One of the oldest distributors of HVAC equipment is setting a fast pace for growth in ecommerce transactions, which are up 19% this year and have put Watsco on course to post about $1.5 billion in online sales.

When it comes to distributors and B2B ecommerce, the ongoing COVID-19 pandemic continues to create a digital tale of two markets.

While ecommerce sales in some distributor markets are flat or even declining, other sectors such as heating, ventilation and air conditioning (HVAC) are enjoying record years.

In certain markets the use of ecommerce is over 50%.
Albert H. Nahmad, CEO
Watsco Inc.

That trend in HVAC B2B ecommerce is evident in the recently released third-quarter earnings for Watsco Inc., a Miami-based company in business for 72 years and one of the biggest and oldest distributors of HVAC products and services.

For the third-quarter ended Sept. 30, total sales grew year over year by 10.2% to $1.536 billion from $1.394 billion. Net income was $126.2 million vs. $99.7 million in the prior year.

More important, ecommerce is growing and digital services are becoming an even bigger part of how Watsco does business with its customers, CEO Albert H. Nahmad told analysts on the company’s quarterly earnings call, according to a transcript from The Motley Fool.

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Like many distributors, Watsco doesn’t break out quarterly ecommerce metrics. But the company did say that weekly users of its mobile apps have grown 31% since last year with over 100,000 downloads.

Ecommerce transactions have grown by 19% this year “to nearly 1 million online orders, which is about $1.5 billion in annual rate at the moment,” Nahmad told analysts.

Expanding dock-side pickup

As COVID-19 changes how Watsco does business, more services and tools are becoming more digital, he told analysts. A case in point is curb-side pickup, a service very common in online retailing with stores but a trend just catching on with manufacturers and distributors.

Our dockside pickup services have expanded to more locations and now include non-contact payment functionality,” Nahmad told analysts. “This technology has only been available for a few months and already over 12,000 orders were fulfilled during the quarter by more than 2,000 unique users.”

Last year, Watsco grew ecommerce sales year over year 17% to $1.400 billion from $1.197 billion in 2018, the company says.

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So far this year, ecommerce is accounting for just under one-third of all sales, Nahmad said.Our annualized ecommerce sales run rate is 32%, versus 29% at the end of last year and in certain markets the use of ecommerce is over 50%,” he told analysts.

New services: OnCall Air, CreditForComfort

To make its overall business even more digital, Watsco recently expanded two digital tools and services, including OnCall Air, a platform that gives contractors new ways to connect with consumers online for making proposals, and for buying and financing replacement systems.

The second digital service is CreditForComfort, new platform for processing digital financing applications. “Contractors using our OnCall Air platform provided digital proposals to over 39,000 households during the quarter, and generated $114 million in sales, nearly double that of last year, Nahmad told analysts. “Our CreditForComfort platform process doubled in number of digital financing applications, resulting in an 87% increase in third-party funded loans.”

For the first nine months of the year, total sales for Watsco are up 5.5% to $3.900 billion from $3.698 billion for the first nine months of 2019. Net income was $266.7 million vs. $251.4 million in the prior year.

“OnCall Air is no longer just a static proposal, it’s a digital interactive sales experience,” Nahmad said. He notes that the number of line items per invoice through ecommerce is 30% higher than offline sales.

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