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Online ordering is advancing, but not yet the norm
22 March 2017, This Week's Editor's Pick, News

Like mobile browsing and social media, online ordering is all the rage, but is it mature enough, and trusted enough, to be widely adopted by the professional electronics industry?

The answer to that question depends on several factors, for example it is less pertinent when it comes to high-value products such as test and manufacturing equipment. For components, though, it seems to have become a must-have, certainly for the larger global distributors which almost all have online ordering platforms. Some distributors have even gone so far as to create an online-only model, such as Digi-Key and Mouser. To find out how the uptake in adoption of online ordering is progressing in the South African market, Dataweek quizzed three members of the local industry.

Mantech Electronics was founded in 1987, long before the days of online ordering and even before the Internet became a commonplace tool. The company still does a roaring trade over its trade counters, but has also implemented online ordering facilities across its website. According to the company’s owner, Manny Moutinho, customers generally still enjoy the ‘old fashioned’ ways of ordering. “Buying online remains a challenge for some,” he explains. “They often need positive and human interaction when negotiating prices, delivery dates, availability conformation, etc.”

Moutinho says the implementation of Mantech’s systems represented a large commitment, and as to whether it’s worth the return on investment, the answer is somewhat mixed. “That is a tough question. The online business remains a small percentage of our total business. However, our online resources have become an essential tool for many of our customers. On our website they can obtain pricing, imagery, technical data, etc. This aids them on their day to day necessities.

“From our side, it was and continues to be a relatively big challenge. We have taken the route of developing our own website and ERP, implying that we essentially had to set up our own software division and all the necessary resources, such as people, development tools, test hardware, hosting hardware, etc.”

Behind the scenes, Moutinho says that converting a mouse click to a delivery, in Mantech’s case, still involves a fair amount of input. The actual order is automatically emailed to a preferred sales person, who simply imports it into the ERP and generates a picking slip and/or invoice. From there onwards, the process is entirely manual.

“The virtual storefront will become the norm – it is only a question of time,” Moutinho believes. “However (and this is increasingly less so), there will always be the need for a physical trade counter and a friendly smile.”

RS Components was one of the first global business-to-business companies to tackle e-commerce within this particular industry. “The vision for RS was to build a sustainable company for the future which meant a shift from being a traditional catalogue distributor to a fully-fledged e-commerce business, so there was significant investment of both resources and personnel,” says SA general manager, Brian Andrew. “The journey didn’t happen overnight as we couldn’t just take our traditional business and develop another channel; we had to create a whole new business that could live in an online environment and adapt as technology and our customers changed. Once we were able to do that in one country we could replicate this across markets.

“It took 13 years to get our e-commerce business to reach the milestone of bringing in 50% of global revenues and it continues to grow. Just like any other business we have to continually invest in our platform and the skills of our people to remain relevant and to add value to our industry. Currently 65% of global RS sales comes through e-commerce, while in South Africa just over 60% of our sales comes through our online channels.”

Andrew says customers are becoming more comfortable with the digital world and are transacting online using various devices to access the RS website. “There is a dominant usage of search and browse functionality but a hesitation to complete transactions online,” he clarifies. “This is because the transaction happens virtually and customers want assurance that, should something go wrong, they can find a human being to contact.

“We strongly believe in supporting our online functionality with the ‘human touch’ which seems to work well for our business, and once we take a customer online and alleviate their fears, they continue to use this channel. In most instances it becomes the preferred method of purchasing due to the ease and convenience it offers, as well as the increased productivity for the customer as all their account information and documentation is available at their fingertips.”

RS Components’ online ordering processes are predominantly automated with some human involvement, which obviously requires sophisticated backend systems and a strong logistics network. Andrew explains: “When a customer places an order, our system searches for the nearest distribution centre that has available stock, which may be in another country. Regardless of where it is in the world, our logistics system is designed to get it to customers in South Africa within a maximum of four to six working days, without the customer having to pay additional freight fees due to the country of origin. If we have the requested products in local stock, customers can have their orders delivered the next day. At the moment human intervention happens within our warehouse and packaging department. We also enhance our customers’ experience through our customer service department that assists them with their online purchases.”

As to how he envisions online purchasing progressing in the future, Andrew says “With the direction that the world is taking it definitely looks like components in general will be bought online. However, there is always a need for a friendly smile as that is how humans connect, learn and grow. Traditional trade counters will probably need to adapt to the changing world, and fulfil another purpose such as showcasing new solutions or even producing a customised part onsite while you wait.”

From the purchasing side, buyers are becoming generally more comfortable with ordering online, but say that it is far from becoming the default method of ordering, and the facility to do so varies across the various South African component distributors. The buying department of Inhep Digital Security, one of SA’s leading security OEMs, says that although it actually prefers to do its purchase orders online, at present less than 1% of the components used in its manufacturing facility are in fact purchased this way.

According to Inhep’s Nirvaan Singh and Liz Nayagar, one of the attractions to online orders is the potential for qualifying for much higher discounts for the MOQs (minimum order quantities) that are available online. Other advantages include access to the supplier's inventory on hand, complete tracking from order placed to order dispatched to order delivered, immediate notification of discontinued parts and alternate parts available, along with data sheets. They also appreciate savings on freight charges, as well as having access to accurate lead times.

While they acclaim the benefits of online purchasing and see the virtual storefront as the way of the future, Singh and Nayagar echo the sentiments of both Moutinho and Andrew: that good old face-to-face, or at least voice-to-voice, interaction will never go out of fashion.

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Further reading:

  • Arrow Altech appoints new sales GM
    11 October 2017, Arrow Altech Distribution (AAD), News
    Renato Martins has worked in the electronics industry since 1994, earning valuable work experience through various positions at BMS, Logitech SA and Mimic SA before joining AAD.
  • From the chairman’s desk: Q3 in South Africa
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    Warren Muir, chairman of AREI, provides an update on how the local electronics sector is doing, and some of the Association’s latest happenings.
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    Arrow Value Recovery Services specialises in reducing the environmental impact of e-waste by recycling ICT products through lifecycle programmes that recondition and return them to the business ICT stream.
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  • From the chairman’s desk: Manufacturing in South Africa
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    Warren Muir reflects on his attendance at the 2017 Manufacturing Indaba, and how it fits in with arei’s plans for the South African electronics industry.

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