Any electronics distribution company that is still conducting business in 2013 has something unique to offer its customers. Following the industry’s massive consolidation during the 1990s were several market downturns that severely challenged the channel and forced many companies to consider their strengths and weaknesses. Now in its 38th year of business, Jameco Electronics has decided its strength lies in being “different.”
“What makes us different,” says Greg Harris, Jameco vice president for marketing and sales, “is that we don’t always play by the same rules as conventional distribution.” For example, he explains, Jameco offers its own brand of value-priced components. “As we came out of the last recession we found that customers are increasingly price sensitive and sometimes the brand is not as important as the price,” Harris says.
Jameco-brand products are manufactured by Jameco through outsourced production or by Jameco’s suppliers. The idea is along the lines of generic products offered by grocery stores that are manufactured by brand owners but are labeled differently. Distributors typically try to avoid selling products that may compete with their suppliers’ offerings. However, the advent of open platforms such as ARM is beginning to change the competitive outlook.
Jameco’s customers include a large population of hobbyists, tinkerers and DIY (do it yourself) enthusiasts. The distributor’s pricing strategy was originally targeted at customers that don’t want to pay a lot for components they experiment with. However, Jameco’s corporate accounts have also discovered Jameco brands—and Jameco has discovered something about its customers. “We found that business people are also looking for projects they can do in their garage,” explains Gil Orozco, Jameco vice president of purchasing, product marketing and technical support. Small and mid-size businesses are taking advantage of Jameco’s pricing strategy and Harris says Jameco’s corporate sales continue to increase.
“There are [distribution] competitors in the market that are very brand-focused and there is no argument that is a very successful strategy,” says Harris. “What we see is a very active and growing trend among customers that are more price-sensitive. In addition to the value-brand products, we offer price breaks on quantities as small as five units.”
A second unique offering is the distributor’s “Club Jameco.” The club was initially a site where inventors and builders could get together for informal discussions and problem-solving. As it turns out, explains Orozco, CEOs and other decision-makers at electronics companies tend to be inventors themselves. Club Jameco has evolved into a revenue sharing opportunity for Jamco, its suppliers and its customers. If a Jameco customer develops a kit of components that can be resold to other users, Jameco shares the proceeds of those sales with the customer.
Jameco currently offer 200 kits that were originally built by customers. The business model works, Orozco explains, because Jameco does not have to take a major inventory position with the components in the kits. “We can take an order and then build the kit.” Jameco carries 50,000 SKUs which Orozco says is more than sufficient for most hobbyists. Additionally, Jameco’s pricing is very attractive for customers that are merely experimenting with various ideas.
As a small to midsize distributor – privately held Jameco does not publically report its revenue – Jameco also distinguishes itself in service. The distributor provides both sales and technical support, but employees say they really enjoy interacting with their hobbyist and designer customer base. “We commit to responding to any business inquiry – even e-mail – within four business hours,” said Harris. “Our CEO is even notorious for picking up the phone and saying ‘How can I help you?’”