Advertisers see uneven growth in ecommerce sales as the year progresses

The big numbers speak for themselves: Most US sales are doing slightly better than last year.

Government data for monthly sales from retailers and wholesalers moves the calendar by two months, meaning the US Commerce Department has just released data for May.

In May, the sales of retailers – without the sales branches of manufacturers and offices – was $ 666.7 billion. It rose by 0.4% from $654.3 billion in May 2023. And annual US retail sales rose by 0.7% in the first five months of 2024 compared to the same period in 2023, after a 1.6% decline for 2023 overall, according to the US Census. Office.

But for retailers and digital commerce, the story so far this year is one of uneven growth. Although it may be a fertile city on one side, times are less on others.

Retailers and retailers’ ecommerce sales so far this year

The largest public distribution companies have yet to earn their second quarter earnings, but some such as WW Grainger started the year with respectable but not spectacular results. Grainger is a leading supplier 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 net-only sales, but expects strong growth going forward, president and CEO DG Macpherson said. in the pay call.

“Amid relatively slow but steady conditions,” Grainger produced “solid results,” he said.

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

Most of the public sector in 2024 is following the general theme of soft sales due to the weak performance in manufacturing and the slow performance of the economy in general.

But even with light sales, the emphasis is on shifting more, not less, the sales process to digital commerce. An example of this is Fastenal Co.

For its second fiscal quarter ended June 30, 2024, the fast-moving retailer increased total sales to $1.916 billion. That’s an increase of 1.8% from $1.883 billion in the second quarter of 2023. Revenue was $590.4 million compared to $593.1 million in Q3 last year.

As with other recent divisions, digital sales made up two-thirds of Fastenal’s total revenue.

“In terms of digital, 59.4%, which takes all of our ecommerce, all of our FMI, was 59.4% in the second quarter. In fact, in June, it reached 60%,” CEO Daniel Florness told analysts. “We expected to reach 66% this year. Now we think it will be 63%, and it’s not because we don’t get customers. It’s because customers are spending less money, and it shows in most of us.”

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

How are small users doing in 2024?

Like Grainger and Fastenal, small retailers are also seeing moderate to steady growth in annual ecommerce sales.

Bay Supply, a supplier of fasteners, tools and equipment, is on track to beat its forecasted growth of 10% through 2024. But the downturn could dampen that, says chief operating officer Michael Eichinger .

He said: “We’re in a very important position over the next eight weeks based on our historical trends, and it looks like we’re on track to reach that 10%. “However, performance is also questionable. it made foretelling. I believe our worst case is 5%-8% growth for 2024.”

For ecommerce, the outlook is also mixed.

“Digital sales are higher in single digits than in 2023 (5%). However, this is due to a decrease in the average order volume,” says Eichinger. “Order volume has increased by 15%

At MC Tools and Safety, a small industrial equipment retailer based in Blaine, Minn., ecommerce is still a very small part of the company’s operations, says president Erika Scherman. The company does $2.5 million in annual sales, and about $20,000 online alone.

MC Tools has been in the ecommerce space for ten years. But after experiencing fraud, it stopped selling online and made its website information-only. When COVID hit, it went back to selling online. Three months ago, it launched a new Shopify site. So far, the results have been “small”. Scherman says.

Another problem is that its enterprise resource planning (ERP) system isn’t connected to Shopify’s site, so a lot of work, like pricing, has to be managed manually. As a result, MC Tools is trying to turn that to their advantage by hiring someone to compare their prices with competitors’ online prices. That may be an opportunity to raise prices on certain items, Scherman says.

“Our next thing is to look at our prices compared to other people out there, to make sure that our online prices protect our bottom line,” he says.

Scherman says a small company like his doesn’t have the resources or time to invest in ecommerce the way many competitors do. And ecommerce offers little profit because it focuses on serving Minnesota and western Wisconsin customers. “I don’t want to sell shovels to California,” says Scherman. I can’t send them properly.

Overall, he’s not sure where the website fits into the company’s business model, which was built on personal relationships with customers, subcontractors, and warehouse workers. who provide good service and stock the products they need.

Speaking of ecommerce, he said, “I was telling my marketing expert, we could sell a million dollars there, but I’m not sure we’re ready for that yet. I don’t know how to change the way we’re doing it.” business with it to support that.”

Digital Commerce contributing editor Don Davis reported this story.

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