As more organizations conduct business online, electronic component manufacturers are expanding their purchasing, pricing, availability and delivery options on their websites. Although most of these services are also provided by distributors, component maker TE Connectivity has found a large population of global users that want to deal directly with TE.
TE Connectivity launched its TE Store on Sept. 15. “We have some 20 million unique visits per year on te.com,” said TE’s chief eBusiness and digital officer Nitin Mathur in an interview. “We get a lot of design engineers hitting our site directly. Some come in via search engines, distributor or component-comparison sites. Many are looking for price and availability information directly from the manufacturer. We see this as an added advantage [for customers]; they can choose to buy from us, or from our distributors. Customers make the choice; it’s our job is to help them take the journey.”
TE is a $12 billion original component manufacturer (OCM) of connectors, sensors and passive components. Most OCMs offer design and purchasing services on their websites. Historically, though, there’s been tension between distributors and suppliers over “capturing” customers, particularly those in the design phase.
Component makers offer incentive programs to distributors that assist customers in selecting that supplier’s parts. Distributors that secure a “design-win” may receive preferential pricing on subsequent volume orders. Texas Instruments Inc. has discontinued its incentive program with distributors; other suppliers are considering similar moves.
Ultimately, customers decide where they buy their components. “I think this a strategy complementary to our channel partners,” Mathur said. “Design engineers start their journey on the internet, and as an industrial technology leader, we look at the best way to enable [a customer’s] decision. We’ve consolidated our product catalog to make it easier to navigate; we’ve made pricing and inventory more visible; and we’ve designed the store to help engineers. Our job is to make it easy for engineers to design in our products.”
The goal is a seamless experience for users. “We are seeing a large number of net new customers who are purchasing TE products for the first time via the online store,” Mathur said. “One of our metrics is how well we are fulfilling customer expectations in terms of researching our products and then getting the services they need. We measure ourselves against best-of-breed digital players and we are doing well.”
In particular, the TE Store caters to engineers and inventors. “We want to make it easy for them to find what they need; provide the right information for their designs; and support them 24/7,” said Mathur. “We are the manufacturer of the products and we feel it is our responsibility to answer customers’ questions.”
At the same time, the TE Store is relying heavily on distribution, according to industry sources. Digi-Key Electronics, which specializes in low-volume high-mix orders, has a preferred relationship with the online store. Neither TE nor Digi-Key has dispelled that notion.
“We have partnerships with many 3rd party distribution and logistics companies to ensure we get products to customers in a timely fashion,” said Mathur. “Digi-Key is one of those partners that helps us provide world class delivery to our customers.” Digi-Key CEO Dave Doherty told EPSNews: “Regarding any programs that we are engaging with on a supplier’s behalf, I’d really prefer to leave it up to them on how much they want to communicate.”
Exclusive relationships between suppliers and distributors are not unheard-of. Early in 2017, Analog Devices Inc. named Arrow Electronics Inc. as its exclusive global distributor. But the debate over “ownership” of customers continues. Registered design wins provide an opportunity for distributors to sell more products on the board, and customers are more likely to buy fulfillment orders from that distributor.
Design registrations also collect a lot of customer data which is shared between distributors and suppliers. The status of such data regarding the EU’s General Data Protection Regulation (GDPR) remains unclear.
“We are 100 percent on top of GDPR,” said Mathur. “We have our customers’ trust. We have systems in place to assure [customer information] is handled correctly from the data collection-and-management standpoint. We don’t intend to capture any more information than what is necessary to fulfill a customers’ need.” For example, mailing addresses are necessary for deliveries; e-mail addresses for downloading documents.
TE and its distributors will benefit from a wider market reach and more transparency on pricing and inventory, Mathur added. “Online pricing and availability helps users select where they want to buy their parts. Qualified sales leads are also generated from online activity.” The TE Store’s direct and distribution pricing is generally the same; contract prices are customer-specific.
“Given our portfolio, our digital strategy complements what distributors are doing,” Mathur concluded. “Our intention is to do digital engagement well. We provide the most up to date data available and we hope customers will keep coming back to our—or our distributors’—sites. We don’t see that changing.”