The industrial distribution sector continues to go through a long-term, well-documented trend toward consolidation, but for all the ink spilled on the subject, it continues to be a stubbornly fragmented industry, as well.
That offers opportunities for ambitious industry players, be they longtime distribution giants, investment firms sensing an opportunity, or — in one recent case — a newly launched company arriving seemingly out of the blue.
NorthSky Supply, based in The Woodlands, Texas, made its public debut in early December, announcing a “digital-first” MRO distributor focused primarily on small and mid-sized companies — offering what it says are premium products at lower costs with a streamlined purchasing experience.
Brad Hanson, the chief executive of the new company, recently told Industrial Distribution that NorthSky stemmed from somewhat serendipitous circumstances.
A 20-year veteran of the distribution industry — including time at Grainger and, most recently, at Jon-Don — Hanson said he began to think about how to meet the needs of the nation’s small businesses that could be overlooked in the current distribution ecosystem.
At about the same time, he said, another party had noticed some of the same gaps — and opportunities — in the industry. A bit of good fortune, he said, led to them “finding each other at the right time.”
The result is a privately held company — whose ownership remains undisclosed — with the resources to immediately serve small and mid-size manufacturers and businesses across nearly the entire country.
NorthSky’s Model
Hanson said that the main focus of the discussions that would ultimately become NorthSky centered on how to offer products at lower prices without sacrificing quality.
One arm of the company’s strategy is the use of technology to build a highly automated operation that’s “easy to do business with.” The company says its more approachable path to purchasing includes warranties on all products, free shipping on orders in excess of $75 and a flat $5 fee on smaller orders, and a 30-day return policy on “the vast majority” of its products.
Another, Hanson said, leveraged the “decades” of distribution market experience within the company’s ranks to collaborate with manufacturers “around the world” and, ultimately, “buy better.”
The company debuted with a pair of private-label brands: Olympia, its portfolio of safety supplies and personal protective equipment, and Black Canyon, a lineup of hand tools, power tools and accessories. NorthSky says that it offers products at the same or better quality as its competitors, at prices that range between 40% and 70% less.
In addition to its product lineup, NorthSky’s backers also invested heavily in its initial footprint. Aside from its suburban Houston headquarters, the company began with five distribution centers in some of the nation’s largest metropolitan areas and spanning nearly all of its geographic regions: Atlanta, Chicago, Dallas, New Jersey and Southern California.
“Those five distribution points allow us to very comfortably hit the vast majority of the U.S in one to two business days,” Hanson said.
Plans to Grow
NorthSky doesn’t plan to stand pat, either. Hanson said the company is investing in ramping up to become a “meaningful” distribution industry player relatively quickly — potentially a top 50 company sooner rather than later.
Although one strategy to quickly secure market share — mergers and acquisitions — is “always on the table,” Hanson said it’s not a priority for NorthSky. Instead, he said that the company is focused on meeting the needs of its chosen segment, which accounts for the majority of the nation’s overall economic activity.
“It’s been a lot of hard work, but to come from a blank sheet of paper to a business in the last six to seven months … It’s been a really exciting journey,” Hanson said.