Onsite Sales Growth Slowdown
Q: Why did Onsite sales growth slow this quarter?
A: The slowdown is due to lower signings this year, which were not at the expected level. This has resulted in reduced growth from Onsite implementations. Additionally, weakness in machinery and fabricated metals has disproportionately impacted Onsite sales, as these sectors are significant for Onsite operations.

Impact of Mix on Gross Margin
Q: How will sales mix affect gross margin in 2024?
A: The impact of sales mix on gross margin is expected to be less negative than the usual 50 to 70 basis points. Factors contributing to this include fewer branch closures leading to slower attrition of smaller customers, slower Onsite signings reducing pressure on channel mix, and a narrowing gap between fastener and non-fastener growth. While mix will still be negative, it may be narrower than usual.

Leadership Changes and Market Share
Q: What leadership changes were made, and how will they accelerate share gains?
A: Several changes were made within the National Accounts team and regional leadership, including consolidating the U.S. under one leader. This aims to unify approaches across regions and stimulate market share growth. The company is confident these changes will help "kick that market share machine back up in 2024."

Competition in Onsite Services
Q: Are you seeing increased competition in Onsite, and can you return to higher growth in 2024?
A: While there is always competition, there's no indication of intensifying competition affecting Onsite growth. The company believes it has a natural advantage due to its branch network, providing redundancy and support for Onsite operations. They expect to achieve higher outgrowth in 2024, returning to previous levels.

Structural Factors Affecting Onsite
Q: Are structural headwinds like e-Commerce impacting Onsite growth?
A: The slowdown in Onsite growth is viewed more as a cyclical issue rather than structural. Onsite and e-Commerce solutions do not compete; instead, they complement each other. Onsite services involve operating within customers' facilities, often supported by digital channels like EDI, and are not impacted by e-Commerce cannibalization.

Increase in Shipping Costs
Q: How are increased shipping container costs affecting you?
A: There has been a meaningful uptick in container costs in recent weeks. While the exact impact by route is unclear, the increase is being monitored closely as it could stress the global network and impact overall costs.

Growth in Warehousing Demand
Q: What drove the increase in warehousing demand, and what is its future potential?
A: The company has made concerted efforts over the last 5–6 years to grow in the warehousing sector, which was less than 1% of sales before the pandemic. The increase is due to deeper penetration with existing customers and stepping up when other suppliers couldn't meet needs. While it's a small part of the business, it has become an increasingly important segment.

Supplier Consolidation Trends
Q: Have suppliers reduced the number of distributors they work with?
A: While not aware of any recent active consolidation by suppliers, it wouldn't be surprising. Over time, there has been gradual consolidation in terms of spending and engagement as relationships evolve.

Sales Trends and Seasonality
Q: Will sales trends in 2024 follow typical seasonality, despite slower Onsites?
A: It's difficult to predict specific sales trends due to many moving pieces. While Onsites may grow less quickly, there could be an uptick in non-Onsite national accounts. Weather impacts and other variables make it challenging to assess deviations from normal seasonal trends.