Despite what it says is a slowdown in business, W.W. Grainger Inc. grew its third quarter electronic sales by a respectable number.
The large distributor of maintenance, repair and operations (MRO) products also will continue to expand its digital technology and product mix for both its Zoro brand, which operates internationally with dedicated ecommerce sites in the United Kingdom, Germany and in the United States, and Japan-based MonotaRO.com, the company says. Zoro focuses on sales to small businesses and individuals. The company’s flagship ecommerce site, Grainger.com, caters to larger companies and national accounts.
“We provide relevant products and services to customers to drive efficiencies and to save their money—and through our endless assortment model, we provide value through an expansive assortment that is easily accessed to streamline search experience,” Grainger CEO D.G. Macpherson told Wall Street analysts Wednesday on a third-quarter earnings call, according to a transcript from SeekingAlpha.com. “In these challenging times, we continue to focus on what matters. We are investing for growth in both business models.”
Grainger doesn’t break out specific ecommerce sales, but about 60% of all sales in 2019 are electronic compared with about 57% in the prior year, the company says. Grainger includes ecommerce site sales and sales from its internet-enabled vending machines in its electronic sales totals.
Ecommerce sales grow faster than total sales
Based on 60% and 57%, respectively, Digital Commerce 360: B2B estimates electronic sales for Grainger grew 11.2% in the third quarter ended Sept. 30 to $1.768 billion from $1.590 billion in the prior year. In comparison, total sales increased year over year 4.1% to $2.947 billion from $2.831 billion.
For the first nine months of 2019, total electronic sales increased 7.5% to $5.183 billion from $4.841 billion in the first nine months of 2018, estimates Digital Commerce 360: B2B. Total sales for the nine months grew 2.1% to $8.639 billion from $8.458 billion in the first three quarters of 2018.
Net earnings for the third-quarter 2019 were $244 million vs. $115 million in the prior year.
Growth in total revenue was modest, based on conditions Grainger calls “softening.”
“We are seeing softness across most end markets including heavy manufacturing, natural resources, and contractors and in pockets like manufacturing,” Macpherson told analysts. “We have seen some of our customers, particularly with heavy manufacturing and natural resources, slow production. Healthcare market remains quite strong and we are seeing flat to modest growth in government and retail end markets.”
But the company will also continue to invest in digital and ecommerce technology and in adding even more products to its online inventory, he told analysts.
“At Zoro U.S., you’ve heard us talk about expanding the product assortment of Zoro,” Macpherson said. “Our goal is to add 10 million items over the next three to five years. In the third-quarter we added about 350,000 SKUs, which brings us to 800,000 SKUs for the year.”
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