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Fastenal: Losing its Fast Growth to Amazon Business
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Reference: IVEY-9B17M170-E
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Year: 2016-2017
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Number of pages: 12
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Geographic Setting: United States
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Publication Date: Nov 16, 2017
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Fecha de edición: Nov 16, 2017
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Source: Ivey Business School (Canada)
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Type of Document: Case
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Industry Setting: Retail Trade;
Description
Fastenal was one of the largest U.S. industrial supply companies, with the highest operating margin among its competitors. It was known and awarded for its innovative industrial vending solutions. With the launch of Amazon Business in the industrial distribution space in 2012, Fastenal’s performance began to decline. In 2017, Amazon Business obtained patents for a drone-based delivery system. This, combined with Amazon’s power of low cost, raised critical challenges for leading players like Fastenal. How should Fastenal respond to this competition: should it focus on low price or pursue a differentiation strategy?
Learning Objective
This case deals with strategic management, customer relationship management, and innovation in the context of industrial business. This case can be taught in strategic management or industrial marketing courses at the undergraduate or graduate level. After completing the case, students should be able to ·analyze elements of sustainable competitive advantage; ·use a strategy map to explain a firm’s success; ·discuss what customer relationship management efforts a firm should take in industrial business; ·conduct an analysis for an industrial supply business; ·explain elements of successful innovation; ·discuss measures for competing against low cost players; and ·understand a strategic feasibility framework.