Industrial Supply Distributors

Industry Profile Report

Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters

Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation Call Prep Questions, Industry Terms, and Weblinks.

Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.

Industry Profile Excerpts

Industry Overview

The 5,800 industrial supply distributors in the US purchase maintenance, repair, operating, and production (MROP) supplies in bulk and resell them to customers in smaller quantities. Product categories include abrasives, strapping, tape, and inks; mechanical power transmission supplies; industrial containers and supplies; industrial valves and fittings; and welding supplies. Distributors may offer technical support, repair, or assembly services.

Offshore Production

US manufacturers’ shift to production in low-cost countries has reduced demand for domestic industrial supply distributors.

Growth in Green

Growing interest in the environment and energy-efficiency has created demand for “green” products and expertise.

Industry size & Structure

A typical industrial supply distributor operates out of a single location, employs 16 workers, and generates $10-11 million annually.

    • The industrial supply distributor industry consists of about 5,800 companies that employ 94,900 workers and generate $64 billion annually.
    • Customer categories include manufacturers (OEMs), institutions, government, utilities, construction, and mining.
    • Large domestic companies include Grainger, HD Supply, and Airgas.
                                      Industry Forecast
                                      Industrial Supply Distributors Industry Growth
                                      Source: Vertical IQ and Inforum

                                      Recent Developments

                                      Dec 5, 2022 - Fires Lead Supply Chain Disruptions
                                      • Of the many causes of supply chain disruptions, factory fires are consistently the leading cause of disruption reported globally, according to a new white paper from supply chain software firm Resilinc. Through Q3 2022, Resilinc’s supply chain management service sent out 2,889 alerts on factory fires globally — nearly 1,000 more than all of 2021. Among the top 10 industries affected by factory fires in 2021 were automotive, manufacturing, food and beverage, and aerospace, according to the paper. Flammable liquids and gases, which often spark industrial fires when they are not handled or stored properly, accounted for 18% of fires Resilinc analyzed between 2020 and 2021, second only to faculty equipment and machinery. The United States led the list of countries affected in 2021 by approximately 300, followed by India and Germany.
                                      • Increasingly, B2B buyers are going online to make business purchases, data from the B2B marketing automation platform HubSpot shows. According to HubSpot, when COVID-19 was declared a global pandemic in March 2020, B2B website traffic took off and continues to climb month by month — currently 83% higher than pre-COVID traffic. To capitalize on this surge in online B2B sales, it’s essential for industrial supply companies to have customer- and sales-focused websites, Industrial Distribution (ID) reported in November 2022. Moreover, ID notes, websites must be search-focused. In 80% of B2B transactions today, the customer finds the supplier — not the other way around, according to MarketingSherpa, which says customers largely rely on Google, so it is extremely important distributors’ websites are optimized for search engines to gain a competitive advantage.
                                      • Unlike previous recessions that ended with a net loss of factory jobs, the unique circumstances of the pandemic-induced recession and recovery have resulted in a net gain in factory jobs – although not in the sectors or regions typically associated with manufacturing, The New York Times reports. American manufacturers eliminated roughly 1.36 million jobs from February to April of 2020, as the pandemic shut down much of the US economy. As of August 2022, however, manufacturers had added back about 1.43 million jobs, a net gain of 67,000 workers above pre pandemic levels, according to data cited by NYTs. The resurgence in factory employment is being driven by recovery in industries including pharmaceuticals, craft breweries, and ice-cream makers, NYTs reports. Moreover, the newly-created jobs are more apt to be located in the Mountain West and the Southeastern US than in traditional industrial strongholds.
                                      • Industrial supply distributors that rely on FedEx for delivery services will face an increase in delivery rates in 2023, Industrial Distribution reported in September 2022. Rates for FedEx Freight are slated to rise by about 7% to 8%, according to the company. Citing a disappointing fiscal quarter and “difficult operating environment” the parcel delivery giant announced that its FedEx Freight service would increase rates at an average of between 6.9% and 7.9%, depending on the customer’s transportation rate scale. The company is also hiking the rates for FedEx Express, FedEx Ground, and FedEx Home Delivery by an average of 6.9%. The rate increases are scheduled to take effect January 2.
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