A big industrial products distributor sees a future driven primarily by digital commerce.
The company, Fastenal Co.—a distributor of original equipment (OEM), maintenance, repair, and operations (MRO), construction, industrial, and safety products—is taking steps to accelerate the process.
For the fourth quarter ended Dec. 31, Fastenal’s digital sales accounted for nearly half, or 46.4%, of total sales. Fastenal says digital sales includes transactions processed through the web, EDI, and the company’s Fastenal Managed Inventory (FMI) service, which includes internet-connected vending machines and bins that provide customers access to fasteners and other products at job locations.
But Fastenal sees its “digital footprint” sales accounting for an even bigger percentage of total sales in 2022 and in the years ahead. “Our goal is to hit 55% in 2022, but we believe this could ultimately grow to approximately 85% of our sales,” the company says.
For the fourth quarter, Fastenal also reported:
- Total sales grew by 12.7% to $1.531 billion from $1.358 billion in the fourth quarter of 2020.
- Net earnings were $231.2 million in the fourth quarter, up 18.0% from $196.1 million in Q4 2020.
- Ecommerce (including web and EDI sales, but not FMI sales) accounted for 15%, or $229.5 million, of total sales, up from 10% the prior year.
- Based on metrics of 46.4% and 37.2%, respectively of all sales, Digital Commerce 360 projects that total “digital footprint” sales grew 40.6% to about $710.0 million from $505.1 million in Q4 2020.
For the 12 months ended Dec. 31, Fastenal reported:
- Total sales increased by 12.8 % year over year to $6.010 billion from $5.647 billion for 2020
- Net earnings were $925.0 million from $859.1 million in the prior year.
“One thing that for us has always been a relatively small piece is the ecommerce component within our technology platform, and I’m pleased to say that our customers are embracing that more and more, and that’s partly a function of the times and maybe partly a function of us embracing it, too,” CEO Dan Florness said on a fourth-quarter earnings call with stock analysts. “But our web sales were up almost 50%. Our EDI was up 47.8%, and combined … ecommerce was up 48% in the fourth quarter of 2021.”
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