Editor’s Note: This is the third and final article in a Premium series that analyzes MSC Industrial Supply and its company evolution. Find Part 1 here and Part 2 here. Stay tuned for a comprehensive MDM Case Study report that packages this series with additional insights.
With MSC Industrial Supply’s web pricing realignment and role progression from spot-buy to “Mission Critical” distributor in Parts 1 and 2 of this series, respectively, I wanted to take a step back here in Part 3 and view MSC’s digital approach and how it is the key driver of the company’s growth initiatives.
Let’s start with the company’s commentary around “4 Ways to Grow in Distribution” with and how MSC addresses each.
- Grow business and share with existing customers — MSC is highly focused on increasing market share with existing customers
- Find New Customers — MSC’s heavy work on digital and pricing is a big driver to find new customers (or get customers who have gone dormant to reengage)
- Enter New Markets (greenfields, new channels) — MSC has broadened its product sets – JanSan, Fasteners, more MRO products, etc.
- Buy Other Businesses — MSC has been limited in its acquisition approach, with smaller bolt-ons that are additive to the business, though noticeably more active over the past four years
What has MSC shared about its focus in this “Big 4 Ways to grow” lens?
From its 2024 Annual Report, issued Dec. 12, 2024, MSC defines its strategy simply as “The first phase of our company-wide initiative, referred to as “Mission Critical,” focused on market share capture and improved profitability.”
This strategy banks on “solidifying our market-leading metalworking business, with an emphasis on selling our product portfolio, expanding our solutions, improving our digital and eCommerce capabilities and diversifying our customers and end-markets.”
At a high level, I view the MSC growth plan as being heavily focused on No. 1 noted above — growing business and share with existing customers.
Acquisitions are traditionally the fastest way to grow revenue, as evidenced in our MDM Case Studies on Wesco, Watsco and Ferguson — they’ve all used acquisitions as their largest growth driver).
MSC has been no stranger to M&A growth, completing eight deals in a three-year stretch between 2021-2024, following single deals in 2018 and 2017. But, most of these have been of the small, bolt-on variety as opposed to a significant addition.
As of the end of MSC’s 2025 fiscal first quarter (September-November, 2024), 63.7% of MSC’s total sales are classified as eCommerce-based. At that portion of business, the fastest way to grow market share by account is to keep improve your digital engine and eCommerce experience.
In its 2024 Annual Report (issued Dec. 12, 2024), MSC shared the following:
“In fiscal year 2024, we completed our web price realignment initiative, and we are currently in the process of rolling out our E-commerce enhancements. Our primary objective is to grow sales profitably while offering our customers highly technical and high-touch solutions to solve their most complex challenges on the plant floor. We have experienced success to date, as measured by the growth rates of our high-touch programs, such as vending and in-plant programs, and the rate of new customer implementations. Our strategy is to position ourselves as a mission-critical partner to our customers. We will selectively pursue strategic acquisitions that expand or complement our business in new and existing markets or further enhance the value and offerings we provide.”
A key pillar in MSC’s strategy is to “reenergize the core customer”. MSC is playing the traditional distribution “orange juice” game. You earn your profits by squeezing profits out of the oranges you have (existing customers), finding new oranges (new customers) or getting bigger oranges (growing your share by customer).
Digital Steps MSC is Taking Today
- Making investments to improve search capabilities for the 2.4 million SKUs MSC has online
- Improving the digital experience — for both product search and display functionality
At the March 2024 Raymond James Institutional Investment Conference, MSC Executive Vice President and Chief Financial Officer Kristen Actis-Grande shared a couple of interesting comments on MSC’s digital focus.
She said MSC wants to “personalize the digital experience to have the MSC Value proposition shine through for customers is not dealing directly with an MSC Associate” and “package that (MSC) expertise to be able to deliver it digitally to customers we can’t touch as frequently.”
What are some of the tactical actions to personalize the digital experience and make the MSC value proposition shine?
Better Search — typing in a phrase like Mill Oil and finding what you want)
Improved Suggested Products — you are buying X, and the site recommends the right Y product)
Improved Promotions — MSC has a $99 free ground shipping offer on its website as of February 2025)
Improved speed — For the entire process from site load to search all the way to click to order.
Coordination of customers’ digital action with the sales team — MSC supports its customers with experienced associates (especially with their metalworking customers).
Improved Market Pricing — in Part one of our series, we dove deep into MSC’s ongoing work on creating credible prices online
As you improve your digital experience, you also have to communicate to your customers the “what’s in for me” value proposition. The primary ways to do that are to have your associates inform the customer and by improving your marketing programs.
MSC shared its 2024 annual report that it has “built an extensive customer database, which we harness via both human and artificial intelligence to target our marketing to the best prospects. We supplement the efforts of our sales force through the use of digital and traditional marketing tactics. Our industry-specific expertise allows us to focus our outreach on the most promising growth areas.”
Many analysts would call this a multi- or omnichannel sales and marketing strategy. MSC has been an omnichannel leader since it mailed its first “Big Book” catalog in 1964. You found a product in the catalog you wanted, and you called/faxed/emailed/texted it to MSC or ordered it online. The MSC associate combined with a strong digital offering is crucial to every distributor, and especially so in MSC’s case.
MSC is using digital as the foundation to re-energize its core customers and drive growth in 2025 and beyond.
So, What Can You Take Away from MSC’s Strategy for Your Channel Business?
Regarding the communication plan for your strategy, simplicity is often the best approach.
What is MSC’s “What’s in It for me” value proposition? I would probably say something like this if I was on the MSC sales team. We are “we are constantly improving the web experience to be your distributor easy button, and our experienced teams helps you solve problems and keep your business running.”
I like that MSC keeps it simple with a one-two messaging punch. The first is to maintain its solutions momentum driven by associates (in vending, national accounts, In Plant programs, technical and engineering support, metalworking expertise and much more). The second is with web enhancements and investments to be that Staples Easy Button for existing and prospective customers.
As a manufacturer (rep) or distributor, what is your one-two punch? Experienced problem-solving associates are an almost universal foundation for every channel business. How can you strengthen that message and stand apart from the competition? What is your second punch? If digital isn’t as feasible — like if you are in a spec-bid-buy environment or are selling a highly engineered customer solution — what is the other ace up your sleeve?
Is it custom inventory solutions, project management, safety audits, engineering support, assembled solutions, custom assembly… the list of possibilities is almost endless.
I think that MSC has its one-two punch clearly defined. The company shared that it is going to tell customers about “why MSC” relentlessly by using its people, its digital solutions and with marketing in 2025. What’s crucial is how the company is improving its digital experience and then communicating with customers, given that the majority of business is eCommerce-based.
These two MSC quotes from the Raymond James conference speak volumes on why digital is the foundation of the business. The company wants to “Personalize the digital experience to have the MSC Value proposition shine through for customers is not dealing directly with an MSC Associate” and “Package that (MSC) expertise to be able to deliver it digitally to customers we can’t touch as frequently.”
The Final Word
Whatever the customer wants or needs — from digital self-service to more complex needs that require full-service support with experienced associates — MSC is working to deliver it.
All distribution channel customers are ever-evolving in how they want and need to be served. The companies that find the right combination of digital self-service and full-service mix for their businesses will be the leaders that take share from the competition.
