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Introduction
The company headquarters are in Winona, Minnesota. The company serves both the retail and wholesale markets in the United States and Canada. Fastenal’s founder, Bib Kierlin mainly specialized in purchasing construction materials and distributing them to his suppliers. The company did not manufacture its products. Due to the dynamics of the industry, the management found it necessary to develop a production line for the company. In 2009, the company had its first cold-heading production line. Most of the initial products that the company dealt with initially were steel. Steel formed 50% of the company’s products by 2004. As of 2021, the company was ranked 479th position as the most successful company according to 2020 revenues.
Before being appointed president, Lee Hein was serving as the company’s storekeeper.
Fastenal Business Model
Fastenal started as a distributor that resold industrial and manufacturing materials. The company has grown from just distributing supplies to offering complementary services in the construction industry. The company manufactures and assembles complex machine components and industrial equipment. Each product has its store to save customers the time to search and source for the products. One of the major transformations involved changing the company from profit-driven to customer-centered. This approach inspired the development of the company’s motto which is “Growth through Customer Service”.
Market Size and Growth
In the fourth quarter of 2021, Fastenal reported a revenue increase of 12.81%. The company’s revenue was significantly higher than its competitors’ average which was about 3.61%. However, this increase was lower than Fastenal’s competitors who recorded an average net income of 18.97%. At the end of the 2021 financial period, Fastenal shares had increased in value by 22.4%. This is more than the previously recorded increment of 19.7% by its rival Zacka Building Products. The market growth is attributed to the development of the company’s e-commerce sector which sparked a significant surge in the purchases of the company’s products. The company also closed most of its branches to cut operation costs and embraced online stores that increase efficiency in serving customers.
Customer Segmentation
The wholesalers and retailers form at least 25.7% of the revenue collected in the industry. Customer loyalty is highly valuable in this industry. Most customers value high-quality products at affordable prices. Most of the customers are in America and Canada. However, the company has expanded its market and is now targeting customers on the international stage.
Competitor Analysis and Trends
Most of the leading companies have little market share compared to the other industries. The industry has been forecasted to have a value of $86 billion at a rate of 0.6% in 5 years. The industrial supplies wholesaling industry has been growing at a slower rate in recent years. The slower growth rate can be attributed to the reduced demand for construction materials which has made the industry to be highly volatile.
Conclusion
Due to increased competition, the company is turning to technology to produce high-quality products at affordable costs. Fastenal is also embracing online stores to reach more customers both locally and internationally.
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