electrical component distributor, Digi-Key offers a number of exclusive capabilities and services including:

• More than one million parts, stocked in inventory and ready to ship

• Same-day shipping for all orders placed by 8pm CST

• Highly-trained technical support engineers, available 24/7

• Digi-Key’s website accounts for 38-percent of online component sales in North America

• High-value resources including a video library of 2,700 tutorials and demonstrations, over 1,200 reference designs and more than 2,300 multimedia product training resources

• High-value yet affordable product schematic and layout design tools, co-developed by Mentor Graphics and Aspen Labs

• An online Bill of Materials (BOM) generator linked directly to available inventory and pricing information, enabling users to create, save, edit and import their BOMs.