MSC Industrial Supply Co. saw steady improvement in sales activity in its fiscal third quarter ended June 3, as it reversed a 2% drop in sales a year ago to post a 2% year-over-year increase.

A particular bright spot was in e-commerce, including sales through MSCDirect.com and the internet-connected vending machines MSC places on-site at customer locations. E-commerce sales in the quarter increased 5.7% year over year to $450.8 million and accounted for 60.6% of total sales of $743.9 million.

CEO Erik Gershwind attributes the uptick in overall sales to increasing demand across several manufacturing industries and customer segments, particularly among national account customers that receive a high level of customer service. “The improvement during the quarter was pretty much across the board, with particularly strong growth in national accounts, which increased in the middle single-digit range,” he said today on a conference call with stock analysts, which is recorded on the MSC’s website.

Gershwind added that sales to national accounts, which typically are larger companies, continued to build momentum at the start of the fiscal fourth quarter, entering double-digit growth rates. He said that growth was encouraging, because “national accounts have historically led the way in an upturn or downturn.”

Gershwind said the growth in national account activity coincides with the company’s ongoing focus on using sales technology, including CRM software, to make sales and service agents more productive. Even as more customers go online to place orders and receive basic information about products and order status, sales and service agents are still spending a lot of time helping them with special needs, he said.

He noted that around 90% of sales processed online are from customers who have steady “selling relationships” with MSC sales reps, who provide various types of assistance in maintaining accounts and advising on product purchases.

“One thing we will not do is reduce our customer touches,” Gershwind said on the conference call. “We’re making salespeople a heck of a lot more productive, with more information at their fingertips.” He added that MSC has been slightly reducing its number of field sales and service agents through attrition, ending the third quarter with 2,309 agents, down from 2,352 in the prior quarter.

The volume of calls received in MSC’s customer contact center has also been decreasing along with the increased online activity, and that has enabled call center agents to spend more time helping customers with complex issues. “A lot of the easy stuff goes to the web,” Gershwind said.

This has freed up contact center agents to help customers in new ways, such as providing technical advice on products and finding sources of products MSC doesn’t carry. While many of the new calls are more time-consuming, Gershwind said, they help to create customer “stickiness” in a way that’s difficult to do online. He noted that MSC had a net increase of about 5,000 SKUs in the quarter, with its total inventory more than 1.5 million SKUs.

MSC executives Mike Roth, senior director of e-commerce, and Steve Baruch, senior vice president, chief strategy and marketing officer, talked  about the importance of providing personal service to online customers during a presentation last month during the B2B Workshop at IRCE 2017 in Chicago.

As online as well as offline sales continue to grow, MSC is well-positioned to expand its distribution and fulfillment centers to meet increasing customer demand, Rustom Jilla, executive vice president and chief financial officer, said on the conference call. MSC can handle fulfillment for annual sales volume of up to $4 billion, or about 40% above the $2.86 billion MSC reported for its fiscal year ended Sept. 3, 2016.? without needing to invest more in warehouse technology, and has plenty of space at its fulfillment centers to expand its fulfillment operations when needed, he said.

For the third quarter ended June 3, 2017, MSC reported:

• Net sales of $743.9 million, up 2.3% from $727.5 million
• Gross profit of $414.4 million, up 3.5% from $400.5 million
• Net income of $62.8 million, down 3.1% from $64.8 million

For the 39 nine weeks ended June 3, MSC reported:

• Net sales of $2.134 billion, up 0.75% from $2.118 billion a year earlier;
• Gross profit of $952.8 million, down 0.2% from $954.8 million
• Net income of $170.7 million, up 0.8% from $169.4 million

MSC is No. 74 in the B2B E-Commerce 300.  The company’s formal corporate name is MSC Industrial Direct Co. Inc., but it generally uses the name of its largest division, MSC Industrial Supply Co.

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