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How a 79-year-old company found itself at the center of the maker revolution
A 79-year-old electronics distributor that started as Newark Electric Co., a radio parts shop on Chicago’s “Radio Row,” finds itself at the epicenter of an e-commerce and engineering design revolution.
Now called Newark element14, the Ravenswood company has kept its e-commerce functions cutting edge to make ordering easy for both design engineer customers and a growing group of “do-it-yourselfers” or “makers” who tinker with professional electronics.
The company’s sales have jumped 14 percent in the past three years, to $562.5 million in 2012, and e-commerce channel sales have grown 17.1 percent during that time.
• Newark element14 started what has become a burgeoning online engineering community four years ago called element14, which created a core group of customers. The name denotes silicon, the 14th element and the building block of semiconductors.
The “knode” at element14.com/knode gives design engineers the information, products and technical support they need to go from concept through prototyping.
“We use the community as a ‘listening post’ to see what our customers are talking about,” said Phil Robins, vice president of marketing and customer strategy.
• Newark’s takeover in the 1990s by 74-year-old British electronics distributor Premier Farnell paved the way for Newark element14 to become one of two distributors nationwide of Raspberry Pi, a wildly popular $25 to $35, credit card-sized Linux computer that hobbyists and engineers use for everything from automating home appliances to creating industrial sensors to powering home beer-brewing kits. The computer is open source and easily programmable.
Robins credits schools’ efforts to get kids involved in science, technology, engineering and mathematics (STEM) programs for helping embolden hobbyists as customers.
Newark element14 started distributing Raspberry Pi on Feb. 29, 2012, and has sold 600,000 so far.
The Raspberry Pi phenomenon started in early 2011 when parent company Premier Farnell planned the Pi’s commercial launch with the computer’s U.K. inventor, former University of Cambridge professor Eben Upton and his Raspberry Pi Foundation. Last September, Premier Farnell worked with the foundation to move the computer’s manufacturing to the U.K. from China.
“We have the entire engineering ecosphere — the knode, a strong transactional website, same-day shipping and a multi-channel sales approach that includes a sales staff out in the field,” Robins said.
Newark element14, which employs 400 at the Ravenswood headquarters, bases its e-commerce product list on its still-existing 2,500-page catalog. (The founding Poncher brothers named their company Newark because that’s where the tallest radio transmitter in the 1930s was in Newark, N.J.) The Ravenswood site includes a technical support team who work in a lab.
The company has plenty of competition, primarily from Digi-Key, Allied and Mouser electronics. Robins said Newark element14 has kept its edge by retaining the print catalog and the national sales force, and by selling innovative products such as Raspberry Pi, which is being used in robotics, college studies and home automation.
A customer who needs help can reach Newark element14 by phone or online chat 24 hours a day on week days.
“Design engineers are under so much pressure in the time they must get products to market,” Robins said. “They’re doing more with less.”
Forrester senior analyst Andy Hoar said companies that sell to other businesses are moving their customers online at an increasing rate to cut costs and seize new revenue.
Business-to-business e-commerce stood at $352 billion in 2009, the latest data available from the U.S. Census Bureau. That was up from $25 billion in 2000, for a 34 percent compound annual growth rate in nine years. Forrester predicts that by the end of 2013, the total will jump to $559 billion.
Hoar is the keynote speaker at an April 18 business-to-business e-commerce strategy session for manufacturers and distributors in Downers Grove, sponsored by platform provider Insite Software.
“We are at an inflection point,” Hoar said of business-to-business e-commerce. “We hear from clients all the time that they prefer ordering online because they can do it at 3 a.m. in their pajamas, get personalized recommendations in real time, see product ratings and reviews and track everything.”
Photo by Al Podgorski