In the summer of 2017, Berkshire Hathaway made a little publicized acquisition when it acquired Warren, Michigan-based MRO distributor Production Tool Supply, and created a new wholesale division, Berkshire eSupply.
At the time, the company was ranked 34th on Industrial Distribution’s 2017 Big 50 List, but just the new Berkshire name has attracted a lot of new business.
“As soon as the new name was announced it was the best thing that ever happened to us,” John Beaudoin, president of Berkshire eSupply, says.
Such is the power of the Berkshire Hathaway name.
Now with Berkshire’s ability to finance capital expenditures to power growth, the company is in a major expansion phase.
With more than 1,000 suppliers, Berkshire eSupply has more than 1 million industrial/MROP products available online, dispersed from three strategically located distribution centers in Detroit, Los Angeles and Houston.
The company has already announced that 57 acres of currently vacant property in Novi, Michigan will be converted into a 193,230-square-foot warehouse with mezzanines and an 18,380-square-foot office building.
Also coming is a new facility that will open in Houston in four months, and another facility in California is in the planning stage.
The goal is to provide nationwide 1-2 day shipping of over one million SKUs for thousands of independent suppliers that have not had the money to provide the logistics and scope to compete with companies such as Grainger.
Berkshire eSupply gives independent distributors the custom website and logistics that make ordering seamless. The company provides retailers with a one-stop, private label, e-commerce platform.
“They already have the customer relationships, and we level the playing field in their competition with catalog suppliers such as Grainger,” John Beaudoin, president of Berkshire eSupply, says.
Just as importantly, retailers gain the punchout system that enables purchasing agents to buy from their website from within the buyer’s own procurement application or hosted eprocurement system. This opens major new customer opportunities.
With the cost of fulfillment centers being one of Berkshire eSupply’s major capital expenses, Beaudoin notes that there is huge potential for growth now that Berkshire is providing the financing.
“The entire MROP products market is around $360 billion,” Beaudoin notes. “Grainger has only $10 billion of it.”
It’s clear that Beaudoin has his eye on the other $350 billion of that business, and with Berkshire’s financing, he’s out to get it.
© 2018 David Mazor
Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.