Missy Hall, Vice President, New Market Development for Digi-Key Electronics discusses benefits of partnership with distributors to overcome B2B market challenges.
These days, electronic component manufacturers of all sizes need to excel in many different — and often complex — areas of their business in order to be successful. They must have a strong digital presence so users can find them online. If they want to do business internationally, they must have the infrastructure in place to ship to countries around the world, and quickly.
Additionally, manufacturers must market their product to the right audiences; pay the proper taxes and follow relevant laws in the countries they operate in and sell to; fill out the correct import and export paperwork; and provide excellent, efficient and effective customer service on top of it all. And that’s just the beginning!
These challenges can be very daunting to new startup manufacturers and established companies alike – because the industry moves so quickly and supply chains are increasingly global in nature, it is advantageous for suppliers to work with a global high-service distributor like Digi-Key that can handle the more complex pieces of selling and shipping products around the world, freeing them up to focus on what they do best: creating the best possible products.
Here are some of the top reasons to work with a B2B distributor to overcome these challenges:
Global Logistics
Undoubtedly one of the top benefits of working with a distributor – particularly in the age of expectations around lightning-fast shipping – is the capability of handling the storage and shipment of your products to customers around the world. Logistics includes much more than simply boxing up the right number of parts to fill an order.
Digi-Key handles the export paperwork for its core suppliers, as well as defining terms of sale (Incoterms) and negotiating great volume-based shipping rates with all the major carriers. All of this adds up to a much simpler transaction for manufacturers, whose primary responsibility is to get the product to Digi-Key – we handle the rest!
Digi-Key has introduced several additional options for suppliers, including its Digi-Key Marketplace and Fulfilled by Digi-Key programs that expand opportunities for manufacturers to work with Digi-Key and take advantage of these benefits in different ways.
Compliance
There are two main areas when it comes to compliance: product compliance and trade compliance. Both areas can become very complicated, and it’s critical to do things correctly.
Trade compliance: Trade compliance encompasses many of the aspects of global logistics mentioned earlier, as well as additional export rules and regulations, denied party screening and more. Of course, there are technology solutions that exist to address these global logistics considerations, but they can be expensive to implement. Working with a distributor using these solutions is often more cost effective.
Product compliance: Each country has its own set of laws and standards regarding what can and cannot be sold within their borders. For instance, one of your products may be fine to sell in one country, but not in another – or, at least, not without some additional labeling or paperwork. Digi-Key has a group of experts focused on ensuring our products are compliant with local regulations around the world – taking a large burden off the manufacturer.
Compliance is absolutely critical for global sales – it’s something that you need to make sure you get right in order to continue selling into global B2B markets. Working with a high service distributor can simplify the process, freeing up valuable time and resources to focus on manufacturing.
Taxation
Collecting and remitting the proper amount of sales tax is already a daunting challenge within just one country, where various states or regions may have their own laws and regulations in place. Multiply that by the number of countries where you want to do business, and it becomes quite a headache very quickly!
Often, companies are forced to make sizeable investments into sales tax software and/or consultants to ensure they’re charging customers appropriately. Working with a distributor to sell your products means that their team of tax experts and VAT specialists oversees staying on top of the changing regulations in each country and digital taxation laws.
Distributors like Digi-Key are also well-versed in sales tax exemptions, ensuring that the customer experience is smooth on the receiving end as well.
Sales and Customer Service
Many manufacturers have great sales and customer service teams in place – the key is figuring out how to scale it up to a global level as the business grows. This is where a strong digital presence becomes essential, including features like self-service returns, order status tracking, real-time web chat, support in local languages and more. Customers are accustomed to these options being available in B2C settings, and B2B organizations must be able to keep pace in order to meet expectations.
Other customer service considerations to keep in mind include:
- Payment options in local currencies and terms that are standard in certain countries
- Translated product information and supporting content to local languages
- Offering API and/or EDI integrations for ordering, as well as sharing parts via Bill of Materials (BOM) solutions
And on the sales side of things, being able to reach a wide breadth of new customers and potential customers is of utmost importance. A high service distributor often is working with a larger global marketing budget which can translate into advertising budgets that draw new eyeballs to their website and your products. Digi-Key, for example, has 56 million pageviews on its site per month!
High-service distributors provide many of these sales and customer service offerings and much more, and are continuously updating, enhancing and evolving them to keep pace with the industry and sell more of your products with high levels of customer satisfaction.
Final Thoughts
Working with a distributor has many benefits, but the ultimate benefit is being able to rely on a trusted partner whose expertise in global sales, logistics and customer service can help your company reach more customers around the world.
Due to numerous complexities and challenges, entering – or staying relevant in — the global B2B market can be difficult for component manufacturers of any size. The good news is that high-service distributors like Digi-Key can shift many of these responsibilities off their plates, allowing them to instead focus their energies on manufacturing the components that fuel the world’s innovations.
Missy Hall is vice president of new market development at Digi-Key Electronics. Digi-Key is both the leader and continuous innovator in the high service distribution of electronic components and automation products worldwide, providing more than 10.7 million components from over 2,200 quality name-brand manufacturers.