Business life in the heating, ventilation, and air conditioning (HVAC) market is good and getting better. And as one of the biggest distributors in the HVAC industry, Watsco Inc. counts on ecommerce and an improved digital infrastructure to make life better for them.
New government mandates for more efficient heating and cooling equipment and changing HVAC technology will create more sales opportunities for HVAC manufacturers and distributors, says Watsco CEO Albert H. Nahmad.
“2023 saw the introduction of federally mandated high efficiency standards for HVAC equipment, which will deliver price benefits in 2023 and beyond. 2025 will also mark the introduction of new refrigerant standards, which historically has made it harder to repair existing systems and favors more demand for replacements,” Nahmad told analysts in the company’s recent Q1 earnings call. “We also see continued movement toward electrification and greater adoption of heat pumps, which generally come at higher prices and higher margins.”
For the first quarter ended March 31, Watsco posted total sales of $1.550 billion. That’s up 2% from $1.523 billion in the same period last year. Watsco net income was $131.4 million compared with $134.9 million in Q1 2022.
Nahmad told analysts Watsco has been a big investor in building out and scaling up its digital technology infrastructure to take advantage of new HVAC market conditions.
“We have an immense technology advantage, and we are investing to grow that advantage,” he said. “These technologies are increasing customer engagement, reducing attrition, creating market share gains, and supporting margin.”
Digital Commerce 360 estimates ecommerce accounted for 33% of all sales in the first quarter, or about $511.5 million.
Watsco digital metrics
- Watsco’s product information management (PIM) database contains more than 1 million SKUs accessible to more than 350,000 contractors and technicians.
- The company’s digital sales platform and CreditForComfort have both increased penetration among HVAC contractors as digital engagement with homeowners expands. CreditForComfort is Watsco’s companion consumer financing platform.
- The annualized gross merchandise value (GMV) of products sold by customers through OnCallAir now exceeds $1 billion. During the first quarter, OnCallAir also generated quotes to approximately 53,000 households. OnCallAir generated $220 million in gross merchandise volume (GMV). That’s a 33% increase over the same period last year, the company says. OnCallAir is a digital sales platform Watsco provides to HVAC contractors to connect with their customers.
“Our technology platforms, which are unique to the industry, have transformed nearly every aspect of our business,” Nahmad said. “Consistent with our long-term focus, we remain committed to investing more over time as we believe these platforms provide a distinct, long-term competitive advantage.”
Sign up for a complimentary subscription to Digital Commerce 360 B2B News, published 4x/week. It covers technology and business trends in the growing B2B ecommerce industry. Contact Mark Brohan, vice president of B2B and Market Research Development, at [email protected] and follow him on Twitter @markbrohan.
Follow us on LinkedIn and be the first to know when we publish Digital Commerce 360 B2B News content.