In the company's investor call to discuss third-quarter results, Fastenal CEO Will Oberton defended his statement in July that Fastenal's 30,000-machine goal for 2013 may have been “overzealous,” saying it was not a claim that the company overinvested in vending. "I believe that we underinvested in supporting vending," he said. "If we had the people in place in the stores, we would be pushing harder than ever on vending."
Oberton and CFO Daniel Florness mentioned several factors they said will help Fastenal better support its vending program in 2014:
1. New sales incentives will be offered. "We plan to introduce new incentives in the early part of 2014 to the vending program with a goal of ramping up the signings in 2014," Oberton said.
2. Fastenal's centralized picking facility will free up and incentivize selling time. Florness said the company's facility in Indianapolis started picking and containerizing vending product for its first store in July. "This will free up a tremendous amount of time at the store," Florness said.
Oberton told MDM in Fastenal’s Vending Evolution that reduced workload at the store should also motivate reps. "Our experience is that when you make things easier for people to do, they’re going to work harder to sell that system. If I can put in a vending machine and sell $1,000 or $2,000 a month, and I don’t have a lot of work to do because the warehouse is doing most of the work for me, that’s a pretty good argument to go out and sell more," he said.
Florness said fifteen districts are already live on the centralized picking system, and Fastenal plans to continue rapidly rolling out the program over the next six to nine months.
3. New sales reps and managers will enable more selling time. Oberton says Fastenal increased its FTEs by 4.6 percent from the second quarter to the third. In addition to added store headcount, Fastenal also started adding district managers, Florness said. "Expanding our district manager roles will do two things," he said. "A, we'll be better at recruiting, and B, we'll have a higher level of sales energy in our business to support our stores."
During the first nine months of 2013, Fastenal signed 15,457 machines. Oberton says Fastenal's goal for 2014 will be to sign 2,000 machines per month, or 24,000 for the year. "That gives us great growth. It's very manageable and it doesn't overload any particular area of the company as far as stores and regions," he said.