Fastenal Company Reaches eCommerce Milestone
The Fastenal Company reported daily sales through eCommerce grew 55.6% in the first quarter of 2022.
eCommerce: daily sales rose 55.6% in 1Q22. Large customer oriented EDI was up 56.2%, while web sales were up 53.9%. On the company’s recent first quarter earnings call Fastenal CEO, Dan Florness told analysts “Our ecommerce team hit a milestone”. “In March, we exceeded $100 million in revenue for the first time.”
Revenues attributable to eCommerce represented 16.1% of their total revenues in the first quarter of 2022. Their eCommerce business includes sales made through an electronic data interface (EDI), or other types of technical integrations, and through their web verticals.
Their digital products and services are comprised of sales through FMI (FASTStock, FASTBin, and FASTVend) plus that proportion of our eCommerce sales that do not represent billings of FMI services (collectively, our Digital Footprint). They believe the data that is created through their digital capabilities enhances product visibility, traceability, and control that reduces risk in operations and creates ordering and fulfillment efficiencies for both themselves and their customers. As a result, they believe their opportunity to grow their business will be enhanced through the continued development and expansion of their digital capabilities. Their Digital Footprint in the first quarter of 2022 represented 47.0% of our sales. They began to provide this figure in the first quarter of 2021, when we reported that our Digital Footprint represented 34.8% of our sales. We subsequently identified a calculation error. Using the same approach to calculating our Digital Footprint as we used starting in the second quarter of 2021, their Digital Footprint represented 39.1% of our sales in the first quarter of 2021.
Growth Driver Performance
During the first quarter of 2022, they signed 106 new Onsite locations (defined as dedicated sales and service provided from within, or in close proximity to, the customer’s facility). They had 1,440 active sites on March 31, 2022, which represented an increase of 12.1% from March 31, 2021. Daily sales through our Onsite locations, excluding sales transferred from branches to new Onsites, grew at a better than 20% rate in the first quarter of 2022 over the first quarter of 2021. This growth is due to improved business activity from our Onsite customers and, to a lesser degree, contributions from the increase in the number of Onsites we operate. It is not unusual for Onsite signings to be relatively strong in first quarters of calendar years. The signings in the first quarter of 2022 represent a record number for any quarter and a substantial improvement on first quarter signings over the prior two years. We believe this reflects normalization of the business environment which is improving access to facilities and decision-makers while reviving customers’ strategic planning around supply chain solutions. We continue to believe the market will support a long-term rate of 375 to 400 annual signings, and this remains our goal for Onsite signings in 2022.
FMI Technology is comprised of our FASTStock℠ (scanned stocking locations), FASTBin℠ (infrared, RFID, and scaled bins), and FASTVend℠ (vending devices) offering. FASTStock’s fulfillment processing technology is not embedded, is relatively less expensive and highly flexible in application, and delivered using our proprietary mobility technology.
FASTBin and FASTVend incorporate highly efficient and powerful embedded data tracking and fulfillment processing technologies. Prior to 2021, they reported exclusively on the signings, installations, and sales of FASTVend. Beginning in the first quarter of 2021, they began disclosing certain statistics around our FMI offering. The first statistic is a weighted FMI® measure which combines the signings and installations of FASTBin and FASTVend in a standardized machine equivalent unit (MEU) based on the expected output of each type of device. They do not include FASTStock in this measurement because scanned stocking locations can take many forms, such as bins, shelves, cabinets, pallets, etc., that cannot be converted into a standardized MEU. The second statistic is revenue through FMI Technology which combines the net sales through FASTStock, FASTBin, and FASTVend. A portion of the growth in net sales experienced by FMI, particularly FASTStock and FASTBin, reflects the migration of products from less efficient non-digital stocking locations to more efficient, digital stocking locations.
The overall impact of product pricing on net sales in the first quarter of 2022 was 580 to 610 basis points. This increase reflects pricing actions taken during 2021, particularly in the second half, and the first quarter of 2022. These actions were taken as part of their strategy to mitigate the impact of marketplace inflation for our products, particularly fasteners, and transportation services. During the first quarter of 2022, costs for fuel and transportation services accelerated in their inflationary impact. Fastenal Company will continue to take actions aimed at mitigating the impact of product and transportation cost inflation as the need arises in 2022. The impact of product pricing on net sales in the first quarter of 2021 was 60 to 90 basis points. From a product standpoint, they have three categories: fasteners, safety products, and other products, the latter of which includes eight smaller product categories, such as tools, janitorial supplies, and cutting tools. Fastener daily sales increased 24.6% over the first quarter of 2021, and represented 34.3% of our net sales in the first quarter of 2022; fasteners represented 32.5% of net sales in the first quarter of 2021. Safety product daily sales increased 15.3% over the first quarter of 2021 and represented 21.0% of their net sales in the first quarter of 2022; safety products represented 21.5% of net sales in the first quarter of 2021. Other products daily sales increased 14.8% over the first quarter of 2021 and represented 44.7% of their net sales in the first quarter of 2022; other products represented 46.0% of net sales in the first quarter of 2021.
Fastenal Company Reports 2022 First Quarter Earnings Report:
WINONA, Minn., April 13, 2022 (BUSINESS WIRE) Fastenal Company (Nasdaq: FAST), a leader in the wholesale distribution of industrial and construction supplies, today announced its financial results for the quarter ended March 31, 2022. Except for share and per share information, or as otherwise noted below, dollar amounts are stated in millions. Throughout this document, percentage and dollar calculations, which are based on non-rounded dollar values, may not be able to be recalculated using the dollar values included in this document due to the rounding of those dollar values.
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The Fastenal Company History:
When Fastenal opened for business in 1967, we were the smallest of an estimated 10,000 fastener distributors in the U.S. By the mid-1990s we had become the largest, almost entirely through organic growth. As company founder Bob Kierlin later observed, “We had to be doing something different. It wasn’t the product, and it wasn’t how we distributed the product. It was our belief in people.”
Website: Fastenal Company