Another quarter, another big win for Fastenal Company, a wholesaler and retailer of industrial and construction materials like screws, bolts, and fasteners in the U.S. and overseas.

Today, the company reported a 10.6% jump in net sales, from the second quarter of 2016 to the second quarter of 2017, due to improvements in underlying market demand, growth in its industrial vending business, and growth in new and existing Onsite locations. “The second quarter of 2017 felt more like Fastenal,” said Dan Florness, president and chief executive officer. “We have grown well over the last year, but market headwinds have masked this growth. We continue to ask our customers to challenge Fastenal to be their supply chain partner; their response shines through in the success we are seeing with all of our growth drivers.”




Long-term investors have already taken notice of the company’s strong performance, chasing after its stock, which since 1987 has yielded returns similar to those of Apple and Microsoft.

What is the secret of Fastenal’s success? Multiple competitive advantages.

 One of its advantages is scale, the cost savings associated with a larger corporate size; Fastenal has 2,585 stores in the US and Mexico. Another advantage is scope, the cost savings associated with the offering for sale of different products by a single corporation rather than by different corporations; Fastenal sells hundreds of thousands of MRO, construction and OEM products that extend to 15 product lines.

A third advantage is customization, the benefits associated with the offering of customer-tailored solutions; Fastenal’s manufacturing facilities can tailor its products to different customer needs. A fourth advantage is bundling, the package of different product characteristics to create unique consumer offerings; Fastenal’s extensive store network and highly trained personnel allows the company to bundle products with services.




And a fifth advantage is aggregation, the benefits associated with pulling a large number of orders together; Fastenal helps its customers cut their transaction costs by offering them a one-stop solution to their hardware needs.

Adding to Fastenal’s multiple advantages is the integration of its supply chain activities, creating a formidable barrier of entry for new competitors. The company owns manufacturing facilities, a transportation fleet, distribution centers, inventory supply systems, and retailing and sales service facilities.

Fastenal confirms that companies with multiple competitive advantage can survive and thrive in both good and bad times, rewarding patient investors generously.

Source: Forbes.com