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1706_WhitepaperOMS_chapter4-fe0f49b2 Digitalization as opportunity – Examples from two industries

While large parts of the wholesale sector are still struggling to identify suitable digitalization strategies and business models, two industries have already seen the opportunities and understood how to use them. The book trade and IT industry were among the first to face the challenges presented by online commerce. With the emergence of online vendors, such as Amazon, they were confronted with new and disruptive competitors, new technologies, and rapid changes in customer behavior.  These developments threatened to undermine the traditional, multi-tier distribution paradigm and, with it, the long-established business models used by wholesalers and retailers in the two industries.

All of a sudden, tech-savvy consumers were able to compare prices, products, and service offerings with just a few mouse clicks and then choose the most attractive option and have it delivered to their door. Within a few short years, these industries were in total disarray and—long before other sectors—desperately searching for ways to fight back.

The wholesale sector faced two main challenges. Firstly, it had to undergo its own digital transformation in order to confront these new competitors. Secondly, it had to include retailers in this transformation process, since many small and mid-sized outlets had neither the necessary digital infrastructure nor sufficient resources to manage the transition alone. Wholesalers realized that without assistance more and more retailers would simply disappear, along with a significant portion of their customer base. In response, the wholesale industry began a massive expansion of its digital services for retailers, while also supporting these outlets as they developed their own digital processes and structures. The industry thus not only ensured that retailers were able to respond to the changing market and open up digital channels to their customers, it also strengthened its ties with these retailers.

B2B e-commerce solutions replace the traditional methods used to order from wholesalers (phone and fax) by connecting buyer and seller smoothly and efficiently via Web-based interfaces or EDI integration. They also enable retailers to provide their corporate customers with standardized e-procurement options. In addition, thousands of different retailers can base their own online stores on the wholesaler’s full-service e-commerce platform. They can use these stores to communicate directly with customers, to provide them with personalized product offerings, and to accept orders 24/7.

Sharing IT resources was not the only way in which the wholesale industry played a crucial role in helping its customers to go digital. It also provided them with the necessary expertise, e.g., through in-house academies where retailers acquired new knowledge and were kept updated on the latest developments. The industry understood that digital tools can only be used effectively if their users have the requisite knowledge. Through this systematic digitalization of all relevant stakeholders, the wholesale industry not only opened up new opportunities for retailers, it also succeeded in cementing its position in its customers’ value chains and securing their long-term loyalty.

This type of digitalization strategy, where a wholesaler engages with its customers, considers their transformation needs, and provides corresponding support, can easily be replicated in other wholesale sectors.

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