Watsco Inc., well-known as a prominent online distributor in the highly fragmented, $64 billion North American HVAC and refrigeration products, owes its market position to a long-running strategy of acquiring family-owned businesses and giving the freedom to continue operating as entrepreneurs — and to a substantial dose of ecommerce technology and strategy, founder, chairman and CEO Albert Nahmad said today.
The company said quarterly revenue rose 6.8% year over year to a record $2.139 billion for the second quarter ended June 30, with ecommerce growing at nearly twice that rate, at 13%, to $770.16 million, accounting for 38% of total sales.
Albert Nahmad, founder, chairman and CEO, Watsco Inc.
“A cornerstone of Watsco’s growth strategy is the acquisition of long-standing, family-owned businesses,” Nahmad said on the Q2 earnings call. He noted that, since its founding in 1989, Watsco has completed 69 acquisitions, “achieving industry-leading scale and preserving many wonderful business legacies into future generations.”
Nahmad added, “Over the last five years, Watsco has acquired eight businesses that today generate approximately $1 billion in annual sales.”
Watsco’s entrepreneurial spirit and digital focus
The company’s growth strategy relies heavily on continuing the entrepreneurial spirit of acquired companies, whose executives typically remain to lead their operations.
“Simply put, Watsco’s entrepreneurial culture, which empowers local leaders to make local decisions, continues to perform well,” Nahmad said on the earnings call today.
He noted that Watsco’s long-running strategy of investing in digital commerce technology “continues to have an impact” on financial performance, adding, “Greater adoption and use of our platforms by a growing number of contractors has produced growth and market share gain.”
Watsco — a Miami-based company that other HVAC suppliers have said they emulate for its digital commerce strategy — also noted other developments related to its “digital ecosystem of technologies” configured to “transform the customer experience and transform how our industry operates.”
Watsco’s digital ecosystem
They include:
- OnCallAir — Watsco’s digital sales platform lets HVAC contractors digitally engage with homeowners and sell them products and services. It compiled approximately $1.4 billion in gross merchandise value for the 12-month period that ended June 30.
- For the six months ended June 30, contractors used OnCallAir to present quotes to about 160,000 households, a year-over-year increase of 18%, generating a 27% increase in
GMV to $743 million. - Watsco’s HVAC Pro+ Mobile Apps provide contractors and their customers with real-time access to ecommerce activity and such information as product specifications, inventory availability, systemwide product matchups, and technical support. For the 12 months until June 30, the number of HVAC Pro+ Mobile Apps users grew 12% to approximately 60,000.
- Watsco’s product information management (PIM) system, a repository of rich product data, provides data on over 1.5 million SKUs to more than 375,000 contractors and technicians that visit or connect digitally with one of its nearly 700 physical locations across the United States, Canada and Latin America.
- Watsco is updating its technology systems to “optimize the launch of new GWP (Global Warming Potential) A2L” refrigeration systems designed to be more efficient and sustainable to reduce the adverse effect of refrigerants on climate change.
- Ecommerce, though accounting for 38% of total Q2 sales companywide, exceeded 60% in some regions.
Watsco’s pitch to would-be partners: “Come to Miami to see us”
In his earnings call remarks, Nahmad, forever on the lookout for acquisitions, said, “Our proven culture, customer-focused technologies, scale and access to capital provide unique advantages and opportunities.” He added to anyone listening: “If you have an interest in learning more, please come to Miami and see us. We are transforming an industry, and we would enjoy telling you about it.”
Paul Demery is a Digital Commerce 360 contributing editor covering B2B digital commerce technology and strategy. paul@digitalcommerce360.com.
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