As overall sales declined to such customers as large manufacturers and companies involved in energy and natural resources, W.W. Grainger Inc. reported slack first-quarter sales in the United States. But a relative bright spot was Zoro Inc., Grainger’s web-only off-price business of selling industrial supplies to U.S. customers.
Grainger doesn’t break out financial numbers for Zoro.com, which along with the company’s Japan-based e-commerce site, MonotaRO.com make up a large part of Grainger’s “Other Business” segment. Largely because of growth at Zoro and MonotaRO, sales for the first quarter ended March 31, 2016, in the Other Business segment surged 49.5 % to $445.33 million from $297.80 million in the year-earlier quarter.
“Our single-channel online businesses of Zoro in the United States and MonotaRO in Japan posted continued strong performance,” Grainger said in a podcast today about its first quarter financial performance. Zoro also operates a site in Canada at ZoroCanada.com. Grainger’s Other Business unit also includes online and offline sales to customers in Europe, Asia and Latin America.
By comparison, U.S. segment sales—composed of sales through Grainger.com, its network of more than 550 stores and an army of sales reps—were essentially flat in the quarter at $1.966 billion, down less than 1% from $1.971 billion in the year-earlier quarter.
Overall e-commerce sales in Q1 represented “nearly 45% of Grainger’s total revenue,” about $1.13 billion out of $2.51 billion, a spokesman says. Compared with figures on overall e-commerce sales that Grainger provided for the year-earlier period, total e-commerce sales in the first quarter of 2016 increased about 15% to $1.13 billion from $976 million.
Sales declined in the quarter to customers grouped among heavy manufacturers, natural resources companies and resellers, but increased among retailers and light manufacturers.
Going forward, Grainger expects to improve its performance as it moves ahead with investments in e-commerce, supply chains and overall business operations software. For example, Grainger completed in February its implementation in Canada of an enterprise resource planning, or ERP, system in Canada based on the same software from SAP SE that runs its ERP system in the United States. “We now have our North American business running on one platform, which will drive better service and increased productivity over time,”chairman, president and CEO Jim Ryan says.
Grainger’s ongoing investments in e-commerce, inventory management and supply chain technology, including new distribution centers in New Jersey and Toronto, “will provide and support growth for years to come,” he said, adding: “We have also invested in tools and processes that will make us more productive including a new customer relationship management system for the sales force, and SAP, in Canada and Mexico.”
Grainger also reported for the first quarter ended March 31:
Total net sales increased 2.7% to $2.507 billion from $2.440 billion;
Net income declined, down 11.5% to $186.7 million from $211.0 million.