Everyone knows that margins are tight in the distribution business, but there are ways to build them along with revenue, Darryl Shaper, vice president and general manager of Arrow Cloud Digital at distributor Arrow Electronics, said today at the B2B Next conference, which had more than 700 attendees in Chicago.
In the age of Amazon.com, he said, online buyers see the prices of everything “seem like a race to the bottom.”
Some experts say the answer for sellers is to “cut prices, differentiate or go niche,” Shaper said. But he prefers a different strategy.
“I say pivot,” he said. “Get a leverage off the pivot to do something better.”
For Arrow Electronics, that has meant identifying three new revenue streams: data, services and expertise.
Deep data insights
For data, Arrow acquired SiliconExpert, which provides data on millions of electronic components and how they’re used in industry. That results in “deep data insights across billions of parts from thousands of suppliers we make available on our site.” Shaper didn’t say what Arrow charges for the data service after a free trial, but noted that the “services businesses drive nice profits and attract new customers.”
Arrow also acquired eInfochips, which provides product engineering services covering such technology areas as internet of things and cloud-based applications and mobility systems.
For making a broad range of expertise easily available to customers, Arrow acquired Aspencore, an online collection of media properties offering news, analysis and other forms of information about electronics.
There are plenty of ways distributors can add value to customers and generate new revenue and better margins, Shaper said. Whatever products a company sells, he said, it should consider ways to service them, provide warranties and financing, troubleshoot any problems, and recommend complementary products.
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