Holden Lewis: And I would say as well, Nigel, I’m not sure I would agree with the underlying premise that there’s some competition between Onsites and e-commerce. I mean, the reality is if we look at our e-commerce business. If you remember, it’s an aggregation of EDI and web sales and a variety of different ways that we engage digitally. Roughly 50% of our e-commerce sales are going through Onsites. So it winds — I don’t believe that there is a one sort of channel approach by the customer set. I think the customer sets are — the customers are looking for a range of solutions to solve different issues, and I don’t think that they’re in conflict.
Dan Florness: But a high percentage of that e-commerce you’re talking about is EDI…
Holden Lewis: Yes, although showing me 35% to 40% of our web is also running though Onsites.
Nigel Coe: And then just on the points about — so are you seeing pockets competition on Onsite? Again, one of your biggest public competitors does talk about their implant offerings. And just thinking about, Dan, you were very honest about the out growth in ’23 below your expectations. Do you think that in ’24, you’d be back to that sort of 5 points plus of that growth versus the market?
Dan Florness: Coming into the year, that would be our expectation. But as far as competition, we have competition in everything we do. There’s a lot of companies out there that we compete with other local businesses that do Onsite. What they don’t have is maybe some of the tools. And a natural strength to our Onsite model is the fact that we have the branch network, because what’s really difficult and where a lot of organizations fail on pieces of Onsite, we have a natural density of people. So let’s say you have an Onsite with two employees. Well, let’s say employee’s out on maternity leave, let’s say employee’s out on vacation, let’s say employee, there’s turnover. How do you replace that? Well, if you have 50 Fastenal employees that are in this market, it’s Omaha, it’s up in the Twin Cities and we have more than 50 in Twin Cities.
But if you have employees in this market, you have redundancy to support that Onsite. So we have a natural advantage in that marketplace versus not necessarily a local competitor but a national competitor because we have a footprint.
Holden Lewis: And maybe the only other thing I would add, this is largely anecdotal. Again, I sort of asked the regionals how things are going every month. And they sort of just freewheeling give me answers. And oftentimes, there’s comments about our competitors there, sometimes it’s favorable to us, sometimes it’s not favorable to us. What I can tell you is I haven’t noticed any difference in the cadence of that conversation over the course of this year. So I mean, if part of the question is, are you seeing things intensify, I haven’t gotten that from the feedback from the field.
Operator: Next question is coming from Ryan Merkel from William Blair.
Ryan Merkel: So I have two questions and I’ll just ask them upfront. The leadership changes, Dan, what changes did you make and why are you confident that that will accelerate the share gains? And then second question. Can you clarify the tweak to the business model where are the front doors open now on all of the branches? And I think the question I’m getting asked is, could that help sales in ’24 or is it not that impactful?
Dan Florness: First off, we made a number of changes. We moved some — within our National Accounts team, we moved some folks around, there are some folks that aren’t in roles that they had before. We made some changes in our regional leadership, that was probably — that wasn’t necessarily performance, that was more of a case of just some natural — we all get older and still some natural changes there. I think the fact that we have the US under one leader now. Over the last 15 years, east and western United States have been under two different leaders. And so over time, there’s economic reasons why all the business changes a little bit, and there’s personality reasons why the business changed a little bit. If I were to characterize the Eastern US versus the Western US and I can think back to who’s been the leaders of two business over time, both incredibly successful businesses.
I would say the way they go about being successful is different. If I think of the western US, I think of a business that they were groundbreaking early on in Onsites and particularly in the Midwestern part of the western US, because it was a more mature business and we needed to figure out ways to keep growing. And so I think that part of the business is more — is better at — you have a large customer, we’re better at getting deeper and deeper into that large customer. Earlier, I talked about our manufacturing division. I suspect there’s a disproportionate mix of their business in the western than there is in the eastern. And I might be wrong on that, that’s just me speculating. If I think of the eastern, there’s nobody better at Hunton.
Going out and finding new customers and growing their business than our Eastern business unit. And again, it emanates from the leaders there’s been over time, it also emanates from the industrial activity over the time. And as it relates to our business, our front doors are open. And I think — they weren’t closed that long and they weren’t closed everywhere, they were closed in pockets. There’s a couple of exceptions, there’s a couple of states where rules are pretty onerous. And we’ve just said, you know what, California has too many requirements, so we just say we’re keeping them closed. And there’s one other state I forget what it is of I think it’s Louisiana. But we’ve been operating that way for years in Canada. And it was primarily because as a wholesaler you just couldn’t do retail transactions.
So our front doors are open but we had a much different business. We grew faster in Canada. I hope that answers your question.
Holden Lewis: And I think a couple of pieces of perspective I might add. I mean, Dan touched on it. When we started this process, we had a lot of different experiments in the field going on, right? Some people closed, other people didn’t close. Some people flipped counters, et cetera. Some people stuck with the traditional, the older CSP model. And I think we wanted to come up with a more consistent model. And so having had the opportunity to evaluate all the different things we were doing, we wanted to sort of consolidate under sort of one approach. We have a lot of customers in a lot of places that share a company and we want to make sure that we weren’t creating conflict in that regard. So that was part of what went into that.
As it relates to the impact on growth, bear in mind that if you’re talking about accounts that are smaller accounts, which tends to be what that walk-in is, because when we’re talking about our larger customers, we’re typically going to their locations. It represents mid-single digits of our total revenue. So do you get some incremental revenue from that? In all likelihood, we will. I wouldn’t overstate the overall impact to growth. It could contribute something at the margin but I wouldn’t overstate the potential of that.
