Large companies include Arrow Electronics and Avnet. The average distributor has 20 employees and annual sales less than $10 million. The industry is rapidly consolidating and has a large international component. The 50 largest firms hold about 65 percent of the market.

COMPETITIVE LANDSCAPE

Demand for electronic components is driven largely by business and consumer purchases of computers and telecommunications equipment. The profitability of individual companies depends on business volume and correct merchandising, or stocking the products buyers want. Large companies have advantages through buying in high volume at discounted prices, more-efficient inventory management, and the ability to fulfill large customer orders. Small wholesalers can compete by offering specialized products or better service.

PRODUCTS, OPERATIONS & TECHNOLOGY

Major products include semiconductors (computer chips); connecters; and electromechanical devices. Other products include disk and tape drives, computer subsystems, microwave and fiber optic components, transistors, diodes, power supplies, and switches. Computer chips account for about 55 percent of industry revenue. In some cases components may be very small and inexpensive. Most distributors operate a single large distribution center, although a big distributor like Arrow operates 23 centers that serve customers in 40 countries. Distribution centers are often larger than 200,000 square feet.

In addition to products, wholesalers offer services like purchasing; marketing; warehousing; packing, shipping, and delivery; customized packaging, private labeling; minor repair and refurbishment.