March 30, 2011

Broker vs. Independent Distributor: What’s the Difference?

Once upon a time, if you needed to buy electronic components on the open market, there was only one way to get them. You had to work with a broker.

In the beginning, most brokers of electronic parts fit the classic definition of the word and didn’t offer much beyond that: They arranged transactions between buyers and sellers and earned commissions from the sales. A broker could be a large firm or a guy in a basement with only a handful of inexpensive parts stocked as inventory. A broker simply knew how to get the parts that you needed, and that’s what made his services valuable.

Times have definitely changed.
A new type of parts broker was born in the 1990s, when the founders of Converge coined the phrase “independent electronics distributor.” Although the company started out as an electronic components broker in 1980, it evolved into much more than that.

The founders identified the need to differentiate the new services that Converge provided from those of the “average” parts broker. The “independent distributor” distinction caught on immediately and is now widely used throughout the industry.

While brokers and independent distributors both help buyers and sellers find each other, there are significant differences between them. Five main points of distinction include:
  1. Global footprint. Independent distributors have infrastructure (in addition to sales offices) sprinkled around the globe. This enables them to provide full end-to-end service — from warehousing to packing to shipping — for customers almost anywhere in the world.
  2.  Robust quality programs. This is an important differentiator. Counterfeiters grow more sophisticated every day. The average broker does not have the capability to inspect and test the parts that it sells. Conversely, an independent distributor invests in capital test equipment, staff education, and internal engineers, who conduct rigorous electronic component inspections to ensure the authenticity of every component.
  3. High industry standards. I’m not trying to say that the “average” broker doesn’t have standards. However, independent distributors (at least the ones that want to be taken seriously) are required to have them. Most aim to join industry trade organizations, such as the Independent Distributors of Electronics Association (IDEA), which has stringent membership requirements. These IDEA standards set the bar high on everything from the certifications that independent distributors must obtain to the amount of product liability insurance they must carry. When you work with an IDEA member, you are assured that you are working with an electronic components distributor that has dotted every “i” and crossed every “t.” 
  4. Market Intelligence. Due to its global footprint and vast network of industry connections, an independent distributor can provide valuable insight into what is transpiring in the market. Instead of simply finding or selling the parts that a client needs, an independent distributor can help the client make educated, long-term decisions based on market dynamics prior to each transaction. 
  5. Reliability. Since independent distributors offer more resources than do brokers, they are able to offer higher levels of service, quality, and liability protection to their customers. If there is a problem with a shipment that you purchase, you can trust that an independent distributor will be there to remedy the issue. Small brokers cannot make that same guarantee.

In the world of electronic components, brokers and independent distributors may share some of the same functions, but they are far from being the same. At Converge, we have worked hard for the past 30 years to set ourselves apart. We hope that our customers — and now you — will notice the difference. 

For more information on the differences between an independent distributor and a broker, please visit our website.

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