Half of ASA Distributors Expect Q4 Sales Growth as E-Commerce Gains Ground

ASA’s latest Quarterly Market Survey offers a snapshot of how distributor members are viewing business conditions heading into the final quarter of 2026.

The survey, Distributors Speak Out Part 1, asked members about sales trends, margins, growth and slowdown segments, competitive pressures, inventory strategy, fuel surcharges and their outlook for Q4. A total of 56 distributor respondents participated, and the questions themselves were submitted by ASA member distributor companies based on what they wanted to know from their peers.

Overall, the results point to a market that is holding up relatively well, even as distributors report very different levels of strength across the segments they serve.

Half of respondents said their overall sales volume increased during the past two quarters. That includes 29% reporting an increase of 10% or more and another 21% reporting moderate growth of 3% to 9%. Another 32% said sales remained about the same, while 18% reported some level of decline.

That outlook remains relatively steady heading into the fourth quarter, according to these distributors.

When asked how they expect Q4 2026 sales to compare with the same period in 2025, 50% said sales will increase and 46% expect them to remain relatively flat. Only 4% anticipate a decrease. That means 96% of respondents expect fourth-quarter sales to either grow or hold roughly steady year over year.

Growth is segmented

The survey shows that strength is not evenly distributed across PHCP-PVF market sectors.

Commercial new construction was the most commonly cited growth segment, selected by 57% of respondents. Residential remodel and repair followed at 48%, while 36% pointed to residential new construction. MRO was selected by 23%, followed by industrial and commercial remodeling at 21% each. Data centers came in at 18%, healthcare at 16%, and education and infrastructure/public projects each at 14%.

At the same time, some of those same segments are also where distributors are seeing softness.

When members were asked where they are seeing the biggest slowdown in demand, residential new construction stood out at 48%, far ahead of the other categories. Commercial new construction was next at 20%, while 21% of respondents said they were seeing no significant slowdown.

The fact that residential new construction appears prominently on both the growth and slowdown lists is a reminder that the market picture is not uniform. Some respondents are still finding growth in that segment, while others are seeing clear weakness.

Inventory decisions also suggest most distributors are not preparing for a broad pullback.

Forty-three percent said they are increasing inventory to support growth, while another 39% are maintaining current inventory levels. Only 9% are reducing inventory to improve cash flow, and another 9% are reducing inventory because of lower demand.

That means more than four out of five respondents are either holding inventory steady or adding to it.

Price competition remains intense

With demand holding up, the survey suggests the bigger challenge may be how distributors compete for it.

A combined 81% of respondents described competitors as either primarily competing on price or mostly competing on price. Only 12% said competitors are equally focused on price and service, while 7% said competitors are mostly competing on service and value.

That same theme showed up when members were asked what competitors are doing better than their own companies.

Lower pricing was the top response at 52%, followed by marketing and branding at 30% and a better digital experience at 23%. Better sales force capabilities were selected by 18%, better product availability by 14% and faster delivery by 12%.

The write-in responses add some context to that pricing pressure. One respondent pointed to competitors “taking jobs at 1-2%,” while another selected lower pricing but added that it was not necessarily “better.” Another cited “technical expertise and support” as an area where competitors may have an advantage.

Meanwhile, margins are showing relatively little movement overall. Forty-one percent said gross margins are remaining about the same. Another 27% reported slight improvement, while 29% said margins are declining slightly and 4% reported significant declines. No respondents reported significant margin improvement.

The survey results suggest that most distributors have also been able to pass along at least some supplier cost increases. Forty-five percent said they are successfully passing through almost all increases, and another 45% said they are passing through most. Seven percent said they are passing through about half, while 4% said only a few increases are making it through to customers.

E-commerce is taking a bigger bite

One of the clearest competitive findings in the survey involves e-commerce.

When asked where they are losing business today, 52% of respondents selected online/e-commerce competitors, the highest response of any category. Big-box retailers followed closely at 50%, and then national distributors at 46%. Regional and local distributors were cited by 25%, while manufacturer-direct sales came in at 16%. Only 14% said they are not experiencing meaningful business loss.

That competitive pressure is also showing up in how distributors view the growth of digital players. Fifty-six percent of respondents said digital or e-commerce competitors are gaining market share in their markets, including 7% who said those gains are significant and 49% who said they are gaining somewhat. Twenty-nine percent said they are not seeing digital competitors gain share, while 15% were unsure.

Beyond price

Distributor respondents continue to lean on the strengths that have traditionally differentiated wholesale distribution.

Local relationships were cited by 91% of respondents as a way their company differentiates beyond price, followed closely by superior customer service at 89%. Technical expertise was selected by 68%, product availability by 61%, faster delivery by 52% and value-added services by 50%. Training and education came in at 43%.

Digital ordering tools, by comparison, were selected by 25%.

While e-commerce competitors are the most commonly cited source of lost business, distributors continue to place the greatest emphasis on relationships, service, technical expertise and availability as their main competitive advantages.

The survey paints a picture of a market that still offers room for growth, but with less margin for complacency. Sales expectations remain relatively positive, and many distributors are maintaining or building inventory, yet the competitive pressure around that business is becoming harder to ignore.

It’s also clear that price competition is widespread, digital players are taking a larger share of business and strength varies by end market. With those factors in mind, ASA distributors continue to lean on the things they believe set them apart most: relationships, service, technical expertise, availability and speed.

Those advantages may become even more important as distributors head into 2027 and competition for the same business continues to intensify.

Part 2 of the ASA Quarterly Market Survey will follow later this fall.

By Natalie Forster