Electronic sales in all forms is emerging as a significant growth opportunity for Fastenal Co., a wholesale distributor of products ranging from construction fasteners to water pumps to 3D printers.
Last year, in fact, the distributor’s electronic sales—which include its internet-connected vending machines, ecommerce sales from Fastenal.com and electronic data interchange—grew 32% year over year, CEO Daniel Florness told Wall Street analysts on Friday on the company’s year-end earnings call, according to a transcript from SeekingAlpha.com.
In the fourth quarter, electronic sales picked up even more steam, increasing 35% over the year-earlier quarter.
“The way we think about ecommerce, it’s about making our business a little bit more efficient every day because, as our supply chain partnership with our customer grows, most of our business activity is coming from vending from been stocks,” Florness told analysts. “Where the customer really gives an order in the product and we keep stepping deeper and deeper into the business.”
Ecommerce can help to open a significant new growth opportunity for Fastenal, Florness told analysts.
Ecommerce and vendor-managed inventory combined “are about 30% of our revenue and I believe in the future that number will more than double as a percentage of our business as become more in trench their and customers business,” he said. Although Fastenal doesn’t break total electronic sales, it notes that digital systems support many of its other operations, including its vendor-managed inventory systems. For example, the company’s FAST 360 service lets customers log onto Fastenal.com to search inventory they already have in-stock in their own facilities before placing an online order for a new item.
For the fourth quarter ended Dec. 31, Fastenal, based in Winona, Minnesota, reported:
- Electronic sales grew 35% in the fourth quarter, but Fastenal didn’t break out any other metrics;
- Total sales increased 3.7% to $1.28 billion;
- Net earnings increased 5.9% to $178.7 million.
For the year ended Dec. 31, Fastenal, reported:
- Total sales grew 7.4% to $5.334 billion in 2019 from $4.965 billion in 2018.
- Electronic sales, which include, ecommerce sales grew 32% in 2019;
- In past earnings calls, Fastenal has said that web sales on Fastenal.com now represent about 3% of all sales. Based on that metric, Digital Commerce 360 B2B estimates that 2019 ecommerce sales total about $160 million;
- Net earnings increased 5.2% to $790.9 million;
- The number of installed internet-connected vending machines used for selling products at customer locations increased year over year 10.8% to 89,937 units from 88,327 in 2018.
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