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Digi-Key CEO’s Take on Google, Amazon in the E-Supply Chain

Imagine you're driving through a mountainous region. On your right is deep gorge with a spectacular river at its bottom. On your left is a steep cliff. Risk on the right is minimized because of a sturdy barrier, but on the left, you're never quite sure whether a boulder might get loose and come crashing down on your vehicle.

Some people think of that boulder as Amazon and Google and the road as the electronics supply chain. The odds that it will happen are long, but still it could happen. (See Google Is Electronics Supply Chain’s New Kid on the Block.)

In an EBN reader poll last year, more than 41 percent of respondents said they would buy or had already bought parts through the Amazon service. The interest is keen.

Some at the industry's largest distributors, Arrow and Avnet, don't worry too much about Google or Amazon encroaching on their business. But what about a company like Digi-Key, where e-commerce is crucial to the company's success and business model?

Digi-Key CEO Mark Larson: Google, Amazon don't have engineering  depth to make a big encroachment into the electronics supply chain.

Digi-Key CEO Mark Larson: Google, Amazon don't have engineering
depth to make a big encroachment into the electronics supply chain.

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I was chatting with Digi-Key CEO Mark Larson recently, and he struck me as an utterly confident, safe driver on that mountainous road — and enjoying the view to boot. Said Larson:

It doesn't keep me up at night. Maybe it should. With Amazon and Google, there's probably a segment of the market that they can bring some value [but]… I really don't see them as aligned closely enough to our market — at least at this point — to be considered a significant threat.

The electronics market is about engineering applications, and Amazon and Google aren't geared up for that model. Larson continued:

If you take a look at Digi-Key from the outside, we have 140 engineering types that support our customers with thousands of contacts each day to guide them with product selection and helping them understand applications. It's a different world. We provide a depth of knowledge. At this point, you can't draw any parallels.

What does keep him up at night? “Not to sound insensitive, but there's not a lot at this point,” Larson said, noting operational strength is a key care-about right now for him and his team at Digi-Key.

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7 comments on “Digi-Key CEO’s Take on Google, Amazon in the E-Supply Chain

  1. _hm
    April 12, 2013

    I agree with Larson. This is simple noise from Google and Amazon which will subside soon. Digikey has great depth and impeccable service record. I love working with Digikey.

     

  2. Clairvoyant
    April 12, 2013

    Agreed, _hm. At this time, Digikey doesn't need to be worrying about Amazon or Google at this point. For me, Digikey is especially valuable because of their large selection and quick shipment. I have bought from them a lot for parts I need to get in to evaluate for new designs.

  3. Cryptoman
    April 13, 2013

    I would not worry about Google and Amazon as Digikey's world is a very specialised one. For Amazon and Google to get into the electronics component market and to be able to provide the same level of service, many years will be required. (By that time, Digikey's current CEO will be enjoying a rich retirement, I am sure.) Not to mention the time, effort and money they will have to spend to establish all the supplier links to offer a huge range of products.

  4. _hm
    April 13, 2013

    I would request Digikey CEO to add more advance and unique parts to their collection. Special requirement is wide range to test and measurement equipments. Digikey should work in this direction and help lower cost of these systems and provide better service.

     

  5. Anand
    April 13, 2013

     Digikey has great depth and impeccable service record. I love working with Digikey.

    @_hm, I totally agree with you. Digikey has great depth and lot of engineering experience which both Google and Amazon lack but I am sure Google and Amazon are putting enough efforts to understand e-supply chain model. It would be interesting to see the outcome of Google and Amazons entry into e-suppy chain.  

  6. Wale Bakare
    April 13, 2013

    @_hm, this is where i like to be part of. The earlier the Digi-Key and other leaders in this business begin tinker best new strategy, the better to fend off challenge from Google and Amazon. I do visit Digi -key sometimes for electronics parts and i have been very pleased with my search, very unique and easy. 

    Meanwhile, both Google and Amazon are capable of disrupting any technological businesses and others should begin to have worrisome minds about them. A look at Amazon success in online retail business for years, a big wake up call. The caveat – it could happen soon.  

  7. _hm
    April 14, 2013

    I would suggest following to Amazon or Google. Digikey and Mouser are very well placed and they can grow further in direction to get market from Arrow and Avnet.

    So why not Amazon and Google invest few billions in Digikey and Mouser and take them to new level to get good market share from Arrow and Avnet.

    Unlike normal consumers, this supply chain involves very demanding customers like auto industry for example. Google and Amazon need full dedication for this task.

     

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