E-commerce sparks change in distribution
By Jeffrey Germanotta -- Industrial Distribution, 5/1/1999
One of the most significant changes facing industrial distribution is increasing customer acceptance of Internet commerce. It's our opinion that courageous firms embracing the Internet have the opportunity to be among those achieving superior market share gains, long-term growth, and stock price appreciation, although not without risks associated with new channel development and significant investment.
Forrester Research projects business-to-business Internet commerce to expand from nearly $8 billion presently to $327 billion by 2002. Of the public distributors listed here, few currently have Internet catalogs and online order entry. Some offer CD-ROM catalogs with order capability and many use EDI technology to connect electronically with key clients. Grainger has taken Internet applications a step further, via its OrderZone.com, creating a multi-supplier marketplace for a variety of industrial products. Others such as Applied Industrial, Fastenal and WESCO have formed strategic arrangements with Datastream to electronically serve clients.
The speed, accuracy and cost-saving potential of the Internet should improve distributor ability to deliver a broad product offering to a geographically dispersed customer base. These efficiencies will continue to be augmented by other distributor functions such as technical support, inventory management, warehousing, fulfillment, delivery, repair activities, emergency service and warranty support, many of which will require distributors to maintain local market presence.
Jeffrey Germanotta is senior vice president of equity research at R. W. Baird & Co. Each month, he provides analysis of the distribution sector. He can be reached
at (414) 765-3572 or jgermanotta@rwbaird.com.
DISTRIBUTORS
Company 4/9 close Year change 52 wk. High/Low
Applied Industrial Tech APZ 12.38 -10.8 26.94 11.13
Airgas ARG 8.88 -0.7 18.81 7.88
Barnes Group B 20.13 -31.2 33.50 15.88
DXP Enterprises DXPE 7.00 3.7 12.00 6.00
Fastenal Co. FAST 39.00 -11.4 56.88 20.50
Grainger (W W) GWW 44.13 6.0 54.72 36.44
Hughes Supply HUG 21.31 -27.1 39.81 17.88
Industrial Distrib. Group IDG 5.19 -32.0 21.31 4.75
Pentacon JIT 4.00 -7.2 14.69 3.13
JLK Direct Distribution JLK 8.50 -16.6 39.38 7.88
Kaman Corp. KAMNA 13.44 -16.3 20.38 11.56
Lawson Products LAWS 21.25 -7.6 28.00 20.25
MSC Industrial Supply MSM 14.38 -36.5 33.50 12.25
Noland Co. NOLD 20.31 -23.3 29.25 19.44
Premier Farnell PFP 6.50 30.0 13.00 4.75
Sunsource SDP 13.06 -30.6 29.38 12.75
Strategic Distribution STRD 2.00 -17.9 7.50 1.75
Vallen Corp. VALN 16.00 -20.0 22.75 14.00
White Cap Industries WHCP 10.75 -29.5 25.25 6.38
Questron Technology QUST 3.38 -25.0 9.88 3.25
Genuine Parts Co. GPC 29.31 -12.3 37.75 27.81
DISTRIBUTION TECHNOLOGY
Company 3/15 close Year change 52 wk. High/Low
Datastream Systems DSTM 7.75 -32.6 27.50 7.00
Edwards J D & Co. JDEC 11.56 -59.3 49.50 10.88
Harbinger HRBC 6.88 -14.1 27.58 3.50
Prophet 21 PXXI 9.50 -11.1 20.25 9.00
Sterling Commerce SE 27.38 -39.2 48.75 20.13
MANUFACTURERS
Company 3/15 close Year change 52 wk. High/Low
Aeroquip-Vickers ANV 57.94 93.5 72.25 22.00
Black & Decker BDK 55.06 -1.8 65.50 38.94
Baldor Electric BEZ 18.94 -6.5 26.88 18.25
Columbus McKinnon CMCO 19.25 6.9 31.00 13.75
Cooper Industries CBE 44.44 -6.8 70.38 36.88
Danaher DHR 58.94 8.5 60.50 28.00
Dana Corp. DCN 40.75 -0.3 61.50 31.31
Emerson Electric EMR 57.63 -4.8 67.44 51.44
Federal-Mogul FMO 43.50 -26.9 72.00 33.00
Ingersoll-Rand Co. IR 52.81 11.8 54.00 34.00
Kennametal KMT 17.00 -20.0 54.75 15.63
Makita MKTAY 10.75 1.2 13.25 8.94
Illinois Tool Works ITW 61.13 5.4 73.19 45.19
3M MMM 71.19 0.1 97.88 65.63
Parker-Hannifin PH 37.31 13.9 51.19 26.56
Pentair Inc. PNR 36.25 -8.9 45.94 26.75
Kaynar Technologies KTIC 28.06 3.0 34.50 7.38
Starrett (L.S.) Co. SCX 27.19 -20.8 41.13 25.75
Timken Co. TKR 16.06 -14.9 41.94 13.63
Textron TXT 78.94 4.0 82.19 52.06
Stock charts courtesy of R.W. Baird & Co.
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