W.W. Grainger SWOT Analysis

SWOT is an acronym for strengths, weaknesses, opportunities and threats related to organizations. The following table  illustrates W.W. Grainger SWOT analysis

W.W. Grainger SWOT Analysis

Strengths in W.W. Grainger SWOT Analysis

1. Established in 1925 by William W. Grainger – motor designer, salesman, and electrical engineer as a wholesale electrical sales company, by now the B2B distributor has an extensive experience of more than 90 years in industrial distribution. In-depth technical knowledge due to experience and know-how serves as a competitive advantage for the business and it plays an instrumental role in further expansion of product categories.

2. Grainger derives massive benefits from the economies of scale. The industrial products distributor sells about 1,7 million types of products supplied by about 5000 suppliers worldwide to more than 3,5 million customers internationally.[1] Immense scale of business operations allows Grainger to source products in bulk, negotiating low purchasing prices. Moreover, economies of scale benefit the business in terms of inbound logistics, warehousing and outbound logistics of products to end-users.

3. Arguably, Grainger covers the greatest range of MRO products among distributors worldwide. Unlike B2C business, in B2B distribution inclusion of an additional product category into portfolio is associated with technical knowledge barriers. In other words, companies in general and sales representatives in particular need to possess deep technical knowledge about product categories and specific products and it takes time and investment to gain such knowledge. Therefore, the majority of industrial distributors worldwide limit their offering to one or two product categories.

In case of Grainger, on the other hand, the company has been engaged in industrial distribution for more than 90 years and it has consistently re-invested share of the profit into the business to systematically expand product categories it offers. By now, Grainger product category is expansive and comprises abrasives, adhesives, cleaning, electrical, electronics, fasteners, furniture, HVAC, hardware, hydraulics, lab suppliers, lighting, lubrication, pneumatics, power transmission and many others.[2]  An extensive product category can be considered as a considerable strength in a way that it allows the company to position itself as one-stop-shop in customers’ perception.

4. For Grainger, the share of revenues generated via e-commerce is consistently increasing. The global industrial supply company has Zoro and MonotaRO subsidiaries which are purely online companies that receive orders from their website. The revenues of Zoro and MonotaRO grew 18% and 27% respectively in 2018 compared to the previous year.

Moreover, as illustrated in Figure 3 below, even when selling to customers with more complex needs as much as 71% of orders are generated via internet-based digital channels including Grainger website, KeepStock inventory management system and e-procurement system. Increasing sales via internet is a noteworthy strength for the business, taking into account increasing integration of internet into various business processes worldwide in general and increasing popularity of online purchases in particular.

Grainger order generation by customers with more complex needs[3]

 Weakness in W.W. Grainger SWOT Analysis

1. Grainger has large debts. As of December 31, 2019, the company’s consolidated indebtedness was approximately USD 2.4 billion.[4] Moreover, the company’s commitments and other contractual obligations equalled to USD 5,46 billion by the end of 2019.[5]  A high level of indebtedness is a considerable weakness for the global industrial supply company.  In the current situation, because of high level of indebtness, the company may find it difficult to attract additional financing required to further expand the business. Moreover, Grainger may face difficulties to satisfy its financial obligations in the current period of adverse economic and industry conditions caused by COVID-19 pandemic.

2. Grainger generated 72% of total revenues in 2019 in the US and only 28% of revenues were generated from international markets.[6] Accordingly, it can be argued that the B2B distributor is over-dependent on its home market in the US. Overdependence in one market is a weakness in a way that a downturn in that market will result in an inevitable decline of revenues for the company. Over-dependence on the US market is especially dangerous at this point of time, when US economy shrank by 5% in Q1, 2020, partially resulting from two weeks shutdown due to pandemic, the worst quarterly decline in 2008.

W.W. Grainger Report contains a full version of W.W. Grainger SWOT Analysis. The report illustrates the application of the major analytical strategic frameworks in business studies such as PESTEL, Porter’s Five Forces, Value Chain analysis, Ansoff Matrix and McKinsey 7S Model on W.W. Grainger. Moreover, the report contains analyses of W.W. Grainger leadership, organizational structure, business strategy and organizational culture. The report also comprises discussions of W.W. Grainger marketing strategy, ecosystem and addresses issues of corporate social responsibility.

[1] Annual Report 2019 (2020) W.W. Grainger

[2] Product Categories (2020) Grainger, Available at: https://www.grainger.com/category?analytics=nav

[3] Fact Book 2019 (2020) W.W. Grainger

[4] Fact Book 2019 (2020) W.W. Grainger

[5] Annual Report 2019 (2020) W.W. Grainger

[6] Fact Book 2019 (2020) W.W. Grainger