Customers of electronics component distributor Digi-Key, which specializes in design and engineering orders, have told the business over the years they’d like to buy more products from Digi-Key. The company has responded.
The distributor most recently launched the Digi-Key Marketplace, which significantly expands its product scope into automation and control, IoT, test and measurement, bare PCBs and a number of other items. In 2013, the catalog house deepened its inventory to provide prototype-sized orders to its customers.
“Innovation is moving so fast in this industry,” said Digi-Key’s Executive Vice President of Digital Business Jim Ricciardelli. “When you think of it in simple terms, the success of Digi-Key was our ability to innovate from a successful catalog company to a massive e-commerce platform. Now, we are going beyond board-level components.”
Customers prefer to have a single-site shopping experience, he explained. “Customers want to buy from Digi-Key. We get roughly 2,000 quotes a day and we can see where everything is and what our customers are looking for and we can supply 80 percent of a customer’s bill of materials. We want to supply 100 percent, so we needed to scale up our product offerings.”
The automation and control, test and measurement, bare PCBs and industrial robot products differ significantly from Digi-Key’s singular focus on 11.4 million component SKUs. Customers will receive the same, frictionless e-commerce experience that has made Digi-Key a preferred distributor in several industry surveys, Ricciardelli said.
Digi-Key ships all orders from its warehouse in Thief River Falls, MN. Marketplace products may ship from the warehouse or be drop-shipped from suppliers.
Marketplace offerings were determined based on customer inquiries about the products or markets with high potential upside. “IoT, industrial automation and single-board computers—we see these things on current bills of material,” Ricciardelli said. “PCBs is another – customers want to buy boards and we offer a PCB builder; and antennas and RF products are a natural fit to our existing product lines. Then we have the niche products customers come to us looking for, such as static-control products.”
Digi-Key hasn’t sold industrial automation equipment, but industry surveys have ranked it as a preferred distributor in that category. “Customers said they would buy that from us if we could sell it to them so the market platform is a different way of connecting suppliers with customers,” Ricciardelli explained.
For distributors, taking on a new supplier usually involves an investment. Suppliers must be vetted; sales teams may have to be trained on the products; inventory may be acquired. Digi-Key has simplified this process. Suppliers upload their information to the marketplace and Digi-Key provides access to a broader customer base, search capabilities, broad marketing reach and SEO services. For customers, the process is seamless, with any unique delivery options and expectations clearly noted when the order is placed.
Digi-Key collects a commission from the products sold through the marketplace.
“We were getting the signal that this is a huge opportunity,” concluded Ricciardelli. “It’s a way for suppliers to leverage the reach of the Digi-Key brand. And it provides customers with a single solution for more of their technology innovation needs. If customers wanted to buy from us, we wanted to have the products. For suppliers, they can fulfill directly or we can handle that for them. This way, we don’t have to hold these products in our warehouse. It’s a win for customers and it’s a win for suppliers.”