E-commerce solutions catalyzing growth in semiconductor industry

The semiconductor sector is at the vanguard of technological innovation, driving the digital revolution that is transforming businesses and society throughout the world. In recent years, the emergence of e-commerce solutions has emerged as a driving factor behind the industry's growth, transforming how semiconductor goods are purchased, sold, and distributed. This essay investigates the disruptive influence of e-commerce on the semiconductor business, focusing on major trends, problems, and possibilities in this dynamic market. 

While talking about the surge in e-commerce and its effect on the semiconductor industry, Siva Balakrishnan, Founder and CEO of Vserve, shares his thoughts.

Rise of e-commerce in semiconductor industry

The semiconductor industry has traditionally relied on complex supply chains and intricate distribution networks to deliver products to customers. However, the advent of e-commerce platforms has disrupted this traditional model, offering a more streamlined and efficient way to connect semiconductor manufacturers with buyers around the globe.

According to data from Statista, global e-commerce sales reached $4.28 trillion in 2020, with the semiconductor industry playing a significant role in driving this growth. E-commerce platforms provide semiconductor companies with access to a broader customer base, enabling them to reach new markets and expand their global footprint.

E-commerce's impact

Prior to the e-commerce boom, distribution facilities were accustomed to dealing with massive order lines and bulk orders, and automation technology was designed to handle pallets of products. Semiconductor distributors are now required to send particular goods for "buy online, pick up in store" options and direct-to-end customer deliveries, in addition to selling stock to retail locations, as online sales have increased.

Reduced order quantity, but improved access: Order queue size has decreased due to omnichannel distribution of lower order amounts, and selecting has become more complicated and labor-intensive. In today's fast-paced e-commerce industry, human procedures and outdated technologies cannot meet consumers' same-day shipping and next-day delivery needs.

Balance of benefit and cost: Many businesses struggle to find the most effective method for automating their omnichannel electrical components distributor and distribution channel operations. The ideal strategy to improve productivity, eliminate mistakes, and save labour costs may be to combine flexible goods-to-person technology with manual operations. 

In particular, as compared to a manual process, an automated goods-to-person system can be up to six times more efficient, allowing facilities to choose an even larger volume of orders every shift. Employees may have products handed to them at a picking station rather of walking around the warehouse, saving them time and effort.

Reduced human error: Totes, bins, or trays can be carried to these stations by an automated storage and retrieval system (AS/RS) and shuttle system, which can subsequently return the products to storage once the required items have been removed. With its unparalleled precision, this technology can remove human mistakes, resulting in more exact orders and satisfied consumers.

Better access to data: Furthermore, greater customer satisfaction may emerge from the traceability provided by an automated solution when combined with a warehouse control system (WCS). Businesses with access to history and location data can provide the real-time tracking information and updates that end customers expect when making an online purchase. Furthermore, a WCS can properly maintain inventory counts, ensuring that the correct commodities are always available for rapid fulfillment when a customer makes a purchase.

Maximized space utilization: To stay up with e-commerce, an automated system that maximizes space is required. To accommodate customer demand for variety, e-commerce fulfillment typically requires the storage of a significant number of SKUs. A modular AS/RS eliminates the requirement for cumbersome storage racks that must be stretched out for hand picking, as well as wide aisles to accommodate forklifts and worker movement.  

Shedding light on recent trends Prateek Sachdev, Managing Partner at Mobikasa, shares his insights on recent trends and how the semiconductor industry is adapting to rapid change in economy.

Key trends in e-commerce adoption

Several key trends are shaping the adoption of e-commerce solutions in the semiconductor industry. One notable trend is the increasing prevalence of online marketplaces, where semiconductor manufacturers can showcase their products and connect with buyers in real time.

Another trend is the growing demand for customizable semiconductor solutions, driven by the rise of applications such as artificial intelligence (AI), Internet of Things (IoT), and 5G connectivity. E-commerce platforms enable customers to easily configure and order customized semiconductor products to meet their specific requirements.

Challenges and opportunities

While e-commerce offers numerous benefits for the semiconductor industry, it also presents several challenges. One of the main challenges is cybersecurity, as the industry must safeguard sensitive intellectual property and proprietary information from cyber threats.

Another challenge is the need for robust logistics and supply chain management systems to ensure the timely delivery of semiconductor products to customers. However, advancements in logistics technologies, such as blockchain and IoT, are helping to address these challenges and improve supply chain visibility and efficiency.

Despite these challenges, e-commerce presents significant opportunities for the semiconductor industry. By leveraging e-commerce platforms, semiconductor companies can reduce costs, improve customer satisfaction, and accelerate time-to-market for new products. 

Additionally, e-commerce enables semiconductor manufacturers to gather valuable data and insights into customer preferences and market trends, enabling them to make informed business decisions and drive innovation.

Case study

Several semiconductor companies have successfully embraced e-commerce to drive growth and innovation. For example, Taiwan Semiconductor Manufacturing Co. (TSMC), the world's largest semiconductor foundry, launched an online portal called eSupply. This was to streamline its supply chain operations and improve collaboration with customers and suppliers.

Another example is Intel Corp., which operates an online store where customers can purchase a wide range of semiconductor products, including processors, memory modules, and development kits. Intel's e-commerce platform offers a seamless purchasing experience and provides customers with access to valuable resources and support.

Future outlook

Looking ahead, the future of e-commerce in the semiconductor business is bright. As digitization continues to transform the global economy, e-commerce will become increasingly important in driving development and innovation in the semiconductor sector.

Artificial intelligence, machine learning, and big data analytics will improve e-commerce platform capabilities, allowing semiconductor firms to provide more personalised and efficient consumer experiences. Furthermore, the continuous move to remote work and digital cooperation in the aftermath of the Covid-19 epidemic is expected to hasten the adoption of e-commerce solutions in the semiconductor sector. 

Ultimately, e-commerce solutions are transforming the semiconductor sector, allowing companies to enter new markets, streamline operations, and drive innovation. By utilising e-commerce platforms, semiconductor firms may traverse the difficulties of the digital economy and embrace future prospects for development and success.