MSC Industrial to End E-Commerce Update Problems, Rebuild Sales

MSC spends big on e-commerce infrastructure upgrades in Q2

The fiscal third quarter for MSC Industrial Supply Co. is a period the distributor of industrial supplies and metalworking parts is happy to say is over.

For the third quarter ended June 1, MSC reported sales down 7.1% to $974.4 million compared to the third quarter of fiscal 2023. Net income was $71.7 million compared to $95.2 million in the prior year.

MSC Industrial e-commerce sales

MSC Industrial did not separate e-commerce sales in the last quarter. However, in the second quarter, MSC e-commerce sales — including sales through EDI systems, VMI systems, extensible markup language ordering systems, sales, hosted systems and other electronic portals — accounted for 63.2% of net sales.

It’s been a tough year for MSC so far. The struggles can be attributed to two factors, Erik Gershwind, CEO of MSC Industrial, told analysts on an earnings conference call, according to a transcript from SeekingAlpha.com. First, there were fewer sales from its core metalworking customer base. Additionally, the company experienced delays in rolling out time-critical improvements to its digital trading platform,

“When we released preliminary results, we described that our biggest disappointment impacting fiscal year results was the re-energization of our core customers, largely due to delays in enhancing our website,” he told analysts. “We also experienced unexpected pressure on gross margin in the fiscal third quarter as we fully implemented our online pricing reorganization.”

The delayed website improvements were intended to support e-commerce with MSC’s core manufacturing customer base. However, they resulted in setbacks in marketing efforts and online features designed to help those customers find the right products at the right price, the company said.

MSC Industrial Website Updates

MSC expects to begin more site improvements in the current fiscal fourth quarter. It also expects to complete projects in “early stages” of fiscal 2025, which begins in September.

The delay in improving e-commerce technology ultimately led to executive departures, with MSC’s chief digital officer, John Hill, leaving the company last month.

Gershwind wants to accelerate the return to better sales and profits. To do that, he said he’s taking a more direct role in accelerating e-commerce updates.

“As for MSCDirect.com, recent leadership changes have given me the opportunity to get to know our team and our growth efforts even better,” he told analysts.

MSC expects the majority of the updates to be completed in the second quarter of fiscal 2025.

“We’ve implemented twice-weekly executive reviews that bring more transparency, collaboration, and energy to the program,” he said. “We expect to roll out improvements to search and product discovery starting this month. These include improvements to search accuracy and relevance, and a new performance presentation that will begin with a narrow slice of our product offering and roll out more broadly in the coming quarters.”

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