Digi-Key Corp. posted solid revenue growth in 2014, cruising easily past the industry’s single-digit average and boosting the electronics company distributor’s annual revenue to record level on rising demand for its services from OEMs and engineers working on Internet of Things (IoT) products. The company also attributed the surge in 2014 sales to continued demand from providers of “pre-built modules and development kits or ‘buy versus make’ solutions providers.”
The Thief River Falls, Minn., electronics components distributor said 2014 sales rose to $1.76 billion, up 11 percent from the prior year. Digi-Key executives noted in a statement that the company is experiencing increasing demand for its services from the design engineering community, which embraced its focus on providing the widest range of components for a wide range of products, including high-mix and low-volume orders.
“This year, we experienced an innovation-fueled demand for emerging technologies to support the development of new applications,” said Chris Beeson, executive VP of sales and supplier management at Digi-Key in the statement. “A spike in new product introduction (NPI) activity lends itself extremely well to our model which is ideal for fast-turn production runs and high-mix, low-volume orders. By constantly adapting to the needs of our customers, we’re one of few distributors able to respond quickly with exactly what they are asking for – new product availability, design resources and fast delivery.”
Digi-Key said its sales growth rate was about three times the industry average, attributing the stronger performance to the company’s distinct distribution model, which executives said is anchored by its promise of the “broadest selection of in-stock components, a unique competence in high-mix, low-volume orders and ultra-efficient, next-day product delivery.”
During recent interviews with Electronics Purchasing Strategies, Digi-Key executives stress the company’s continuing focus on adding to its already wide range of components. It has in the last year increased its supplier roster with strategic components manufacturers focused on proprietary products aimed at new market segments as electronics manufacturers venture into aviation, automotive, medical and industrial segments of the economy. This strategy has helped fuel Digi-Key’s growth, according to Dave Doherty, executive VP, Operations, at Digi-Key.
“It’s an extraordinary time of growth in this industry,” Doherty said in a statement. “We’re seeing a combination of market trends driving innovative new products that will literally change how we work and play. Along with breakthrough wireless and embedded technologies, the cost of components continues to drop, high-value EDA tools are now affordable and other game-changers like open source software and crowdfunding resources are breaking down the walls for the design engineer. Fortunately for Digi-Key, these kinds of market drivers all point to the need for a next-generation distribution model that values selection, speed and self-service.”
EPS will in a forthcoming article publish an exclusive report based on an interview with Doherty in which he addressed the strategies Digi-Key I using to service its customers as well as estimates for industry performance and growth areas. The interview covers a broad range of topics and will include comments on how Digi-Key is focusing on servicing global customers with various products from a single-location even while making sure their local requirements are fulfilled.