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Asia Buyers Seek Sourcing Security

Although all electronics distributors have systems that track the buying patterns of their customers, catalogue distributors up the ante when it comes to purchasing analytics. Catalogues, which specialize in low-volume engineering orders, often are a launching pad for component makers' new products. Suppliers want to know which parts are taking off, who is buying them, where the orders originate, and in which applications their devices are being used.

As a result, catalogues are prime indicators of buying trends. {complink 12816|Mouser Electronics Inc.} is among the US-based channel players that have noticed something is changing in Asia: Buyers are increasingly seeking out secure sources of supply and are avoiding sites that pop up on the Internet advertising “this week's special.”

“We are picking up activity on our site from customers that wouldn't have known us a year ago,” Hayne Shumate, vice president of Internet Business at Mouser, told me. “This indicates to us that buyers don't care where a device comes from — whether it is shipped from the other side of the world. After they get what they are looking for, they keep coming back.”

The distribution market in Asia is made up of a few large global players, numerous local and regional players, and a plethora of small firms called “traders.” Some of these companies sell parts with the authorization of their suppliers; many don't. Asia has been a tough market for foreign distributors because customers prefer to source locally and buy based on relationships rather than established service levels.

The trend Mouser sees is beginning to dispel that notion. “In the US, if a new site pops up, customers can figure out pretty quickly whether the site is legitimate or not,” notes Shumate. The US distribution industry has existed since the 1940s, has fought against fly-by-night resellers for decades, and has a supply base that helps defend authorized relationships. The electronics market in Asia has grown so quickly that anyone with a PC and Internet service can sell components. The fact that customers keep retuning to Mouser's site indicates buyers are looking for more than the cheapest price — they are also looking for consistency.

“A lot of customers tell us about issues they have had [with traders] or things that have gone wrong,” says Shumate.

Lindsley Ruth, executive vice president, Office of the President, for global distributor {complink 2164|Future Electronics}, told me: “Buyers aren't getting in trouble for paying a few cents more for a component. They get in trouble when a manufacturing line is down because a crucial part isn't there when it is needed.”

Traders often buy products online in addition to selling them, so legitimacy concerns work both ways. During the dotcom boom in particular, bogus companies would set up a Website, establish a line of credit, order parts from distributors, and then disappear after delivery. “How do we know our customers are legit?” asks Shumate: “We talk to them.”

Both Future and Mouser — as well as most foreign distributors that do business in Asia — have established local sales and support offices in Asia. “There are a lot of pretenders in [the electronics distribution] space,” notes Ruth. “Everyone has to be careful about where they are sourcing.”

“The stand-up companies are easy to identify, and folks that are doing things the right way are winning,” says Shumate.

13 comments on “Asia Buyers Seek Sourcing Security

  1. FLYINGSCOT
    April 19, 2012

    I believe it can be difficult sometimes to tell the trustworthy suppliers from the fly-by-nighters.  Any suggestions on how best to do this?

  2. Barbara Jorgensen
    April 19, 2012

    Hi FScot:  Mouser admits that it has to shield itself from its data being accessed, particularly in Asia where IP is handled differently than in the West. Several things that should ID a legit source from a FBN:

    ECIA logo–the ECIA is a designation for authorized distribution only. You can source through the ECIA site: ECIAonline.org; or look for an ECIA endorsement on a distributor site.

    Most legit distributors require registration and password proctection before accessing inventory and link to supplier sites. FBNs usually just list inventory.

    Check out past ranking of Top 25 distrbutors on EETimes.com and EDN.com. The rankings identify authorized distributors (but only if they rank in the Top 25.)

    Check out the Independent Distributors of Electronics Assoc. (IDEA)  site: this is a list of independent distributors that adhere to strict rules regarding the handling of components and good business practices.

    Check to see if the supplier lists a distributor as “authorized” on its site. Nearly every supplier I know does this.

