E-commerce continues to drive sales growth for MSC Industrial Direct Co. Inc. (NYSE: MSM), Melville, NY, in the distributor's fiscal first quarter. Sales were up 7.8 percent compared to last year, with underlying sales up 8.4 percent.
"Our customers continue to leverage our technology platforms," said Erik Gershwind, president and CEO, during an investor call to discuss the first-quarter results. E-commerce – which for MSC includes all sales through electronic channels, not just through the company's website, although the website makes up the largest portion of e-commerce sales – reached 54.5 percent of sales during the quarter. Last year it comprised 50.9 percent of sales.
The drive behind the e-commerce increase, Gershwind said, is continued supplier consolidation by customers who want to take advantage of technology platforms. In the past, customers – particularly large customers such as national accounts or government customers – didn’t have the visibility into spend across locations that they do today. The visibility that new technology provides "is helping drive that supplier consolidation," he said.
Customers have also renewed their focus on streamlining the supply chain since the Great Recession. "The whole purpose and raison d'etre for procurement, for supply chain, has moved from just 'I exist to get the lowest price on a part.' to 'I exist to help my company get products to market faster," Gershwind said. As a result, they're looking for more strategic ways to source MRO products to help that shift.
Vending also continues to help drive sales growth for MSC, adding about 3 percentage points to the growth rate during the first quarter.
