Arrow’s Darryl Shaper
When the Internet first enabled b2b e-commerce, companies that wanted to buy and sell electronics components tried a lot of different models. Marketplaces similar to Amazon.com appeared that displayed parts for sale (called OPI—other peoples’ inventory) no matter where the parts were located. Auction sites posted inventory (the eBay model) and allowed buyers to bid. Trading sites evolved that matched companies that had components with buyers that were looking for them (for a fee). These dot.com sites have a few things in common: they started with an e-commerce model and adapted it to sell electronics components. They are also, with very few exceptions, gone.
It’s fair to say that online marketplaces created a host of problems for electronics companies. Anonymity allowed fly-by-night companies to set up shop; post inventory; collect payment and disappear. “Blind” trading led to counterfeits more easily entering the supply chain. The ability to monitor global component prices—similar to commodities exchanges—disrupted pricing models. Most importantly, electronics procurement professionals weren’t able to get the mix of products and services that they needed from these dot.com distributors.
The distribution channel is still working on the best mix of e-commerce products, services and functionality for the electronics supply chain. The industry’s two largest distributors have both within recent weeks announced initiatives geared toward their “digital transformation.” At Arrow Electronics Inc. one of the more recent efforts is the upgrade of Arrow’s Verical.com website. Verical, which was acquired by Arrow in 2010, aims to bridge the gap between distribution’s forecast-dependent fulfillment model that pipelines inventory—some of it not built yet—into the supply chain; and the ready-to-sell inventory model of catalog distributors and independents.
Verical’s general manager, Darryl Shaper, recently joined Arrow from e-commerce business hibu, formerly Yell Group. Hibu delivered print and digital marketing solutions to small and medium businesses in the UK, USA, Spain, Chile, Argentina, and Peru, helping them grow, attract new customers, sell online and offline, and to be more efficient at running their business. Shaper emphasizes that one of Verical’s strengths is the depth of the inventory that’s immediately available for shipment – in volume.
“I think Verical has more inventory for immediate shipment by a significant factor [than even Arrow],” Shaper said. Verical, he added, isn’t strictly a distributor—it is an online marketplace that sells what distributors sell. Although Verical lists components for sale from a variety of sources, all transactions occur at Verical.com. “The second thing is we have 1 million SKUs and hundreds of sources of supply and $8 billion in inventory ready to ship,” Shaper said. Everything marketed on the Verical.com site is ready for immediate purchase and shipment.
Many distributors can make similar claims, but not all can guarantee parts can be traced directly back to suppliers and are 100 percent warrantied. Not all distributors are authorized to buy and sell branded components and some – usually called independents — source unused inventory from OEMs and EMS providers. Because this inventory changes hands frequently, it is difficult to verify parts come directly from original component manufacturers (OCMs) and are handled per OCM standards. Suppliers may not warrantee components that can’t prove their lineage.
Verical, Shaper said, has a process and a playbook an entire team dedicated to testing and vetting all component sources and products. As an authorized distributor Arrow Electronics has agreements with suppliers regarding the handling and authenticity of components. “Many of the components we have come from Arrow entities and those are cross-documented [within Arrow],” Shaper explained. The vast majority of devices –even those from other Arrow companies — are shipped to Arrow sites where they are inspected and their provenance verified before being shipped to customers. “Verical is trustworthy marketplace for buyers looking for reputable, traceable parts,” said Shaper.
A wide and deep inventory of ready-to-sell components isn’t typical of distributors even as big as Arrow. Distributors – like many electonics companies – are punished by Wall Street for carrying too much inventory. By forecasting and scheduling orders 8-, 16- or even 32-weeks out, distributors can reduce their inventory burden. However, the pricing, delivery and return policies of this type of inventory are highly variable and often negotiable—characteristics that don’t align well with most e-commerce models.
Different inventory management techniques are required for a single distributor to cost-effectively manage ready-to-ship orders and fulfillment transactions. Although Verical offers components at a variety of price points, “the price listed is the price we ask—there is no negotiation and no games,” Shaper said. Catalog distributors, which sell small quantities of many different parts, practice a similar policy. The way distribution accounts for price variations—called ship-from-stock-and-debit—don’t lend itself well to e-commerce. For one thing, ship-from-stock requires supplier input which slows down purchasing transactions.
Verical also differentiates itself from companies such as FindChips.com, SupplyFrame.com, Octopart, and ECIAuthorized. “These companies are aggregators—they provide information from a variety of different sources—but they don’t do the heavy lifting associated with transacting purchases, shipping components and getting them there on time,” Shaper explained. “They are middlemen that aren’t facilitating a transaction.” These firms operate as affiliates of Verical.com.
Verical.com aims first and foremost to be a friction-less e-commerce site for the buying and selling of electronics components. It has stripped out many of the features that gave online marketplaces a bad reputation. There are no membership fees or costs associated with posting inventory. Buyers looking for parts and sellers are not matched for a fee: Verical’s DemandMatch quoting engine enables users to upload an entire shortage list (up to 1,000 line items). The sourcing, quality-control and vetting of all components has the experience and backing of Arrow Electronics. “Electronics component distribution is a very complex business,” Shaper adds. “We want to make sure that complexity is invisible and even irrelevant to Verical.com’s customers.”
The post Verical Sets Sights on Frictionless E-Commerce appeared first on Verical Connect.
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