Fastenal Co. is a construction and industrial products distributor on a revenue roll and looking to grow even faster.

Dan Florness, CEO, Fastenal Co.

“We’re taking market share at a faster pace than I’ve ever seen in this organization,” CEO Dan Florness, a Fastenal Co. senior executive since 1996, nearly nine years now as the top executive, said on a recent earnings call. Florness didn’t note specific market share figures but cited the company’s internet-supported vendor-managed inventory programs as “a great proxy” for building share.

He noted that Fastenal has been adding close to a half-billion dollars in revenue annually for the past several years, a growth rate that resulted in 2023 sales of $7.3 billion. For its recent third quarter ended Sept 30, the company said revenue rose 3.5% year over year to $1.91 billion.

But Florness added that now the company is scaling up to the point where it will want to produce significantly higher annual revenue increases.

“Our challenge now is in a few years, we’ll be a $10 billion organization,” he said, adding, “What strategy do we need to add $1  billion a year in revenue?”

A good part of that strategy is already in play with Fastenal’s diversified approach to selling through Onsite locations that maintain inventory at customer sites, internet-supported FMI (Fastenal Managed Inventory) programs, and ecommerce sales through Fastenal.com. Its FMI programs include internet-connected FASTVend vending machines that dispense fasteners and other items at about 20,000 customer locations.

Florness noted that offering a mix of Onsite inventory locations and vending machines helps to generate business in multiple ways. As of the end of September, Fastenal reported having 1,986 Onsite locations, including 93 added in the third quarter, some of which include FASTVend machines and other internet-support FMI programs including FASTStock and FASTBin.

Many customers start using just the FASTVend machines, which help Fastenal to realize quick sales, but then also  develop an Onsite location, resulting in a deeper range and higher volume of product sales. In addition, FMI transactions provide valuable customer demand data useful to both Fastenal and its customers.

“We’re doing millions of transactions now through our FMI platform,” Florness said. “It provides incredible data to be thoroughly analyzed to provide insight for our customers and our business.”

Jeff Watts, president and chief sales officer, Fastenal Co.

Florness added that Fastenal will be taking a hard look at “where we’re making IT investments, and why,” to ensure its digital strategy supports the company’s expected growth.

Florness, who for nearly a decade was Fastenal’s president and CEO, recently passed on the president’s position to long-time Fastenal executive Jeff Watts, who is also the chief sales officer. Florness says Watts and other senior executives are working on technology alignment and personnel moves to maintain sales growth.

“We want to be able to tell the story of how we add $1 billion a year in revenue,” he said.

Paul Demery is a Digital Commerce 360 contributing editor covering B2B digital commerce technology and strategy. [email protected].

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