Monday, May 20, 2024

The Future of Wholesale Distribution


Photo from Medium


While 2020 was a fairly successful year for the wholesale distribution industry – leading to $5.8 trillion worth of goods in the United States alone – it has also triggered one of the largest shifts in the wholesale market to date.

With the accelerated push to eCommerce during the Covid-19 pandemic, wholesale distributors need to transform their business models to remain competitive in the market. From unpredictable demand to supply chain disruptions and changing customer relationships, wholesalers are faced with the challenge of rethinking their entire approach to the market.

To change their status quo, many wholesale distributors are relying on insights into the forces that have changed and are now shaping the industry. In this article, we explore the future of wholesale distribution by looking at industry trends, how wholesalers can change the way they work, and how they can be successful in the new climate.

Wholesale Distribution Trends

The past year has significantly changed how many wholesale distributors buy and sell. As customers are more and more likely to turn to an online wholesale marketplace than a physical one, digital consumers are driving the need for always-on and personalized services.

Due to the increased demand for distribution channels, the industry is flooded with competition from suppliers and marketplaces. These nontraditional competitors are increasingly leveraging technology to capitalize on digital opportunities like the business-to-business eCommerce market – which is projected to reach $20.9 trillion by 2027. Today’s B2B customers like to turn to different channels for the same products, looking for compelling prices and delivery options.

Photo from DNA India

Furthermore, as first responders in the logistics supply chain, wholesalers hold a substantial role in the global supply chain. For this reason, they have to be more in tune with how they plan and manage inventory, and how they can better forecast given the demand that might be coming their way. To remain in their position after this kind of market disruption, they need to create supply chain transparency, track available inventory, assess demand, and manage their working capital.

Breaking New Ground

To meet the changing industry demands, wholesale distributors should aim at transforming their business models into a vertical one-stop shop for their offerings. This way, a B2B marketplace is a perfect way to align business strategy with changing customer expectations.

A vertical marketplace gives wholesalers the ability to showcase and expand their inventory on their way to becoming the go-to players in B2B. Such platforms can help wholesale distributors create benefits for both buyers and sellers. By turning to digital channels that offer a variety of products, buyers can purchase everything from a single source with the benefit of detailed product knowledge and top-notch customer service. At the same time, sellers can effectively broaden their reach to a global audience.

Wholesalers can most easily expand their marketplaces by partnering with new vendors. Adding these new vendors can extend their assortment and lead to higher sale numbers – allowing wholesale distributors to increase their offerings beyond current customer demands. By partnering with vendors, wholesalers can improve their customer relationships and even broaden the marketplace to consulting and installation. Ultimately, this creates boundless opportunities for services that were previously untapped.

Success In Today’s Wholesale Distribution Industry

One thing is clear from the current trends – agility is the key that can unlock success for wholesale distributors. With technology playing a central role in market adaptation, distributors should focus on continuous innovation to keep up with industry leaders.

To build a truly innovative culture, distributors must invest in training and value-based management practice that supports such change. To that end, such companies should focus not only on changing their business model but also on the way they do business.

When shifting from traditional to B2B marketplaces, wholesalers should avoid overextending themselves by going head to head with larger companies. Instead, they should personalize the marketplace and prioritize specific segments to become the preferred choice for customers. By focusing on the areas that set them apart, they can use their experience and in-depth knowledge to deliver quality products and solutions, becoming more efficient, more competitive, and ultimately more valuable to their stakeholders.

Final Words

The wholesale distribution industry has experienced significant disruptions that are reshaping supply chains and transforming business models across the board. With the increased demand for digital channels, the competition is only rising and increasingly leveraging technology to respond to industry expectations.

To meet new demand, wholesale distributors are changing their business models in an effort to join the B2B eCommerce market with extended offerings and quality solutions. However, this alone cannot guarantee success. To remain competitive in the market, wholesalers should begin by focusing on their key offerings and build a culture of innovation to drive future growth.



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