15-Year, Margin-Trend Insights for: Grainger, Genuine Parts, Fastenal
What do the trends for three percentages of sales – gross margin, op. profit, and net profit -do for: GWW, GPC and FAST?
- Go to macrotrends.net (cool, free tool)
- Search for each of the three companies
- For each, select the first option: “revenue”.
- Once to the “2006-2020 Revenue” page click on: “margins”.
- Then, slide the cursor bar over the trend dots to see how percentages track or don’t!
Grainger’s trends:
- Grainger’s percentages track together. Why?
- They were best in 2013. Why the declines since? Amazon effects?
GWW used to make big profits on freight-charge mark ups. Then, to compete with AMZ they had to offer free freight.
In April ’15, Amazonsupply.com moved from its own website to the main one as Amazon Business. Then, business – resellers, SKUs, Prime memberships and sales – all took off. Both AMZ and GWW are good for “spot-buys” of odd items. Plus, maybe we buy an add-on case of a popular, consumable SKU.
3. In ’17, GWW cut prices on about 1000 of the most-popular, but now price-sensitive SKUs to stop losing sales to AMZ. Another big hit to profits.
4. Can any distributor profitably sell spot-buy SKUs that AMZ also carries? With higher fulfillment costs than AMZ and none of AMZ’s offsetting advertising and prime fees: not likely!
Genuine Parts (GPC) Trends:
After 12 years of averaging about 30% gross-margin, why has GPC’s gross-margin trended up to 33% while its operating-profit margin declines?
Who knows! These are aggregated numbers from multiple divisions and business models: autoparts; electrical Insulation (sold in 9/19); office supplies (sold 6/20); and power-transmission/bearings.
But, GPC does have multiple web sites that all are “enjoying” growing sales. How many new web orders are spot-buys trying to compete on – price, freight and delivery – with AMZ? If many orders have: 1) a higher GM% than the overall, historic aggregate; 2) but contain less margin-dollars than their cost to fulfill; then, 3) overall GM% creeps up while the PBIT% drops.
Fastenal
FAST’s gross-margin percent is trending down while PBIT% is improving. FAST has been pruning their core-store count (high GM%) while exploding their at-customer vending machines. A lower GM% with an offsetting big jump in margin-dollars per order?
The Missing Link: Order-Size Analytics!
Distributors with order-size analytics can – weed, fix, avoid – small, losing orders with “good” GM%. Unprofitable orders/customers distract and bleed you from winning profitable, order-size, replenishment solutions with key accounts.
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4 年Need to know the tracking, how it compares to best in class, why, and what can be done to improve and remain strong over the long-term.
Founder | AttainMAX | Growth Consultant | Helping companies Grow Faster | Go to Market Strategist | Business Development | Customer Creation | AI-enabled Sales | Productized Services | Technology Futurist | SaaS.
4 年Love the analysis Bruce. Thanks for sharing. With growing pressures on margin, these companies would benefit from a tighter control on channel profitability and a dash of "customer obsession".