With a staggering number of design engineering graduates entering the workforce in places such as China and India, Asia remains an attractive market for electronic components distributors looking to expand their business around the world. And many are finding that the secret to success lies in leveraging the power of the Internet to combine commerce and community to meet customers’ needs.
Whether it’s through the localization of products and services or the creation of online communities, electronics distributors are increasingly customizing their approach to Asia in an effort to grow business in the region.
Some recent news reports reflect solid growth for many Western distributors doing business in Asia. Avnet Electronics Marketing, for example, posted 36% growth in its Asia business segment in the second quarter of fiscal 2011, ended January 1. That came on top of a 44% increase in Asia in its fiscal first quarter, ended October 2, 2010.
The results follow last summer’s launch of Avnet Express, Asia, the company’s e-commerce Web site, which provides a place for design engineers and purchasing executives to access local inventory, payment options, and customer support, in addition to the distributor’s global component menu of more than 4 million parts. The site also offers online technical forums in which customers can ask questions, exchange ideas, and share their knowledge.
Global distributor Premier Farnell is growing in Asia as well. The company’s Asia Pacific business—which includes Australia, China, India, Malaysia, Singapore, New Zealand, Thailand, Taiwan and Korea—grew 31% in the company’s third quarter, ended October 31, 2010. The distributor further cemented its commitment to the region recently by rebranding all of its Asia business as element14, a physical as well as e-commerce and online community targeting electronic design engineers throughout the region.
A driving force behind these efforts is the distributors’ desire to make it easier for customers to do business with them. Simply put, local inventory and local customer support—in the form of technical service and collaborative communities—make it easier for purchasing executives and design engineers to get their jobs done.
“The ability to access and purchase inventory within Asia will provide Asia customers reduced cycle time and logistics costs, enabling them to order products from the location closest to their operation,” Avnet senior vice president Beth Ely said in announcing the launch of Avnet Express Asia last year. “Local payment options and local customer service support from within the region will also make it easier for them to do business.”
Such one-stop shops and collaborative online communities are serving customers throughout the entire business cycle—from concept to design to transaction.
Making “Community” A Priority
Premier Farnell’s element14 is a striking example of the trend toward professional online communities and marketplaces in Asia.
“This really addresses consumer behavior,” explains Nader Tadros, Singapore-based marketing and e-commerce director, Asia Pacific, for element14. “Throughout the R&D phase, there is a lot of discussion about prototyping and so forth. It’s not just straight-out transactions.
“[Design engineers] need to toggle between understanding their needs, understanding pricing, looking at ratings and reviews, and so on. There is a fluid motion between the community collaboration and the transaction portion [of our business]. So, having everything under one roof, from concept to designing all the way out to purchasing, is very much a value-add to our customers.”
Premier Farnell has long focused on higher-volume maintenance, repair, and operations (MRO) business, and element14 represents the company’s effort to capture the more specialized, high-mix/lower-volume business of electronic design engineers. The name “element14” comes from the 14th element on the periodic table, silicon, which is the primary ingredient in semiconductors today and “a relevant component of our lives and the lives of our engineers,” Tadros explains.
“The idea of one supplier with a very broad range [of products and services] is very attractive to these customers,” he adds. “They like the idea of a one-stop shop for products and information. And now, with the online community, they can tap into their peers. They need and want this flexibility.”
In developing element14, Premier Farnell paid close attention to demographics. First, the company looked at the growing number of design engineers in China and India in particular. Tadros estimates that roughly 300,000 engineers, 70,000 of which are electronic design engineers, graduate from Chinese universities each year. And he says the numbers in India are even larger (See “More Engineering Graduates, More Customers—More Business”).
In addition, he believes the engineering population in those countries is younger than in the East and that they often work across multiple applications and technologies—so they have an even greater need for technical assistance throughout the design process. They are also more likely to search for products on community Web sites as opposed to traditional distributor or manufacturer sites.
“When we took a very deep, deep look at the needs of the customers and the trends they were going through, it was very apparent that they were looking for more,” Tadros explains. “They needed to get their products to market faster, they had cost pressure, and they had collaboration preferences…So, understanding this need for collaboration and understanding their changing business needs, we discovered that we needed a brand that reflected our ability to meet those requirements.”
Service Is Still Key
It takes more than the building of a community to attract and retain customers, though. Increasingly, distributors are setting up shop in Asia and putting more “feet on the street” to meet the growing demands of the marketplace: quick access to product information and documentation, fast turnaround time from order to delivery, and localized content, language, and currency support, to name just a few of those demands.
In response, Tadros emphasizes element14’s inventory and support offerings. Touting its expanded product offering and next-day delivery services, element14 says it goes to market as “the unique fusion of commerce and community.” The company stocks about 120,000 products in its Singapore distribution center, from which it provides next-day delivery to most of Asia Pacific. Customer phone support is available 24/7 and online technical support is available 24/5, as well.
Tadros and others say the need for such services will only grow as competition in the region heats up.
“[This business] is moving beyond just offering the transaction to offering more services,” Tadros explains. “Now, what we’re trying to do is offer a convenient solution that allows customers to meet their design needs quicker, and then seamlessly transact.”