The macro numbers speak for themselves: U.S. wholesale sales are doing slightly better than the previous year.

Government data for the monthly sales from distributors and wholesalers trails the calendar by two months, meaning the U.S. Department of Commerce only now just released data for May.

In May, the sales of merchant wholesalers — except manufacturers’ sales branches and offices — totaled $666.7 billion. That’s up 0.4% from $654.3 billion in May 2023. And seasonally adjusted U.S. wholesale sales rose 0.7% in the first five months of 2024 compared to the same period in 2023, after declining 1.6% for 2023 as a whole, according to the U.S. Census Bureau.

But for distributors and digital commerce, the story thus far this year is a tale of uneven growth. While it may be a fat city in one vertical, times are leaner in others.

Wholesalers and distributors’ ecommerce sales so far this year

The biggest public distribution companies have yet to break out second-quarter earnings, but some such as W. W. Grainger started the year with respectable but hardly stellar results. Grainger is a prominent distributor of maintenance, repair and operations (MRO) products that businesses need to operate their facilities.

For the first quarter ended Jan. 30, Grainger reported moderate first-quarter growth in total and web-only sales, but it expects stronger growth ahead, president and CEO D.G. Macpherson said on an earnings call.

“Amid a slow but steady demand environment,” Grainger produced “solid results,” he said.

Grainger’s web-only Endless Assortment business — which Zoro.com and Japan-based MonotaRo.com comprise — posted a 3.7% sales increase to $751 million. By comparison, Grainger’s High-Touch Solutions segment grew 3.4% to $3.405 billion. The High-Touch Solutions segment includes the full-service sales through Grainger.com and the company’s sales team.

Most big public distributors in 2024 are following a common theme of softer sales due to weaker performance in manufacturing productivity and slower overall economic activity.

But even with softer sales, the emphasis is on shifting more, and not less, sales activity to digital commerce. A case in point is Fastenal Co.

For its fiscal second quarter ended June 30, 2024, the fastener distributor grew total sales to $1.916 billion. That’s a 1.8% increase from $1.883 billion in the second quarter of 2023. Net income was $590.4 million compared with $593.1 million in Q3 of the previous year.

As in other recent quarters, digital sales made up two-thirds of all Fastenal revenue.

“On digital footprint, 59.4%, that’s taking all of our ecommerce, all of our FMI, it was 59.4% in the second quarter. Actually, in June, it hit 60%,” CEO Daniel Florness told analysts. “We had expected that we’d get to about 66% this year. We now think it’s about 63%, and that’s not because we’re not acquiring customers. It’s because customers are spending less, and it shows up in our numbers.”

For the second quarter, using 59.4% and 55.3% of digital as a percentage of all sales, Digital Commerce 360 estimates Fastenal digital sales grew year over year by 1.8% to $1.138 billion from $1.041 billion.

How are smaller distributors doing in 2024?

Like Grainger and Fastenal, smaller distributors also are seeing only moderate to steady increases in year-to-date ecommerce sales.

Bay Supply, a distributor of fasteners, tools and hardware, is on track to hit its forecasted growth of 10% in 2024. But a downturn could lower that, says chief operating officer Michael Eichinger.

“We are at a pivotal point in the coming eight weeks based on our historic trends, and it appears we are on track to hit that 10%,” he said. “However, the sluggish performance has also thrown forecasting a wrench. I do believe our worst case is 5%-8% growth for 2024.”

For ecommerce, the outlook is also mixed.

“Digital sales are up single digits over 2023 (5%). However, this is attributed to reduced average order volume,” Eichinger says. “Order volume is up 15%.”

At MC Tools and Safety, a small distributor of industrial equipment based in Blaine, Minn., ecommerce remains an exceedingly small part of the company’s operation, says president Erika Scherman. The company does $2.5 million in annual sales, and only about $20,000 online.

MC Tools has had an ecommerce site for a decade. But after experiencing fraud, it pulled back from selling online and made its website informational only. When COVID hit, it went back to selling online. Within the last three months, it launched a new Shopify site. So far, results have been “minimal.” Scherman says.

One problem is that its enterprise resource planning (ERP) system doesn’t communicate with the Shopify site, so a lot of work, such as on pricing, must be managed manually. As a result, MC Tools is trying to turn that to their advantage by hiring someone to compare their individual prices with online prices of competitors. That may be an opportunity to raise prices on certain items, Scherman says.

“Our next adventure is to look at our pricing compared to other people out there, to make sure our online prices protect our margin,” she says.

Scherman says a small company like hers doesn’t have the resources or time to invest in ecommerce the way larger competitors do. And ecommerce offers less return because she focuses on serving customers in Minnesota and western Wisconsin. “I don’t want to sell shovels to California,” Scherman says. “I can’t ship them well.”

Overall, she’s not sure where the website fits into the company’s business model that was built on personal relationships with customers, midsized contractors as well as operators of warehouses, offering them great service and stocking the products they need.

Speaking of ecommerce, she said, “I was telling my marketing gal, we could sell a million dollars there, but I’m not sure we’re well set up for that. I don’t know how to change how we do business to support that.”

Digital Commerce 360 contributing editor Don Davis provided reporting for this story.

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