  3. elctrnx_lyf
    April 19, 2012

    It is pretty much clear that the buyers are more careful about purchasing components. The OEM's are careful about this to make sure they will not have last minute problem to build a prototype which is on real critical stage or a product which has already egun production. In anyways this is a good trend that buyers ready to spend extra cents for the guarantee.

  4. syedzunair
    April 19, 2012

    @Barbara: 

    One thing that I have seen over the years in Asia is that FBN's will use a name that is very similar to the actual distributors name. Sometimes, there is just a difference of a letter in the name and hence people confuse them with the actual distributors. 

    I also think only a handful of consumers actually check the suppliers site for official distributors. They usually rely on the word of mouth and local business guarantees. 

  5. Barbara Jorgensen
    April 19, 2012

    @syed: That is interesting–hadn't heard that. I doubt I would notice something like that if the name of the compnay was in a foreign language, so it makes a lot of sense.

  6. Jay_Bond
    April 20, 2012

    I would believe there are a lot of buyers out there who want to make sure they are dealing with a legitimet company who can consistently deliver products at reasonable prices. I personally do research on any new site before I buy. I also look at their Google page ranking and check to see when the website was created. Helps to avoid getting scammed.

  7. Daniel
    April 20, 2012

    Barbara, you are right. Now a day’s companies are taking extra steps and cautions, while selecting their preferred partners and suppliers. They don’t mind to spend little bit extra for quality products from reliable sources. At the end of the cycle, the quality and reliability of products purely depends up on its components and workmanship. So for a better durability of the product, they are making filtrations based on certain parameters.

  8. Barbara Jorgensen
    April 20, 2012

    I was shopping for a hard to find DVD set when I found it on a website. The deeper I dug, though, the more suspicious I became that this was probably pirated. This program had never been released on DVD, there were no trademarks, and the site had no affiliation with any provider I had ever heard of. And this was for a $50 purchase. The stakes are a lot higher if you are designing your company's next big thing, so it pays to find a ligit source. I always add sites I like to favorites, so there is reward for vendors that do a good job.

  9. ITempire
    April 21, 2012

    @ Barb

     “This program had never been released on DVD, there were no trademarks, and the site had no affiliation with any provider I had ever heard of. And this was for a $50″ 

    Thats hilarious. When the website operators know that what they are selling is a rare commodity, they will get the price tags high. When someone needs material for developing something important for his/her organization and that is not available through legitimate sources, its upto them to decide between a tough choice, either to support piracy through that particular buy or either hamper the development process of a product for the organization. Many of us would choose option A, unfortunately.

  10. ITempire
    April 21, 2012

    Amongst many one important factor that still secures the market for the legitimate sellers is the established standard for after sales service. Many of the illegitimate sellers are good at selling cheap goods and delivering it within no time but often lack the ability of providing support after sales which is essential and which in turn affects their customer loyalty. Many people who intend to buy from legitimate sources know that the premium price they are paying is actually the price of after-sales support. So while ignoring legal issues, many legitimate sellers and distributors are able to win purely on qualitative grounds.

  11. Daniel
    April 23, 2012

    “When the website operators know that what they are selling is a rare commodity, they will get the price tags high” Waqas, that’s always not feasible. If the product is of good quality and from a branded company, then it’s fine, else nobody prefer for it. For online purchases, nobody can make sure about quality and features, unless and until it’s already in market.

  12. Barbara Jorgensen
    April 23, 2012

    I think buyers have to conduct some due diligence before buying over the Web. Like the DVD I mentioned in a prior post, the fact that no one else had this item should have been a red flag. If something looks too good to be true, it probably is. The issue of after-sales support is a big one, as well. Suppliers will not honor a warrantee unless buyers can prove they bought products through authorized channels. That's a big consideration when you are designing components into mission-critical systems.

  13. Ariella
    April 23, 2012

    ” If something looks too good to be true, it probably is. ” 

    @Barbara, yes, in those situations one has to consider “what's the catch?” And then investiagate to find it before buying.

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