Electrical, Plumbing & Hardware Wholesalers

Companies in this industry distribute electrical, plumbing, and HVAC materials and supplies, as well as hardware, hand tools, and other equipment. Major companies include Ace Hardware, Graybar, True Value, and WESCO International (all based in the US), as well as Ferguson plc (the UK) and Rexel (France).

Distributors may have operations in multiple countries to meet the needs of customers with global operations. Many larger US companies have operations in Canada, Mexico, and Europe.

The US electrical goods, plumbing, and hardware wholesalers industry includes about 35,000 establishments (single-location companies and units of multi-location companies) with combined annual revenue of about $350 billion.

COMPETITIVE LANDSCAPE

Sales are driven by demand from the construction, telecommunications, and hardware retailing industries. Profitability depends largely on merchandising and efficient inventory management. Large companies have wide distribution networks and may offer customers a broad selection of products and services. Small operators can compete successfully by stocking specialty products, stocking all of the parts that their particular customers need, or delivering superior service.

The hardware, plumbing, and heating equipment and supplies segment of the industry is concentrated; the 50 largest companies generate about 50% of revenue. The US electrical apparatus and equipment, wiring supplies, and related equipment segment is concentrated: the 50 largest companies generate about 55% of revenue.

PRODUCTS, OPERATIONS & TECHNOLOGY

Companies in this industry typically buy large quantities of products from hundreds of manufacturers, then "break bulk" and resell them to thousands of customers. This practice allows customers to buy small quantities of products from many different manufacturers. Electrical products, for example, may include wire, cable, wiring devices, fiber optic products, electrical connectors, bolts, fittings, screws, and data products for local or wide area networks. In addition to selling products, many distributors provide technical knowledge and support and some provide maintenance and repair.

A specialty distributor of fasteners (screws, nuts, bolts) may buy some 100,000 stock-keeping units (SKUs) from 1,000 manufacturers and sell to around 6,000 customers. Electrical supplier WESCO buys more than 1 million items from more than 30,000 suppliers and sells to more than 70,000 customers.

Small distributors usually operate out of a single location. Tracking inventory and sales and restocking are major activities. A national distributor might operate numerous distribution centers of 30,000 to 200,000 square feet throughout the country, or might maintain a hierarchical system of zone and area warehouses and district distribution centers. A regional distributor might service mainly from a large, central 500,000-square-foot distribution center.

Companies take orders over the phone, by fax, and increasingly by electronic data interchange (EDI) or over the internet. Large deliveries may be made via a fleet of owned trucks or by third parties. Small orders can be picked up by the customer.

Fast service and a wide selection are key, as firms act as the inventory warehouse for customers. Distributors closely monitor "fill-rate," the percentage of items shipped to customers within 24 or 48 hours; a good rate is above 95%. Many distributors provide free same- or next-day delivery, extend credit, and offer product advice and training. Show more