Smaller component suppliers sometimes have a hard time getting the personal attention of big distributors. If you are number 47 on the list of DC-DC converter suppliers, your product might not be mentioned by a distributor's applications engineer. If yours is not a household name, a salesperson is likely to steer a customer toward a more familiar product. In both cases, the customer might not end up with the best solution.
The specialty distribution model can be a win-win for both suppliers and customers for a number of reasons...
Specialized distributors focus on you (and your customer):
So how do we break the cycle of the tail (distributor) wagging the dog (customer)? Enter the world of franchized niche distributors. Niche distributors carry a limited number of lines that are highly complementary. Customer focus likewise is narrow. If your product line is specialized, your product matches with the target industry's, and it requires above-average design-in support, chances are a smaller distributor might be worth signing on.
What you can expect:
Suppliers get more leverage with their product group if there's just a handful of lines available. Because a niche distributor's line card is narrowly focused, the distributor can better collaborate with manufacturer's reps. A focused distributor has the time to learn about your products in depth rather than just grasp a few key features. Each product can be handled as a "marquee" line. Finally, because of the high level of technical involvement up front, you can expect motivated after-sales support.
How to spot a good specialized distributor:
Does it have the industry experience, the technical know-how, a synergistic alignment, and customer focus to succeed as your partner? In addition, make sure best industry practices are being followed. Ask how many relevant customer contacts are in its database to which your message is being broadcast. Inquire and review its marketing plans and consider entering into a co-op marketing agreement.
A niche distributor can give both suppliers and customers a lot of "face time." Let us know if the model works for you.
What the niche distributor can often provide is much more product expertise. One example is in specialty connectros used with a nonstandard cable. These were a bit more than the standard MS connectors, but the ones that I needed had to be smaller and more rugged, and had to work with a cable that had much larger conductors than would normally be used with that sized connector, since the conductors had to be mechanically durable. I was using #20 wire, when normally that connector would be used with #30 or #32 size wire. So the distributor located parts that were not on a standard order sheet, and got me the parts with a good delivery time and a price that was acceptable. I don't think that I could have had that much support from the #1,2,or #3 distributors in the US. Of course, they may challenge me on that, but the specialized distributor just had to go to a different shelf for the stock. That is one example.
WilliamK: That sounds curious to me as well. What a pain in the neck. Whether or not this company is a niche distributor or not, that's just bad business practice for any kind of business. Especially when you call. I see why companies might not publish prices online but they should certainly quote you by phone.
Although niche distributors tend to focus on high-end products, they don't necessarily determine the price of the product. That's up to the supplier. The specilaty model most often gravitates toward premium components becuase you really need something like that to compete against volume distributors. Being on a niche line card also helps suppliers. Let's say you have a pricey line: when someone quotes you on a BOM, you'll fail by comparison to less expensive lines on a broad line card. On a niche linecard, where everything might be pricier, it doesn't look quite as bad.
Well, those specialized distributors probably come with a higher price. As some point, the engineers need to establish the minimum requirements but also, when too good is bad (based on costs). Efficiency comes with buying what's good enough.
I've never used a specialized distributor, and i'm not sure i even know of any, and right, now i'm I don't see how it will make things easier for an OEM, especially one that is not very large having to go to multiple distributors to get products.
Specializing a distributor or the distribution process is a good thing but don't you think it will complicate things for the supplier / retailer ? Process will not be streamlined
I have found that some of the ditributors are a bit more like manufacturers reps, and there is a problem that I find with that. If the product is the best solution it works well, but the other side is that "when all that you sell is hammers, everybody's applications all look like nails". When I am in the searching stage and collecting information is not the time when I need sales calling me, when I was just checking to see if the product might be what I was looking for.
Of course, presently I am having problems with a specialized distributor who will not quote a price, even though I explained that when I get the price I will place the order the next day. I know that they have the product that I need and that the price is OK, so please sell to me but.... And I was willing to pay at the time of order, which is a zero risk deal for the seller.
A large part of that process is trial and error. It may be painful in the beginning but when you find the rigth partners, you may be able to recoup the initial losses quickly.
I just started to understand the challenges in finding the right distributor partner for a supplier. Finding niche distributor who has a special line card with very good customer list is always a difficult thing considering the fact that many of the big oem's doesn't work with smaller distributors in general.
EBN Dialogue enables and encourages you to participate in live chats with notable leaders and luminaries. Not only editors and journalists, but the entire EBN community is able to comment and ask questions. Listed below are upcoming and archived chats.
Archived Dialogues
Thailand Stages a Comeback Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Euro-Crisis: What It Means for High-Tech Firms Join EBN Editor in Chief Bolaji Ojo and Contributing Editor Jennifer Baljko on Thursday, July 12, at 10:00 a.m. EDT for a Live Chat on high-tech and Europe's economic difficulties.
Microsoft Surface: Potential Winners & Losers What are the implications for the electronics industry supply chain of Microsoft Corp.'s decision to launch its own tablet PC? Join industry veteran and EE Times' systems and OEM expert Rick Merritt on Tuesday, July 3, at 12:00 pm EDT for a Live Chat on this subject.
Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Peter Drucker famously said "Trying to predict the future is like trying to drive down a country road at night with no lights while looking out the back window." Yet in the razor's-edge world of electronics—with a lean supply chain and just-in-time demands—the need to know the future is vital.
You've heard the saying "the No. 1 supply chain risk is your people." That hasn't always been the case. But today's complex global supply chain requires a new type of multitalented employee. It's one who understands, finance, marketing, economics, is savvy with technology, graceful with relationships and can think analytically.
Where are these people? Are universities properly preparing the next generation supply chain professionals? How do train your existing workforce for these new, demanding positions?
Brian Fuller, editor-in-chief of EBN, will lead a 60-minute Avnet Velocity panel discussion that will ask and answer these and other questions swirling around today's supply-chain talent challenges.
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