At VSE Corp., a supplier of aftermarket transportation industry parts and repair services, its diversification among commercial and government markets is helping it post strong growth—with  2019 sales up 7.9% year over year to $753 million—as it overcomes a drop in demand from one of its main customers, the U.S. Postal Service.

VSE operates in three industry groups: Federal and Defense Services, including parts and managed repair services for the USPS and the U.S. Armed Forces; Fleet Management, including parts sales to small and independent truck fleets; and VSE Aviation, which provides parts and services to aircraft fleets. Other than its sales to the U.S. Armed Forces, VSE relies heavily on its own ecommerce sites and Amazon.com to process orders, the company says.

It also operates a dedicated online platform for the USPS, where the Postal Service orders parts and receives inventory management services for maintaining its fleet of delivery vehicles.

The company’s Fleet Management group (until recently called Supply Chain  Management Group), grew a relatively modest 2% last year as an increase in vehicle parts sales to commercial customers offset an expected decline in revenue from VSE’s business with the USPS. VSE also experienced a 7% drop in revenue last year as a result of reduced demand for services in a U.S. Navy program, the company says.

Nonetheless, VSE’s diversified base and broad exposure through ecommerce helped to drive up total sales by 7.9% to $753 million, CEO John Cuomo says.

Although the company doesn’t break out ecommerce sales, it relies on ecommerce for much of its product sales. In addition to Amazon.com, where it sells items including its Tru-Fit brand of vehicle parts designed by its Wheeler Bros. unit, VSE also sells vehicle parts through WheelerFleet.com; vehicle seating products UltraSeating.com, and aviation parts at VSE Aviation, which was formerly known as Aircraft Parts & Supply Co., or APSCO.

On a conference call with investment analysts Friday, Cuomo and Tom Loftus, chief financial officer, pointed to the Fleet Management group as a particular example of the benefits of diversification.

“This group continues to focus on diversification beyond the U.S. Postal Service managed inventory program, with non-USPS group revenue growing nearly 20%, as John mentioned earlier, on a year-over-year basis, in 2019, supported by increased activity in ecommerce and commercial parts distribution,” Loftus said on the conference call, according to a transcript from Seeking Alpha.

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