A conversation with RS Components Electronics News

In 2011, RS Components made $60m in sales from the Australia and New Zealand region. We talked to country manager Jeremy Edward about this.

Online sales for RS Components has been a major growth area, with 50 percent increase this year. 41 percent of new leads for the company comes from its website.

Being a vendor for electronic components, the migration of manufacturing from Australia has had obvious impacts for the company, but Edward expressed optimism about the state of the electronic industry.

“There have been a lot of businesses offshored, particularly in electronics, and a lot of it has gone north to Asia,” Edward told Electronics News. “Having said that, there are still some very good businesses over here producing electronic equipment and continuing to innovate, design and lead the world in a lot of ways.”

“We have maybe gone away from the large-scale manufacturing side of things. But there is definitely strength in the design, the innovation, the specialist, the niche markets which tend to support us very well.”

RS Component started by supplying radio spares to repair shops but has over the last six or seven years boosted its electronics offering, offering tools and parts to electronics customers, design engineers and buyers.

The company has also pushed itself as a provider of DesignSPARK, a free PCB software. Based on the registration data it has received for that software, RS Components believes there is still significant interest and application in electronics in Australia.

“The registrations we have for that software are disproportionate to our population,” Edward said. “That tells me that there’s a healthy network of engineers out there designing, innovating and producing.”

“Will manufacturing come back? I think there is a chance it will come back, but it will be sporadic.”

What is more likely to happen, according to Edward, is a shift in the manufacturing base away from China.

“I think we will still see a lot of fluidity in the market. As more and more people aspire to the BMWs in China, where most of the offshoring has gone to, we will see the manufacturing base circulate around.”

“The manufacturers who are loyal to their market, who do not need to chase the lowest base price, will continue to maintain their market presence,” Edward said. “The large bulk manufacturers will continue to chase the lowest unit price.”

In a world where companies are diversifying their offerings and moving from goods into services (see Amazon, for example) Edward is steering RS Components into the future focused on its strengths.

“I don’t think we will move into manufacturing. I think it would be very difficult to add value to that,” Edward told Electronics News when asked about the potential of becoming a CEM. “As a business, if we can add value to our customers, let’s stick to what we’re good at.”

The current strengths of RS Components is its stock of around 70,000 products in Australia, with the ability to reach 90 percent of the population within the next day, or 100 percent within two days.

The logistics of shipping one parcel every 25 seconds is boosted by RS Component’s local facilities. Its main distribution house is in Smithfield in Sydney’s West, with showrooms in Brisbane, Melbourne, and Auckland.

For the other 450,000 products stocked elsewhere in the world, shipping to Australia takes approximately six days.

According to Edward, the strong Aussie dollar is not helping the company.

“It has increased competition from overseas,” said Edward.

However, he says the service RS Components provides is helping.

“Yes, we’ll always see customers vote with their feet, but  we’re winning a lot more battles than we are losing.”

In April 2010, RS Components started a plan to double its business in five years (by April 2015).

“We are solidly on track, and I am confident we will do it before that. We will continue to evolve and grow into a stronger business,” said Edward.
A conversation with RS Components Electronics News