High-service distributors have ‘room for growth’, says RS
Essentially, that means it needs to ‘touch’ customers more often, with information about more of their products. Using online methods, RS claims it has doubled the number of ‘touches’ without spending any more money, adding that a link to RS now appears in relevant search results 52 times every second.
However, despite full orders books, customers are nervous about placing orders, leading to a slowdown in demand for electronic components. The economic crisis also means that smaller, independent distributors are finding it difficult to build and maintain stock due to cash flow problems. This, according to Klaus Goldenbot, Regional General Manager for EMEA at Electrocomponents (RS’ parent company), presents RS with an opportunity to gain market share in a market that is estimated to be worth $30b worldwide.
According to Goldenbot, eCommerce has become the company’s growth engine, which already accounts for more than half the total revenue generated. However the aim is to drive this further and this will be achieved through the company’s SEM (search engine marketing) activity, which will also see the online experience being more aligned with a multichannel approach to customer service.
According to Keith Reville, General Manager of eCommerce, this meets the needs of customers who fall in to the ROBBO category; research online, but buy offline. Reville commented: “It would be easy to become a 100% online company, but it would result in a smaller company that is less profitable.” He added: “We now have a more business-like approach to eCommerce than ever before.”
These comments must be viewed in the context of a high service distributor; delivering relatively low value orders in high volume. The average order value for RS is less than £150, but it fulfils thousands of orders every day. Its key strategy for growth involved increasing the order frequency of every customer and not, therefore, the average value of their shopping basket.
Creating traffic to the RS website is a high priority and one where the DesignSpark initiative plays a key role. To date there have been over 100k downloads of the company’s free full-featured PCB design tool and around 75k activations. Charging even a modest amount for the tool would have produced significant revenue, but the philosophy remains to keep the tool free and use it to drive traffic to the site.
Another recent innovation, Component Chooser, has now been rolled into the main eCommerce site, while the number of syndicated sites for its 3D cad models – again, free – has increased. Mark Cundle, Group Technical Marketing Manager, said that 80% of the engineers downloading the cad models are new to RS, and that research shows an 80% chance of purchase by people downloading the models. The value of free design resources is clear.
Mobile eCommerce has also increased; from 0 to 15% of revenue since June 2010. So significant is the online revolution that RS believes that search engines are now at the start of every project. This has led to significant developments to the RS website, in terms of ‘best practice’ features familiar with other successful B2C websites.
The company did confirm that it will retain its print catalogue but that its circulation will be decreased and it will not carry all available products, while pricing will be highlighted as ‘indicative’ and that for the latest pricing engineers should visit the website.