First Research US Industry Profile

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Industrial Equipment Wholesalers
SIC Codes: 5084
NAICS Codes: 42383
Last Quarterly Update: 9/16/2019
Companies in this industry distribute machinery and equipment used in manufacturing, oil and gas exploration and production, and warehousing. Major companies include US-based Fastenal, HD Supply, Motion Industries, NOW, and WW Grainger, as well as ERIKS (Netherlands), Wolseley (UK), and Würth Group (Germany).
Industrial machinery wholesalers seek markets with a strong manufacturing base and countries experiencing high growth in manufacturing. In terms of GDP, the wealthiest regions are the European Union, the US, China, India, and Japan.
The US industrial equipment wholesalers industry consists of about 30,000 establishments (single-location companies and units of multi-location companies) with combined annual revenue of about $223 billion.
Competitive Landscape
The entry of online retailers, primarily Amazon Business, into the industrial equipment wholesale space has disrupted the business models of traditional players and intensified competition. Online B2B retailers often offer price comparison tools that allow customers to select from several different suppliers, forcing some established industrial equipment wholesalers to reduce their prices which has negatively affected profitability.
In response to the shifting competitive environment, traditional industrial equipment wholesalers with brick-and-mortar locations have shuttered some operations and shifted resources toward online offerings. Companies are also differentiating themselves from the likes of Amazon Business by becoming more ingrained in their customers' supply chains, touting the expertise of service professionals, and offering on-site inventory management tools.
Competitive Advantages:
Price Transparency -- Allowing customers to compare prices online among several suppliers has given Amazon Business an edge against traditional players in the industry. Industry watchers have noted that to compete with e-commerce sites, companies may need to collaborate so they can offer competitive online quotes from multiple distributors.
Streamlined Operations -- Reducing operating costs is vital in an era when lower margins are the new norm. Amid pricing pressure from e-commerce providers, supply wholesalers are reducing costs by closing underperforming outlets and divesting noncore assets.
Specialized Services -- Offering superior services can help traditional players differentiate themselves from e-commerce sites, which tend to be transactional in nature. Trained product experts, supply chain services, and inventory management can help companies build stronger relationships with large customers.
Companies to Watch:
Amazon -- The company's B2B offering, Amazon Business, has effectively eroded market share and profit margins of traditional suppliers. Amazon Business is growing faster than the company's consumer and cloud services businesses, reaching sales of about $10 billion in 2018.
Fastenal -- The industrial supply and fastener distributor offers products in about a dozen categories. Fastenal has established closer ties with customers through on-site stores and vending machines.
WW Grainger -- The company, which distributes industrial products ranging from supplies to equipment and tools, has adjusted its pricing strategy to compete with emerging e-commerce rivals. It also is emphasizing online sales channels in key markets, including the US, Western Europe, Japan, and Mexico.
Products, Operations & Technology
Major products are general purpose machinery such as pumps and engines (about 30% of revenue); oil well, oil refinery, and pipeline machinery (about 20% ... plus:
Sales & Marketing
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Finance & Regulation
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Regional & International Issues
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Human Resources
Also includes the following chapters:
Quarterly Industry Update
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Industry Indicators
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Business Challenges
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Trends and Opportunities
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Call Preparation Questions
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Financial Information
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Industry Forecast
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Industry Websites
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Glossary of Acronyms

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