Newark InOne: This senior has its moments

Newark InOne, the granddaddy of electronics catalogs, remains quite spry.

By Heidi Elliott -- Movers & Shakers, 11/1/2004

Paul Tallentire set big goals for Newark InOne in his first year as president.

Paul Tallentire, President, Newark InOne

In taking the helm of the electronics industry's oldest catalog in December 2003, he had three priorities: increase technical information support to customers, improve the company's Web offerings, and improve the overall product portfolio.

Newark InOne has certainly delivered on those fronts. In March, the company announced it would add 40,000 new products to its online portfolio by year's end. In May, it unveiled a new technical-support initiative. In September, a new Internet search engine went live. "I think we're firing on all cylinders," Tallentire says of the company's performance to date. "We're quite excited about that."

Newark InOne is the US arm of Premier Farnell. It got its start during the Great Depression. In 1934, brothers Abe and Sam Poncher paid $11,800 for a spare-parts business for crystal radios in Chicago. They called the business Newark Electric Company, after the site of the first radio station in Newark, New Jersey. Newark published its first catalog in 1948, offering electronic and electric items. That first catalog was 100 pages long. Newark would grow to be considered the "bible" of the industry and weigh in at 1,700 pages.

Newark became a publicly traded company in 1960 and changed its name to Newark Electronics. Cleveland-based Premier Industrial Corp. purchased the company in 1968 and led it to become the largest catalog electronics distributor in North America. In 1996 Premier merged with Wetherby England's Electronics plc. The new company was named Premier Farnell plc, and the merger moved Newark into the global electronics marketplace.

Newark InOne and other catalog distributors serve the small-order market of prototype projects and test production runs. Broadline distributors sell in large volumes primarily to original equipment manufacturers (OEMs) and contract manufacturers. The typical catalog customer is a design engineer, though Tallentire says Newark InOne derives about 20 percent of its revenue from "traditional" distribution customers.

Because they sell in lesser volumes than broadline distributors, catalog companies generally enjoy higher profit margins. Newark InOne competes with Digi-Key, Allied, and Mouser. Though Newark InOne retains its title as the largest catalog distributor, Minnesota-based Digi-Key is nipping at its heels and could usurp that position in the near future.

Overall, the catalog business model is trumping the traditional distribution sector. The National Electronic Distributors Association (NEDA) started tracking the performance of the catalog category, as compared with other types of distributors, at the beginning of this year. "Catalog distributors are outperforming the big guys, the public guys, the private guys, the little guys—distribution as a whole," says Robin Gray, NEDA's executive vice president. "Our data show they've been outperforming everyone since we began tracking them as a separate group."

Though NEDA doesn't have a quick explanation as to why catalog companies are doing better, Gray suggests it might be that companies don't want to take on inventory and are willing to take on smaller quantities at a higher price rather than get stuck with unneeded parts. Whatever the reason, Newark InOne's parent company reports that its component-distribution business is maintaining or gaining market share.

In September, Premier Farnell reported that its Marketing and Distribution Division (MDD)—which includes Newark InOne, Farnell InOne, BuckHickman InOne, MCM, and CPC—reported that sales per day rose 15.3 percent during its second quarter, which ended in August. And for the first half of the fiscal year, the group's e-commerce sales per day rose 65 percent over the prior year. "Month by month, we are improving the quality and effectiveness of our operations through disciplined management and the sharing of best practices and expertise across the group," said CEO John Hirst in releasing the results. "Our markets remain positive, and we are increasingly confident of our ability to improve our effectiveness in the marketplace and grow our market share."

Newark InOne has made some changes to keep up with the ever-changing business landscape. After introducing more than 50,000 new products to its Internet offerings in 2003, the company announced its intention to add another 40,000 this year. The company also created a technical support group. Newark InOne has assembled a team of 20 engineers to provide product and application-related assistance. These engineers have varied product expertise, including semiconductors, passive components, and interconnect products. The technical support team fields about 5,000 phone calls each month.

These steps are part of what Tallentire calls a back-to-basics approach. He wants the company to offer the right product, that's easily available, at the right price. "We need to attract customers from the competition," Tallentire argues. "To do that, you need to focus on the breadth of product, technical support, and number of contacts. You can then add services, the human element, and customers can rely on you to deliver product."

One of the main ways to lure customers away is the Internet. The typical catalog customer base consists of design engineers—a group that is extremely Web-savvy and highly comfortable with using new technology. Newark InOne currently estimates its Web sales at 10 percent of its total sales. The goal is to increase that figure to 25 percent.

The company's new search engine, launched in September, will aid in that strategy. The search engine matches products and provides results ranked by relevance. The user can sort the results by manufacturer, price, availability, and other categories. The engine allows for side-by-side product comparisons and links to datasheets. Web visitors can also chat live with Newark InOne's technical support group. Tellentire is very proud of the new search engine. "We believe it will be market-leading," he says. "We believe it will be the most comprehensive search engine in the marketplace."

Tallentire looks to the future with relish. His company has laid the groundwork for a successful future. Now that a three-year period of gloom in the electronics market is over, he is looking forward to continued success. "We set ourselves some bold goals and we've been achieving them," he says. "We set more bold goals for next year and I believe we will beat them again."