The US electronic components and semiconductor wholesalers industry includes about 15,000 establishments (single-location companies and units of multi-location companies) with combined annual revenue of about $225 billion. Major companies include Arrow Electronics and Avnet. The industry is concentrated: the 50 largest companies account for the majority of industry revenue.
Demand for electronic components is driven largely by business and consumer purchases of computers and telecommunications equipment. The profitability of individual companies depends on business volume and correct merchandising, or stocking the products buyers want. Large companies have advantages through buying in high volume at discounted prices, more-efficient inventory management, and the ability to fulfill large customer orders. Small wholesalers can compete by offering specialized products or better service. The industry is capital-intensive: average annual revenue per worker is more than $800,000. PRODUCTS, OPERATIONS & TECHNOLOGY
Major products include semiconductors (computer chips); connectors; and electromechanical devices. Other products include disk and tape drives, computer subsystems, microwave and fiber optic components, transistors, diodes, power supplies, and switches.
In addition to products, wholesalers offer services like purchasing; marketing; warehousing; packing, shipping, and delivery; customized packaging, private labeling; minor repair and refurbishment; “kitting” (simple assembly); and other end-user support services.
The product mix for most wholesalers is always changing, due to changing market demand. Products are generally bought from manufacturers under non-exclusive authorized distributor agreements that establish marketing relationships with manufacturers. These agreements are very important to protect.
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