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Electrical, Plumbing, and Hardware Distributors Industry Profile Excerpt
| SIC Codes: 5063, 5072, 5074 NAICS Codes: 4237, 42361 Page Length: 10-12 Last Quarterly Update: 11/3/2008 View Sample Industry Profile |
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The wholesale distribution of hardware, plumbing, heating, and electrical supplies is a $200 billion industry with about 30,000 outlets. Big distributors include Graybar Electric Company, True Value, and WESCO International. The industry is fragmented: the 50 largest companies hold less than 40 percent of the market.
COMPETITIVE LANDSCAPE
Sales are driven by demand from the construction, electrical distribution, telecommunications, and hardware retailing industries. Profitability depends largely on merchandising and efficient inventory management. Small operators can compete successfully by stocking specialty products, stocking all the parts their particular customers need, or delivering superior service. The industry is highly automated: average annual revenue per employee is around $450,000.
PRODUCTS, OPERATIONS & TECHNOLOGY
Distributors are middlemen between manufacturers and end-users. The companies in this industry buy large quantities from hundreds of manufacturers, then "break bulk" and resell them to thousands of customers, thereby allowing customers to buy small quantities of products from many different manufacturers. 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 some 200,000 items from around 6,000 suppliers and sells to about 130,000 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 small distribution centers ...
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