Distributor Profile: HUB Industrial Supply

HUB Industrial Supply may have had humble beginnings, but that hasn’t stopped this $25 million distributor from being fearless when it comes to its growth objectives.

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HUB Industrial’s Stuart Johnson and Gabriel Curry

Many of today’s distribution company executives have worked in the industry for a long time, yet you’d be hard-pressed to find another CEO with 19 years of experience at 36 years old. Married at 16, Gabriel Curry joined HUB Industrial as a salesperson in 1996 — at 17 years of age. At the time, the company’s sales volumes were roughly $500,000 per year. Ten years later Curry bought the company and, today, HUB Industrial is a $25 million distributor, and continues to grow rapidly in its core product lines of primary industrial supplies.

The Talent Pool as Fuel for Growth

Rapid growth didn’t happen by accident, and Curry and his team have made it a matter of priority to think differently about how to facilitate this in an ongoing way. According to Curry, the bulk of the company’s growth has occurred since 2005; there was one flat year in that time period, and that was 2008, when nearly every business felt the impacts of the Great Recession.

The average age of HUB's employees is just 31 years old.

For HUB, business growth starts with the employees who drive it. An anomaly in industrial distribution, the average age of the HUB employee is 31 years. “In the changing landscape with industrial distribution today, we have found it to be very important to have a young and relevant team,” says Curry. “In addition to training team members up through the company, one of our keys has been hiring young, motivated individuals from other industries who have brought in their business and life experience.”

Employee Empowerment Driving Customer Satisfaction

And once these all-stars are in the door, HUB has found a great solution to the industry-wide problem of talent retention — a pay structure that’s heavily incentive-based. “With incentive-based pay we can pay a lot more money, but we tie people to the metrics that deliver value to our clients,” explains Curry. “Most distributors that I talk to are not doing much incentive-based pay. It’s very challenging, because you want to make sure that you’re rewarding in a way that delivers value.”

These value metrics work hand-in-hand with a culture that empowers employees to make decisions that are in the best interest of the customer. The business has a no-questions-asked policy where employees are permitted to make a “$1,000 decision” without requiring approval. The decision is in their hands, based on the scenario, and “we support it without question,” says Curry. The idea here is that empowerment encourages the employees to make sensible, pragmatic choices when dealing with customers, and that these types of discretionary decisions are made wisely. 

The results of this culture of empowerment is that employees are satisfied, and new recruits are often the product of positive word-of-mouth. “We give a $25 per week referral bonus, for a year, to anyone who refers someone to us,” he says. “We started to look at the culture of our people the same way we’d look at a client. If we naturally take care of our people, they will naturally take care of the client. More than that, we’ve found that the better we take care of our people, they will tell others, and people will beat our door down to come work for us.”

Additionally, HUB feels that sales training has improved retention. According to Curry, the company has lived by the saying: ‘What if we invested in training our people and they leave? Even worse, what if we don’t invest and they stay?’

A Marketing Goliath

HUB’s tools for growth are varied, but marketing plays a critical role. In fact, for a distributor of its size, HUB’s marketing team is a Goliath. Crossing over into related IT requirements, this team is comprised of a product manager, creative director, graphic designer, content manager, video and CRM specialist, campaign manager, and web developer. The department is responsible for generating all of HUB’s catalogs and marketing pieces in-house. “This is one of the areas that helps us develop and go after our target markets with such precision,” explains Curry. HUB sees this as a way of supporting the sales team. Besides through the more traditional methods like print, direct mail, and trade magazine advertising, the company also places focus on digital avenues like email marketing, social media, and e-commerce.

Curry refers to HUB’s e-commerce as “a fast growing strength of ours.” In 2014, the company saw online revenue grow from five percent at the start of the year to 15 percent, simply using this channel for its current client base to place orders. Ultimately, HUB sees its website as an extension of its sales reps. “We see the need to tie together our clients’ online experience with the relationship that we have built them through our team.”

Fills Rates to Beat Amazon

Despite being a company that’s known for its logistics capabilities, Amazon doesn’t pose a significant threat to HUB, according to Curry. In fact, he feels his business does a better job shipping product with customer service in mind. “AmazonSupply will ship from numerous locations, and their lead time is not totally clear. If you order 20 things from Amazon, you might get them in 15 shipments,” he says. HUB has three warehouses and tracks its fill rate very closely. If a product is supposed to ship from Florida and it ships from Indiana, for example, HUB considers this a back-order, even though it shipped. “If we can get 30 items on one pallet, in one shipment, on one purchase order, we feel we can do better than Amazon. And we know our customers’ businesses better than Amazon. If you’re easier to work with than Amazon, and know their supplies better, I think that will help us hit our goal of $40 million here shortly — by understanding the client, and having fewer shipments.”

In fact, HUB claims that customers don’t tend to challenge them to price match organizations like Amazon based on this high standard. According to Stuart Johnson, HUB’s vice president, this is because the price discussion essentially gets pushed out of the way. “If you leave the customer nothing to talk about besides price, then price becomes the topic. Price is relevant and we know we have to be competitive, but our goal is to give a customer such great service and lower their total cost of ownership that price, at some point, does become irrelevant.”

Competing, Bringing Value

HUB Industrial Supply isn’t intimidated by the fact that it’s a small, independent distributor competing against some larger, more robust distributors that have broader product lines, more technology, and a larger distribution network. 

“This is the primary reason that small distributors are losing sleep is the concern that they will not have the resources and energy to take on these competitors,” says Curry.

“For instance, Grainger has one of the most advanced online presences in our industry, Fastenal has over 40,000 vending machines in use at customer locations and Amazon has free 2-day shipping and is rolling out same day delivery service in some markets. The question is, how do small distributors compete with this today?”

HUB feels that small distributors often become stonewalled by what they see as insurmountable challenges; some don’t want to go through the effort of implementing the amount of tech tools it takes to remain competitive. As for vending technology specifically, Curry considers Fastenal’s approach to be marketing-changing, yet sees it starting to lose a little steam. 

And Amazon? As Curry and Johnson mentioned earlier, there are ways to define your business to make the comparison to Amazon a non-starter. For HUB, reducing their customer’s inventory by offering a same-day shipping guarantee on its catalog items – along with a 365 day no-hassle return policy – has resulted in some happy and loyal customers. “If you see anything in our Quickship or Industry Catalog that you might like to try out, you can do so without risk because we’ll take it back if you tell us to. We’ll even pay the freight,” says Curry.

All of the efforts function as a support system for HUB’s sales team and, according to Johnson, the go-to-market strategy in place is the right one. “We’re not a generalist, and we’re not a ‘me-too’ distributor. We are focused in niche industries, and we understand what value we bring to those niche industries.”

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