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In 20 years, how will people look back on today’s wholesale industry? Will they view it as a boomer business model? Absolutely not.

Instead, what they will see is the precise moment when the wholesale industry set a bold new course for the future. Our current era will be remembered as a time of change and upheaval, driven by the wider digitalization of society. A period with fundamental implications for our personal lives, for how we collaborate at work, and for the way companies interact with each other.

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What is digitalization in the wholesale sector?

Wholesalers today face major challenges due to new digital competitors, changing customer expectations, increasing product and pricing transparency, and growing pressure for efficiency. At the same time, however, digitalization also offers valuable opportunities. Equipped with the right strategy, wholesalers can use their core competencies to not only address these developments but also profit from them.

Digital sales and after-sales channels, self-service options and
a personalized B2C-like customer experience are key differentiators that allow wholesalers to turn B2B buyers into loyal, happily returning customers.

 

5 challenges for wholesalers undergoing digitalization

  • Create B2C-like shopping experiences: Customers have been exposed to mainstream e-commerce for years and expect the same standards of convenience and service from their business procurement processes. For younger generations of customers and buyers in particular, shopping online is as natural as using a smart phone.

  • New competitors: They are penetrating markets that were previously dominated by wholesalers. Platforms such as Amazon not only have sophisticated digital know-how, an extensive technical infrastructure, and logistical expertise, they also have the necessary financial firepower. Read here how your B2B website can beat Amazon.

  • Increasing price and content transparency: As the Internet continues to boost transparency into both offer content and pricing, customers are becoming increasingly sensitive to price, service, and quality. If any of these elements are lacking, the usually tech-savvy and well-informed online consumer is just a few clicks away from choosing a competitor.

  • Direct selling tactics: More and more manufacturers are now selling directly to consumers. As they bypass traditional, multi-tiered distribution channels, they are eating into wholesalers’ revenues.

  • Decreasing efficiency of traditional processes: Although many companies continue to operate highly efficiently via traditional processes, that efficiency will decline in relative terms as the world around them goes digital. Companies that embrace digital transformation now will have a clear competitive edge. A prime example for more efficiency through e-commerce is wholesaler Isero.

 

Digitalization benefits for wholesalers

By putting your customers right in the center of your activities, you will be rewarded with a prosperous business, more efficiency in your processes,
higher profits and loyal customers.

  • E-Commerce will boost wholesale revenue: Price, product assortment and convenience will always remain important, but they are no longer key differentiators. As a wholesaler you need to be clear on the value you add to your customers - beyond only price and selection. Having a digital commerce platform in place will enable wholesalers to offer a unique, highly personalized experience.

  • Digital sales channels attract new customers for wholesalers: A number of wholesale companies are already demonstrating how a marketplace or D2C strategy can be implemented. By creating online pure-play spinoffs, they are reaching out directly to consumers with competitive offers and pricing as well as value-added services.

  • Digital self-services boost customer satisfaction in wholesale: Today, wholesale customers expect a B2C-like shopping experience offering them maximum ease and comfort when researching and buying products or
    services. This includes the continuous availability of customer-specific information on products, inventories, and delivery or account status as well as
    convenient self-service tools that enable customers to manage their own data (company profiles, procurement structures, user roles etc.), products,
    and service agreements online.



Digitalization in the wholesale industry:  strategies

The good news is that by leveraging their existing core competencies and adopting the right digital strategy, wholesale companies can not only keep pace with the changes outlined above, they can turn them to their advantage. Using a tailored digital strategy, it is possible to achieve faster growth, create more efficient business processes, stabilize profit margins, and open up new channels and customer groups. With a clearly defined digital strategy and a clever step-by-step approach, you can celebrate first
successes in just 100 days.

 

The focal point of a wholesale digitalization strategy should be your customers with their various needs and expectations.

When developing such a strategy, it is advisable to define clear digitalization goals: What are your main objectives? Do you want to boost customer satisfaction, reduce costs per transaction or increase sales to the installed base? Or would you rather want to attract new customers online, push high-margin products, expand internationally or achieve a 100 % digitized customer interaction?

The possibilities are manifold and depend on your company’s ambitions, culture, business model and last but not least your digital maturity. Once you have agreed upon the goals of your digitalization process, you can define a range of key indicators (KPIs) so that progress can be closely monitored.

 

4 proven digitalization strategies  for wholesalers

Wholesalers can accelerate sales by catering customers with a B2B commerce platform that is both deeply integrated into all relevant business processes and capable of delivering a consistent and personalized shopping experience across all available touchpoints.

The continuous availability of customer-specific information on products, inventories, and delivery or account status, combined with user-friendly self-service options and 24/7 after-sales service, are just a few examples of the added value that will strengthen and maintain customer loyalty over the longer term.

Here are 4 proven strategies that show how wholesalers can find their place in a digital-first world:

Wholesalers can connect directly with end customers via B2C e-commerce

Wholesalers can leverage their strengths by addressing consumers directly, either through specially created B2C websites or by affiliating with external marketplaces. In many cases, these B2C activities are run under a new company name. By creating pure-play spin-offs with systematic digitalization of all transaction processes, wholesalers can reach out directly to consumers with competitive offers and pricing. To stay cost-sensitive, they should choose a commerce platform that supports B2X commerce. This way, no additional costs arise with a new business model.

 

Wholesalers can establish direct sales to small and mid-sized retailers and trade companies

Wholesalers who cater exclusively to larger enterprises and industrial corporations can expand their base by selling directly to small and mid-sized retailers and skilled trades, either under their existing brand or using a new company name.

New customer segments like smaller customers are usually served via new subsidiaries/brands, which make effective use of e-commerce strategies to create online offerings tailored to this specific target group.

 

Wholesalers can become full-service providers (marketplaces) for smaller specialist retailers and dealers

Multi-regional wholesalers and buying associations can help their customers and members compete more effectively by providing access to shared e-commerce platforms. Mid-sized specialty retailers and smaller commercial customers generally do not have the resources to create their own e-commerce solutions. However, using these shared platforms, they can improve customer retention within their region and reach out to new clientele.

 

Wholesalers can become full-service providers for manufacturers

Given its traditional role with regard to manufacturers, the wholesale industry is ideally placed to offer full-service e-commerce solutions that enable partnered manufacturers to sell directly to consumers. Under this model, the wholesaler takes over complete responsibility for delivery of all services on behalf of the manufacturer, thus providing significant added value.

While manufacturers would have to create totally new structures in order to sell directly to consumers, wholesalers already have these assets in place and can easily make them available as a service. Manufacturers, retailers, and professional buyers can all benefit from the provision of integrated omnichannel services by wholesale companies.

 


There is no one-size-fits-all solution to speed up the process of digitalization. Every wholesale company needs its own unique strategy that is customer-centric and tailored to its particular value chain. We have a whitepaper where we examine various aspects that are relevant for a successful digital transformation of the wholesale sector. Download it now:

Learn about the benefits of digitalization in the wholesale sector!