Arrow Electronics Inc., a distributor of electronic components and cloud-based enterprise computing technology and services, grew sales in 2016 with a lot of help from its digital focus and its Internet of Things offerings.

“Our digital transformation and IoT solutions spanning from sensor to sunset helped drive record full-year sales and earnings per share,” Michael Long, president and CEO, said in a statement. “Our customers value our comprehensive portfolio of electronic components and embedded computing, datacenter, cloud, and reverse logistics solutions.”

Sensor to sunset refers to Arrow’s Internet of Things, or IoT, technology designed to provide customers IoT products and services ranging from internet-connected sensors for connectivity to asset retirement, Arrow says. The company’s eVolve IoT technology and electronic components sales helped lift total revenue 2.3% to a record $23.83 billion in fiscal 2016, according its earnings report.

“Our customers need platform solutions in this increasingly digital world,” Long told analysts Tuesday on Arrow’s year-end earnings call. “They want solutions that help evolve their business to capture the benefits of IoT and add new revenue streams.”

Arrow meets those needs through investments in engineering and technical capabilities along with acquisitions, Long said. Part of its strategy last year was to form deeper relationships with design engineers by acquiring media sites and partnering with crowdfunding site Indiegogo.

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For example, Arrow in June acquired from UBM a portfolio of media sites focused on technology, including EE Times, TechONline.com and Datasheets.com. Arrow says it owns more than 45 engineering-related media properties and will allow advertisers, including Arrow and other companies, to reach engineers through ads that link back to their e-commerce sites.

These moves are part of Arrow’s strategy over the past five years to invest heavily in the web and e-commerce. And in August it announced a partnership with Indiegogo that allows entrepreneurs to access online help from Arrow specialists and win an “Arrow Certified” badge ensuring that their products can be manufactured.

Arrow’s digital business includes sales through its main e-commerce site, Arrow.com, and additional online channels including Arrow divisions Chip 1 Stop for electronic components and semiconductors, at Chip1Stop.com; Richardson RFPD for products used in radio frequency, wireless, energy and power industries, at Richardsonrfpd.com; and Arrow’s China-based electronic products and software distributor SEED, or Special Electronic Equipment Device, at Seeddsp.com.

“The returns on those investments are starting to grow and they’re going to continue to build throughout 2017 as most of the costs there are already in place,” Long said. “As you’ll see in our annual report, our customer count has now exceeded 125,000 customers and this is up from a 100,000 customers in recent years. Clearly, digital is the main source for this customer growth.”

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Although Arrow doesn’t report online sales, digital sales are accounting for a bigger piece of the sales growth pie and there’s more to come, Long said. “We expect that to continue, and I would say that, right now, I think we’re seeing something like 35% or 36% growth out of the digital business, pretty much quarter in, quarter out,” Long told analysts. “Some quarters it’s even bigger than that.”

For the 2016 fiscal year ended Dec. 31, Arrow, No. 122 in the B2B E-Commerce 300, reported:

  • Total sales increased 2.3% to $23.825 billion from $23.282 billion.
  • Net income increased 5.0% to $522.8 million from $497.7 million.
  • Cost of sales increased 2.1% to $20.68 billion from $20.25 billion.
  • Operating income increased 4.1% to $858.5 million from $824.5 million.

For the fourth quarter, Arrow reported:

  • Total sales declined 4.6% to $6.443 billion from $6.751 billion a year earlier.
  • Net income increased 3.8% to $164.5 million from $158.5 million a year earlier.
  • Cost of sales increased 4.0% to $5.16 billion from $4.96 billion.
  • Gross profit increased 4.1% to $773.2 million from $742.4 million.

Sign up for a free subscription to B2BecNews, a twice-weekly newsletter that covers technology and business trends in the growing B2B e-commerce industry. B2BecNews is published by Vertical Web Media LLC, which also publishes the monthly business magazine Internet Retailer. Follow Bill Briggs on Twitter @BBriggsB2B.

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