At Fastenal, ecommerce is ‘becoming part of our DNA’hdfadmin
Paul Demery |
Ecommerce, including sales through Fastenal.com, accounted for 18% of total third-quarter revenue, while total “digital footprint” sales including internet vending machines grew to 50%, CEO Dan Florness said.
When Dan Florness took the reins as president adn CEO of Fastenal Co. in 2016, ecommerce accounted for less than 6% of total sales. But for the recent third quarter ended Sept. 30, ecommerce sales grew to 18%.
“It’s becoming part of our DNA,” he said on a Q3 earnings call today.
That share of ecommerce, including web sales and EDI transactions, amounted to $324.43 million out of $1.802 billion in total Q3 sales for at the wholesale distributor of fasteners and other industrial and construction supplies. But factoring in other digital sales through internet vending machines and other digital channels — what Fastenal calls its total “digital footprint” — digital commerce overall accounted for 50% of total sales, or $901.20 million.
Moreover, Florness noted that digital commerce is expanding throughout the company’s operations.
“When I stepped into this role [in 2016] ecommerce was about 5.5% of our sales,” he said. “They had been stuck there and they were stuck in purgatory … because we’re a service organization … not a catalog company or a ecommerce company.”
But Fastenal figured how it could play to its strengths as a service-oriented business and make ecommerce “part of our business.” For example, its network of 1,716 physical branch locations learned how to support customers’ ecommerce transactions. In the third quarter, 52% of Fastenal’s branches “had over 10% of their revenue in ecommerce,” Florness said.
He asserted that the ecommerce channel’s 18% share of Q3 total sales “isn’t coming from a few” Fastenal operations. “It’s coming from a lot of activities throughout the organization, which means it’s becoming part of our DNA.”
Florness added that Fastenal’s growth trend in ecommerce is following similar trends in the company’s broader digital footprint. That includes its vending machines and OnSite inventory management services.
For the third quarter ended Sept. 30, Fastenal reported:
- Total net sales of $1.802 billion, up 16% year over year;
- Gross profit of $826.5 million, up 14.8%, resulting in a gross profit margin of 45.9%, down from 46.3%;
- Net earnings of $284.6 million, up 16.9%.
For the nine months ended Sept. 30, Fastenal reported:
- Total net sales of $5.285 billion, up 18.0% from a year earlier;
- Gross profit of $2.447 billion, up 18.6%, resulting in a gross margin of 46.3%, up from 46.1%;
- Net earnings of $841.3 million, up 21.3%
Fastenal’s digital lesson for other distributors: It pays to diversify
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