The Internet ratchets up sales at MSC Industrial Supply
January 16, 2015 05:01 PM
E-commerce is being good to MSC Industrial Supply Co., providing all of its 7.8% increase in fiscal first quarter sales, to $731.1 million from $678.5 million a year earlier, the company says.
Erik Gershwind, president and CEO, attributes the largest share of growth to the company’s e-commerce site, MSCDirect.com, followed by MSC’s sales through Internet-connected vending machines. MSC places the vending machines at client sites, where MSC’s customers can retrieve such products as cutting tools and work gloves; the machines are designed to automatically send replenishment orders through an Internet connection to MSC.
MSC says e-commerce sales—including sales on MSCDirect.com and through Internet-connected vending machines—reached $398.44 million for the quarter ended Nov. 29, 2014, which MSC records as the first quarter of its 2015 fiscal year, up 15.4% from $345.36 million a year earlier. E-commerce sales as a percent of total sales, meanwhile, rose to $54.5% from 50.9%, Gershwind said during a conference call with stock analysts last week.
He added that MSC’s strengths in operating an established e-commerce site and vending machine system mesh with the increasing demand among customers for Internet technology-driven methods of quickly and easily acquiring the products they need. “As customers want to take advantage of technology, it’s really playing right into our sweet spot,” he said.
MSC is also adding to its total number of products—most of them on MSCDirect.com instead of in the company’s paper catalog—and using web analytics to determine which products are most popular among customers, Gershwind said. “We’re using a lot science and data, and customer behavior, to help us predict what SKUs are going to sell best,” he said.
MSC added about 30,000 SKUs during the quarter, bringing its total number of SKUs available on the web to about 880,000, Gershwind said.
MSC also reported for the fiscal first quarter ended Nov. 29, 2014:
● A 10.3% increase in the cost of goods sold, to $400.94 million from $363.66 million;
● Net income of $57.42 million, down 2.8% from $59.05 million.
The company also announced changes in senior management. MSC is looking for replacements for chief financial officer Jeff Kaczka, who is retiring, and for executive vice president of sales Tom Cox, who has left the company. Kaczka says he plans to stay in the CFO spot until MSC finds a replacement.
In addition, MSC has promoted Doug Jones from executive vice president of global supply chain operations to the combined position of chief supply chain officer and head of I.T.
MSC is No. 40 in the Internet Retailer Top 500, which ranks companies on their annual online sales.
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