W.W. Grainger Inc., the distributor of equipment and supplies that companies use to maintain their facilities, is investing in its ecommerce and distribution operations to spark sales, executives said today.
Referring to its “endless aisle” strategy of making its large catalog of products available online, CEO D.G. Macpherson said on a second-quarter earnings conference call with investment analysts that Grainger was investing in its Zoro.com platform to generate more sales by making more products available more easily and quickly to online buyers.
The improvements include a new product information management (PIM) system to improve how managers can add products to Zoro.com; upgraded analytics technology to improve how Zoro markets its assortment of products to customers; and adding about 1 million more SKUs this year, following 400,000 recently added. Eventually, Grainger expects to have from 3 million to 5 million SKUs available through Zoro, its web-0nly business for smaller customers. “We’re optimistic for our growth going forward,” Macpherson said. He added that the endless aisle improvements were on course to be completed by the end of this year.
Ecommerce is worth the investment
In addition, Macpherson noted that Grainger is upgrading its distribution facilities. With its new Louisville, Kentucky, distribution center, Grainger is able to make 600,000 products available for quick shipments, with most available for next-day delivery.
Grainger didn’t break out ecommerce sales, but in recent quarters has noted that ecommerce sales accounted for more than half of total sales. Macpherson said on the conference call that Grainger’s investments in ecommerce were crucial for a channel that “continues to be profitable—and a fast grower.”
For the second quarter ended June 30, Grainger reported:
- Total sales increased 1% year over year to $2.9 billion;
- Gross profit increased by 0.9% to $1.12 billion, resulting in a gross profit margin of 38.7%, down slightly from 38.8%;
- Net earnings increased by 9.7% to $260 million.
For the first half, Grainger reported:
- Total sales increased 0.1% year over year to $5.69 billion;
- Gross profit increased by 0.6% to $2.22 billion, resulting in a gross profit margin of 38.9%, down from 39.2%.